HB-5421, As Passed House, April 14, 2016

SUBSTITUTE FOR

HOUSE BILL NO. 5421

A bill to amend 1999 PA 149, entitled

"Public employee health care fund investment act,"

by amending section 2 (MCL 38.1212) and by adding sections 4a, 4b,

and 4c.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 2. As used in this act:

(a) "Bankruptcy trust" means a trust created by a court order,

including a plan for adjustment.

(b) "Bankruptcy trust beneficiary" means an individual who is

eligible to receive health care benefits under a bankruptcy trust.

of a bankruptcy trust.

(d) ~~(a)~~ "Fund" means a public employee health care fund

created ~~pursuant to~~ under this act or a court order, including a

plan for adjustment, and used for the accumulation and investment

of funds for the purpose of funding health care for retired

employees of the public corporation.

(e) "Independent professional trustee" means a person that has

expert knowledge, extensive experience, or both, with respect to

economics, finance, institutional investments, administration of

public or private health and welfare benefit plans, executive

management, benefits administration, or actuarial science. An

independent professional trustee does not include any of the

following:

(i) A bankruptcy trust beneficiary.

(ii) A current or former employee of the public corporation

that was responsible for funding the bankruptcy trust.

(iii) An employee of an affiliate of the public corporation.

(f) ~~(b)~~ "Investment fiduciary" means a person ~~or persons~~ who

do does any of the following:

(i) Exercises any discretionary authority or control in the

investment of the fund's or trust's assets.

(ii) Renders investment advice to a fund or trust for a fee or

other direct or indirect compensation.

(g) "Nonindependent trustee" means a bankruptcy trust

beneficiary or a current or former employee of the public

corporation that was responsible for funding the bankruptcy trust.

(h) "Plan for adjustment" means a plan for the adjustment of

debts entered and approved by a federal bankruptcy court for a

public corporation.

(i) ~~(c)~~ "Public corporation" means ~~any~~ a county, city,

village, township, authority, district, board, or commission in

this state.

(j) ~~(d)~~ "Qualified person" means ~~a person or group of persons~~

an individual who ~~are~~ is eligible to receive health care benefits

and who ~~are~~ is designated as a qualified person by the public

corporation.

(k) ~~(e)~~ "Trust" means a trust created under the authority of a

state or federal law for the purpose of funding retiree health care

benefits.

Sec. 4a. (1) A trustee of a bankruptcy trust serves at the

pleasure of the appointing authority. The appointing authority may,

after providing 30 days' notice to a trustee, remove the trustee

without cause. The appointing authority may immediately remove a

trustee for incompetence, dereliction of duty, malfeasance,

misfeasance, or nonfeasance in office, or any other good cause. As

used in this subsection, "appointing authority" is the authority

identified by the court or the plan for adjustment.

(2) The board of trustees, by a vote of 2/3 of the voting

members serving, may, after providing 30 days' notice to a trustee,

remove the trustee if the board determines that allowing the

trustee to serve could cause loss of confidence in the

administration of the bankruptcy trust and that removing the

trustee is in the best interest of the bankruptcy trust

beneficiaries. The board, by a vote of 2/3 of the voting members

serving, may immediately remove a trustee for incompetence,

dereliction of duty, malfeasance, misfeasance, or nonfeasance in

office, or any other good cause.

(3) If there is a vacancy on the board of trustees, the

vacancy must be filled in a manner provided by the court or the

plan for adjustment.

(4) The board of trustees shall meet at least quarterly.

(5) The business that the board of trustees may perform shall

be conducted at a public meeting of the board held in compliance

with the open meetings act, 1976 PA 267, MCL 15.261 to 15.275.

(6) A writing prepared, owned, used, in the possession of, or

retained by the board of trustees in the performance of an official

function is subject to the freedom of information act, 1976 PA 442,

MCL 15.231 to 15.246.

(7) The board of trustees shall prepare a summary annual

report that includes the bankruptcy trust's administrative

expenditures and expenditures related to a member of the board

attending educational conferences that are paid by the bankruptcy

trust, if any. The board of trustees shall send a copy of the

summary annual report by first-class mail to each bankruptcy trust

beneficiary at the bankruptcy trust beneficiary's last known

address.

Sec. 4b. (1) Subject to a plan for adjustment and section 4c,

if a bankruptcy trust provides for the compensation of the members

of the board of trustees, all of the following apply:

(a) A member of the board may be compensated only for

attending a meeting of the board in person. However, by a vote of

2/3 of the voting members serving, a member may be compensated for

attending a meeting telephonically.

(b) The compensation of a member of the board must not exceed

the cap imposed under a court order, including a plan for

adjustment, if any.

compensation must be reasonable for the services rendered in the

performance of his or her duties.

(d) Subject to the cap described in subdivision (b), the per-

meeting stipend of a member of the board other than a nonvoting ex

officio member must be calculated based on an hourly rate not to

exceed $25.00 per hour. For the first 2 years after the

establishment of a bankruptcy trust, a member shall not receive

more than 45 hours of compensation in any 1 month. Beginning 2

years after the establishment of the bankruptcy trust, a member who

is a bankruptcy trust beneficiary must not receive more than 24

hours of compensation in any 1 month. Subject to the cap described

in subdivision (b), by a vote of 2/3 of the voting members serving,

and subject to the vote of bankruptcy trust beneficiaries described

in section 4c, the board may increase the per-meeting stipend.

(e) Subject to the cap described in subdivision (b), if the

public corporation that was responsible for funding the bankruptcy

trust sponsors a retirement system, a bankruptcy trust beneficiary

who is a member of the board of trustees is also a member of the

retirement system, the retirement system's governing board includes

an elected retirant of the retirement system, and the retirement

system compensates its board members as provided in section 8a(3)

of the public employee retirement benefit protection act, 2002 PA

100, MCL 38.1688a, the bankruptcy trust shall compensate the

bankruptcy trust beneficiary who is a member of the board of

trustees at no less than the compensation given to the elected

retirant.

(f) For a nonvoting ex officio member, the per-meeting stipend

must be calculated based on an hourly rate. The hourly rate must be

50% of the hourly rate paid described in subdivision (d).

(g) Subject to the cap described in subdivision (b), by a vote

of 2/3 of the voting members serving, an independent professional

trustee may be paid an annual retainer fee payable in equal monthly

installments.

(h) Subject to a court order, including a plan for adjustment,

by a majority vote of voting members serving, the board of trustees

may lower or eliminate the compensation of members of the board.

(i) A member of the board may decline compensation from the

bankruptcy trust.

(j) A member of the board who is a bankruptcy trust

beneficiary and who is employed full-time by the public corporation

that was responsible for funding the bankruptcy trust or by an

employee organization whose members are bankruptcy trust

beneficiaries shall serve without compensation.

(2) A member of the board of trustees may be reimbursed for

his or her actual and necessary expenses incurred in the

performance of his or her official duties while attending a meeting

of the board. The board, by a vote of 2/3 of the voting members

serving, may reimburse a member for the costs related to attending

an educational conference if the board determines the conference is

necessary.

Sec. 4c. (1) In addition to the method of removing a member of

the board of trustees as provided in section 4a, the removal of a

member of the board may be initiated by either of the following

methods:

(a) A petition signed by not less than 20% of the bankruptcy

trust beneficiaries.

(b) A proposal by an organization, including, but not limited

to, a union, that represents not less than 50% of the bankruptcy

trust beneficiaries.

(2) The compensation of members of the board of trustees as

provided in section 4b may be changed by either of the methods

described in subsection (1).

(3) A petition or proposal, as applicable, under subsection

(1) or (2) must be filed with the board of the retirement system

that administers the pension benefits of the bankruptcy trust

beneficiaries. The retirement system shall submit the ballot

question proposing the removal of a member of the board of trustees

or changing the compensation paid to members of the board of

trustees to the bankruptcy trust beneficiaries not less than 60

days after the filing of the petition or proposal, as applicable.

(4) If a majority of the voting bankruptcy trust beneficiaries

approve the ballot proposal described in subsection (3), the board

of trustees shall implement the ballot proposal within 14 days

after the election.

(5) The bankruptcy trust beneficiaries or organization that

filed a petition or proposal, as applicable, under subsection (3)

shall pay the costs of conducting an election under this section.

If the ballot proposal is approved under subsection (4), the