The Michigan legislature cannot change public employees’ compensation without input from the State Civil Service Commission. Pension contributions are part of an employee’s compensation. Consequently, the Michigan legislature violated Michigan’s Constitution by altering pension contributions for public employees without input from the Commission. This, in a nutshell, was the Court of Appeals’ conclusion in Michigan Coalition of State Employee Unions v State of Michigan, an August 13, 2013 opinion.
In 2011, the Michigan legislature enacted 2011 PA 264. The Michigan Coalition plaintiffs took issue with two main aspects of this act: (1) it changed overtime calculations in a way that would reduce pensions and (2) it required members of the state’s pension system to contribute 4% of their salaries to their pensions in order to maintain membership. The Michigan Coalition plaintiffs argued that, by enacting these provisions without input from the Commission, the legislature violated article 11, section 5 of the Michigan constitution. Both the trial court and the Court of Appeals agreed.
Section 5 confers on the Commission the authority to “fix rates of compensation,” among other things. The Court of Appeals examined the common understanding of “compensation” at the time Michigan’s Constitution was ratified in 1963. Relying primarily on the Michigan Supreme Court’s 1955 opinion in Kane v City of Flint, the court determined that pension benefits were commonly understood to be part of an employee’s “compensation.” It held, therefore, that the Michigan legislature overstepped constitutional bounds by altering compensation without input from the Commission.
The panel also held that the trial court erred by invalidating all of 2011 PA 264, instead of determining whether the unconstitutional provisions were severable. Consequently, Michigan Coalition remanded the matter to the trial court to assess whether some of 2011 PA 264 might survive.