Hello Fellow Michiganders:Welcome to the beginning of the 2012-2013 school year.

I t's with great pleasure that I assume the position of

President of the Michigan Council of School Attor-neys (MCSA) and attempt to humbly serve my fellow constituents. There's no ques-

tion that our state has and continues to face very chal-lenging economic times. The political debate, which to a large extent, has been fueled by our economic challenges is one that I'm sure most of us could not have imagined a few short years ago. Nevertheless, as Nov. 6 draws near, citizens will be asked to determine the direction this state will take on many issues via several proposals that will be on the ballot. If passed, one of these proposals, i.e., Pro-posal 2, would not only grant public and private employ-ees the constitutional right to collectively bargain, but it would also invalidate any existing or future state or local law that interferes with that right, to the extent said law(s) conflict with governing collective bargaining agreements. No matter what your personal opinion may be with respect to Proposal 2, it's undisputable that if passed, this potential new law will have sweeping effects on Michigan public schools and its employees. In a memorandum to Governor Snyder dated July 20, 2012, Attorney General Bill Schutte opined that the pas-sage of Proposal 2 could, in part, abrogate or otherwise substantially limit constitutional provisions authorizing the following: the power of cities and villages to adopt resolutions and ordinances relating to municipal con-cerns; the Legislature’s discretion to appropriate moneys to educational institutions; the Legislature’s power to enact laws to resolve disputes concerning public employ-ees; the Legislature’s discretion to determine general ap-propriation; the Legislature’s power to enact laws relative to the hours and conditions of employment; and coun-ties’ obligation to refrain from incurring indebtedness that increases total county debt beyond 10 percent of the

county’s assessed valuation It has also been suggested that the Revised School Code and the Teacher Tenure Act will be affected in the specific areas of teacher evaluation and the hiring and firing of public school employees in general. The fact is, even if this proposal doesn't pass on Nov. 6, there will undoubtedly be issues that we'll all have to grapple with over the next school year as we adjust and attempt to comply with the laws of our state, whatever they may be. Thus, it is my goal as President to ensure that MCSA not only provides guidance with understand-ing these laws, but also assists with the proper application of the legal mandates that will govern our public schools and our public school employees. To that end, I truly look forward to working with each and every one of you and welcome your comments and/or suggestions for seminar topics or events that you would deem helpful as we move forward toward creating the best possible school systems for our children. Sincerely, Michelle P. Crockett crockett@millercanfield.com

Michelle P. Crockett

Miller, Canfield, Paddock & Stone, PLC

In This Issue…

In Memoriam . . . . . . . . . . . . . . . . . . . . . 2

Which "Act" Applies? Application . . . . . . . 2of Recent Education Reforms

Property Tax Litigation and . . . . . . . . . . . 6School Districts

2011-12 Reform Legislation: . . . . . . . . . . 7Frequently Asked Questions

MCSA School Law Fall Conference . . . . . 12

Copyright© 2012 by the Michigan Association of School Boards. All Rights Reserved.

President’s Letter

Fa l l 2012

2 Council News

Which “Act” Applies? Application of Recent Education ReformsKatherine Wolf Broaddus, Collins & Blaha, P.C.

On July 19, 2011, changes were made to the Teach-ers’ Tenure Act, Revised School Code and Public

Employment Relations Act affecting public school teach-ers and the operation of public school districts. Issues immediately arose regarding which “Act” would apply when filing tenure charges against a teacher seeking his/her discharge for misconduct or incompetency — the pre-amendment language or the amended language. The Tenure Commission addressed this issue in Cona v Avondale School District and subsequent cases addressed below. To date, the issue has not been addressed by either the Michigan Employment Relations Commission or the Michigan Courts in applying the 2011 amendatory language in either the Public Employment Relations Act or the Revised School Code.

Tenure Commission’s Handling of Previous Amendments to the Teachers’ Tenure ActIn 1993, amendments were made to the Teachers’ Ten-ure Act in several areas, particularly in the application of tenure to teachers working in a consortium. The Tenure Commission addressed the application of these amend-ments in Webster v Godfrey Lee.1 In this case, the teacher, Karen Webster, was employed by the Southkent Commu-nity Education, which was a consortium of school districts consisting of Godfrey-Lee Public Schools, Kentwood Public Schools, Godwin Heights Public Schools, Byron Center Public Schools and Kelloggsville Public Schools. The participating school districts entered into a contract naming Godfrey Lee as the fiscal agent of the consortium. Ms. Webster had previously obtained tenure while teach-ing at Pinconning School District for 17 years. She was then employed by Southkent for the school years 1991-92 and 1992-93 as an adult basic education teacher. Dur-ing the 1993-94 school year, Ms. Webster was assigned by Southkent to teach supplemental bilingual education classes to elementary and middle school students en-rolled in Godwin Heights, Kentwood and Godfrey-Lee school districts. On July 25, 1994, after the amendment to the Tenure Act, Ms. Webster was notified that she was laid-off and was advised of her tenure rights. Shortly thereafter, Ms. Webster filed a Claim of Appeal alleging that she obtained tenure with all school districts par-

In MemoriamMichael L. Bevins (1958–2012)

Education Reforms, continued on page 3

The members of the MCSA and the countless other friends of Michael Bevins were greatly saddened by his death on August 3, 2012 at the age of 54 after a coura-geous battle with cancer. As a partner in the Grand Haven law firm of Scholten Fant, Michael represented numerous school districts throughout the state. Mi-chael was a long-time and active member of MCSA. He frequently volunteered his time by presenting on special education issues at conferences and writing for the newsletter. Michael served on the MCSA Board of Directors from 2002 to 2008, and he was President of the Board in 2006-07.Michael’s kindness and wit will have a lasting impression on those who knew him and worked with him. Similarly, the guidance that Michael provided to his clients on special education issues will be relied on for years to come. The following was excerpted from a President’s Letter written by Michael, and it provides a great example of his thoughtful approach on complying with the requirements of IDEA:

As attorneys representing school districts and as persons in leadership positions in our school systems, we must all foster and encourage the partnership between general education and special education. We must all support this partnership by whatever means we can, be it through our work in collective bargaining, by providing professional development op-portunities or efforts in the larger educational community or at the State Board. General and special education personnel alike must avoid the “glass half empty” attitude, and we must provide the resources and support necessary to foster those partnerships.

These times in education are changing, and like the weather in Michigan, will continue to do so. It is only by forging a lasting partnership between general and special education that we'll weather those changes, and through those partnerships we fill find that opportunities abound.

Council News, President’s Letter by Michael Bevins, Spring 2007.

Fall 2012 3

ticipating in the consortium in both adult education and K-12. She claimed her tenure rights were violated when probationary teachers were employed for the 1994-95 school year in positions for which she was certified and qualified to teach. In 1993, the Michigan Legislature amended the Teachers’ Tenure Act, MCL 38.71 et seq, which became effective on June 11, 1993. At issue in Webster, were amendments to Article III, Section 1, addressing employment by a consor-tium. At the time Webster’s Claim of Appeal was filed, the amendments read as follows:

(2) If a teacher employed in a program operated by a consortium of school districts was previously on continuing tenure in a school district that participates in the consortium, the teacher shall be considered to be on continuing tenure only in that school district.(3) If a teacher employed in a program operated by a consortium of school districts was not previously on continuing tenure in a school district that participates in the consortium and satisfactorily completes the probationary period, the teacher shall be considered to be on continuing tenure only in the school district that is the fiscal agent for the consortium.

Prior to the 1993 amendments to the Teachers’ Tenure Act, the Commission determined which of the districts participating in the consortium were employers for the purposes of determining a teacher’s tenure by using the “economic reality test” adopted and accepted by the Michigan Court of Appeals in Imbrunone v Inkster Public Schools.2 Webster argued that the economic reality test applied to her case rather than the 1993 amendments. The school districts maintained that the economic reality test was abrogated by the adoption of the amendments.Administrative Law Judge James Ward (“ALJ Ward”) held, “the Legislature, by its enactment of subsections (2) and (3), intended to replace the economic reality test of Imbru-none, identify what school district with which a teacher acquires tenure in a consortium and limit the acquisition of tenure to one of the school districts identified in the statute.”3 ALJ Ward then discussed the “transition" be-tween the economic reality test and the amendments to the Teachers’ Tenure Act. Adopting the rule put forth in People v Russo,4 the ALJ determined that "after June 11, 1993, the effective date of 1993 PA 59, subsections (2) and (3) should be applied to all causes of action filed with the Commission to determine with which school district a teacher employed in a program operated by a consortium

acquires tenure.” (Emphasis added.) Therefore, ALJ Ward believed that the determination of which law applied was triggered by the filing of the cause of action with the Com-mission, not the law in place when the facts giving rise to the cause of action occurred. In Russo, the Michigan Supreme Court stated the follow-ing general rule of statutory construction:

The general rule of statutory construction in Michigan is that a new or amended statute applies prospectively unless the Legislature has expressly or impliedly indicated its intention to give it retrospective effect … However, an exception to the general rule is recognized where a statute is remedial or procedural in nature. Statutes that operate in furtherance of a remedy already existing and that neither create new rights nor destroy rights already existing are held to operate retrospectively unless a different intention is clear.5

Applying this test to the Webster case, ALJ Ward deter-mined the relevant sections of the Tenure Act were proce-dural for the following reasons:

They are procedural because they are legislatively established criteria to determine with which school district in a consortium a teacher acquires tenure. Before subsections (2) and (3) were enacted, the procedure to determine the existence of an employment relationship within the meaning of the Teachers’ Tenure Act was the economic reality test; a test created by the Commission to assist it in effectuating the objectives of the Act. Subsections (2) and (3) are the legislative substitute for the economic reality test. Just as the economic reality test was procedural — the Commission has no power or jurisdiction to create substantive rights — subsections (2) and (3) are procedural. However, the tenure a teacher acquires under the Act is a statutory right; a right that vests in a teacher when he or she completes a probationary period of employment. MCL 38.91; MSA 15.1991. According to Russo, a procedural statute should apply retrospectively so long as it does not operate to divest an individual of a previously acquired right. Thus, I conclude that subsections (2) and (3) should not be construed to divest a teacher of previously acquired tenure.

It was therefore determined that the 1993 amendatory language applied in this case because Ms. Webster’s claim of appeal was filed with the Commission after the effective date of the amendments. Ms. Webster obtained tenure only in Godfrey Lee Public Schools because it was the

Education Reforms, continued from page 2

4 Council NewsEducation Reforms, continued on page 5

Continued from page 3

fiscal agent for the consortium and her claim of improper layoff and recall was rejected.

Exceptions were filed with the Tenure Commission where Ms. Webster argued that her “tenure rights...vested prior to the amendment of the statute,” thereby requiring the application of the economic reality test rather than the newly amended statutory language.6 The Tenure Commission disagreed with Ms. Webster and found, “For our present purposes of statutory construction, 'vested rights' are those represented by accrued causes of action.”7 Further, a cause of ac-tion accrues, and thus becomes a vested right, when “all the facts become operative and are known.”8 The Commission reasoned that Webster wasn't con-sidered to have a vested right to the application of the economic reality test over the newly amended statutory language and affirmed the ALJ’s finding that Webster’s cause of action did not accrue until July 25, 1994, after the effective date of the relevant amend-ments of the Teachers’ Tenure Act, when she received notification of the District’s decision to lay her off. The Commission concluded that retroactivity of the statute was not “at issue” because Webster had “no vested right to the scope of tenure,“ and it was therefore unneces-sary to determine whether the relevant amendments were “procedural” or “substantive.”

Application of Webster to 2011 Amendments to theTeachers’ Tenure ActEffective July 19, 2011, the standard for discharging a tenured teacher under the Teachers’ Tenure Act changed from “reasonable and just cause” to “a reason that is not arbitrary or capricious.”9 In Cona v Avondale Schools, the teacher, Frank Cona, engaged in alleged misconduct prior to July 19, 2011.10 However, Avondale Schools filed ten-ure charges, and the board voted to proceed upon those charges after July 19, 2011. On appeal to ALJ Ward and then the Tenure Commission, the threshold question be-came: Which standard applies, “reasonable and just cause” or “not arbitrary or capricious”? While ALJ Ward and the Tenure Commission engaged in differing analysis, their outcomes were the same.In determining whether the statute was to be applied retrospectively, as opposed to prospectively, ALJ Ward applied the legal test in Russo and determined that the

“not arbitrary or capricious” standard was “remedial.” ALJ Ward found that “The Legislature amended the Teachers’ Tenure Act to remedy perceived difficulty in disciplin-ing teachers for their misconduct.” This determination brought the statute within a narrow exception that al-lowed for retrospective application of the statute’s provi-sions. On the issue of whether a vested right was at issue, ALJ Ward stated:

Teacher tenure is a vested property right.  Teacher tenure safeguards a tenured teacher’s right to continuing employment. The amendment does not eliminate or alter a tenured teacher’s right to continuing employment. Moreover, the amendment does not deny a teacher his or her right to due process. Thus, appellant’s existing tenure rights prior to the July 19th amendment are preserved.  The amendment of the statute changes the standard by which the controlling board’s decision to seek a discharge or demotion is evaluated. I conclude that the respondent’s reason to seek discharge or demotion of appellant in this case should be evaluated based upon the “not arbitrary or capricious” standard.

On exceptions filed with the Commission, the Commis-sion disagreed with ALJ Ward regarding whether a vested right was involved in this case. While ALJ Ward found that “[t]eacher tenure is a vested property right,” the Com-mission, citing Webster, supra, determined that

Appellant did not have a vested right in a particular statutory standard until accrual of his cause of action. It was not until September 2011, when tenure charges were filed against him and the controlling board voted to proceed on those charges, that his claim of a violation of his tenure rights arose. At that time, the “reasonable and just cause” standard had been replaced by the “not arbitrary or capricious” standard. There is thus no issue of retrospective application of the 2011 amendments presented in this case.11

Therefore, while the Commission and ALJ Ward came to the same conclusion, there was a difference of opinion with regard to when a tenure right becomes “vested” with a tenured teacher.12

This difference of opinion was again evident in a subsequent case. In Kalina v Grosse Pointe Public Schools13, the school district sought the teacher’s discharge for unprofessional conduct, unsatisfactory teaching performance and engag-ing in a pattern of misconduct. All of the facts of the case occurred before the effective date of the amendments to

Fall 2012 5

Education Reforms, continued from page 4

the Teachers’ Tenure Act. The teacher was given a copy of his tenure rights. The tenure charges stated the “reasonable and just cause” standard, and the board voted to proceed upon the charges — all before July 19, 2011. In addition, the actual claim of appeal was filed on May 20, 2011. Only the actual administrative hearing occurred after the effective date. At the hearing, the school district argued that the “not arbitrary or capricious” standard should be retrospectively applied to the proofs of the case. Kalina maintained that the “reasonable and just cause” standard applied to this case. Mr. Kalina claimed that because he had achieved tenure, he had a “vested right” to have his conduct judged by the reasonable and just cause standard. ALJ Ward determined that the reasonable and just cause standard applied for the following reasons:

Teacher tenure, once acquired, is a vested property right. A person cannot be deprived of his or her property without due process of law. Due process requires notice and an opportunity to be heard. The notice required in a due process hearing includes the notice to be informed of the applicable standard by which his or her conduct is being evaluated.14

ALJ Ward concluded that Mr. Kalina was provided with a copy of his rights under Article IV of the Teachers’ Tenure Act on May 2, 2011, which included the right to have his conduct evaluated under the reasonable and just cause standard. Following the provision of these rights, the district at no time furnished Mr. Kalina with notice that it intended to proceed against him for discharge under any other standard, including the newly adopted “not arbitrary or capricious” standard. Therefore, the ALJ determined that “because the only notice that Mr. Kalina received advising him of his rights under article IV was the notice that he was furnished prior to July 19, 2012, due process requires that this matter be heard under the reasonable and just cause standard.”On exceptions to the Commission, the decision of the ALJ was affirmed. The Commission relied on its finding in Cona, “The teacher’s cause of action under the Tenure Act did not accrue until after the effective date of the statutory amendments and that the “not arbitrary or capricious” standard applied.” The Commission pointed out that in Kalina, the charges were acted upon and the claim of appeal was filed before the effective date of the amend-ments. The Commission determined that the ALJ prop-erly applied the “reasonable and just cause” standard. The Commission reiterated that “appellant’s cause of action

under the Tenure Act accrued before the effective date of the statutory amendments that changed the standard of review from “reasonable and just cause” to “not arbitrary or capricious”.” In the most recent case to apply this rule, the Tenure Commission also found that the pre-amendment language applied. In Bowers v Hastings15, the school district sought Ms. Bowers’ discharge for inappropriate conduct that oc-curred more than a decade earlier. On June 28, 2011, the Hastings Public Schools approved tenure charges against Ms. Bowers and voted to discharge her from her employ-ment. On July 13, 2011, Ms. Bowers filed a claim of appeal challenging her discharge. ALJ Ward upheld her discharge. The Tenure Commission noted in a footnote to its Deci-sion and Order on Exceptions that the amendments to the Teachers’ Tenure Act effective on July 19, 2011 do not ap-ply because the claim of appeal was filed before July 19, 2011. The Board’s decision to discharge the teacher was evaluated under the pre-amendment standard of “reason-able and just cause.” In light of these cases, it appears that the Tenure Com-mission will look to when the cause of action accrues to determine what law applies: the pre-amendment or recently amended language. Central to this determination is when the teacher’s rights under the Teachers’ Tenure Act have “vested.” A right has vested when all of the facts become operative and known. To date, the Commission has relied upon this analysis to make the determination of law. However, as pointed out by ALJ Ward in the Webster and Cona opinions, Michigan courts have also permitted retrospective application of amendatory language where the amendments were remedial or procedural.

1 TTC 94-32.2 TTC 81-52; 161 Mich App 132 (1987).3 PDO 94-32 (2/13/95). 4 439 Mich 584 (1992).5 Id at 594.6 Webster v Godfrey Lee, TTC 94-32 (5/2/1995). 7 Emphasis added.8 Citing In re Certified Questions (Karl v Bryant Air Conditioning Co), 416

Mich 558, 573 (1982). 9 MCL § 38.101. 10 TTC 11-61 (PDO dated 3/12/2012; Decision and Order on Exceptions dated

5/31/2012).11 Emphasis added.12 This case is currently on appeal to the Michigan Court of Appeals, COA Case

Number 310893.13 TTC 11-23 (PDO dated 4/26/2012; Decision and Order on Exceptions dated

7/12/2012).14 Internal citations omitted.15 TTC 11-54 (PDO dated 5/17/2012; Decision and Order on Exceptions dated

7/12/12).

6 Council News

I t's a good time of year for school superintendents and administrators to review their procedures for monitor-

ing property tax appeals. Property taxes are assessed by townships and cities annually. Businesses that believe their assessments are too high file a petition in the Michigan Tax Tribunal naming only the assessing unit (the town-ship or city) as the “respondent,” but they also serve other taxing units, including the secretary of the local school district. The deadline for filing commercial and industrial property tax appeals is May 31 each year. School administrators should review the petitions as they are received and determine whether to oppose the tax-payer’s request for reduced taxes. Many cases are routine and pose no threat to the schools. Occasionally, however, a taxpayer from the top ten list seeks substantial reductions, which could affect the district’s finances enough to war-rant further concern. This is particularly true for “out of formula” districts and intermediate school districts which can have substantial funds at issue. While the assessing unit should defend the appeals, the township operating rates are often lower than the school operating rate, and its ability or motivation to defend is sometimes not up to the task in large and complex appeals. To oppose a prop-erty tax appeal and assure the schools a seat at the table in resolving the appeal, a school district files a motion to intervene. If the schools intervene, they become a party, receive copies of all filings in the case and participate in the settlement negotiations and hearing. Intervention does not remove the city or township from the case, but it al-lows the school district to defend its interest.

Beyond defending appeals brought by taxpayers, there are some procedures by which a school district can seek to increase incorrect assessments. Assessing units and schools have conflicting interests affecting some types of assessment decisions. For example, a major industrial taxpayer may agree to accept a higher personal property value (which is taxed by the township but exempt from the school tax) in exchange for a lower real property value (which is taxed by all units). Whether done as a part of an exchange, or inadvertence, the treatment of real property as industrial personal property is a threat to the schools. Covert Public Schools recently recovered additional 2009 and 2010 tax revenue averaging $3 million per year under an appeal after a local assessor assessed a substantial por-tion of a power plant as industrial personal property which was exempt from the school tax. Covert’s appeal was sup-ported by MASB’s Legal Trust Fund. One situation in which a school district may find itself listed by a taxpayer as a defending party is a challenge to the one decision which the school district makes ev-ery year affecting property taxes, the levy of its tax rate. Detroit Public Schools was involved in a lawsuit which sought refunds of four years of school operating taxes which exceeded $256 million and were levied without a voter approval. The schools won at the trial level, the Court of Appeals reversed and the Michigan Supreme Court ultimately ruled that the type of mistake at issue was a mistake of law, with a 30-day period of limitation and not a mutual mistake of fact with a three-year period of limitation; thus refunds weren't required.

Property Tax Litigation and School DistrictsRobert F. Rhoades and Paul M. Wyzgosk, Dickinson Wright, PLLC

Fall 2012 7

The Michigan Council of School Attorneys and MASB have developed this special insert to pro-vide general guidance on the 2011 and 2012 re-forms relating to the Public Employment Relations Act (PERA), the Teachers’ Tenure Act and public employers contributing to employees’ medical insurance benefits, which resulted in the Publicly Funded Health Insurance Contribution Act. The following Frequently Asked Questions were de-veloped to serve as a reference for helping school officials understand the changes that were made to school employment laws in 2011 and 2012. The information provided should not be interpreted or used as a substitute for a legal opinion from retained legal counsel. School officials should consult with their retained legal counsel or other qualified counsel before making a legal decision using this information.

MASB would like to recognize law student Kacie Kefgen for researching and writing the questions and answers for this insert.

PA 54 of 2011 (HB 4152) — Public Employment Relations Act amendmentsWhat does this Act do?

It freezes wages and benefits during contract negotiations to the level provided in the expired collective bargaining agreement until a successor agreement is in place.

Can all of the parties agree to extend the expiration date of a bargaining agreement?

The expiration date of the collective bargaining agreement is the expiration date set by the agreement. The parties may not agree to extend this agreement beyond the expiration date. (MCL 423.215b(4)(a))

What happens if another person is added to the employee’s plan through a birth, marriage, etc.?

If the cost of benefits included in the expired collective bargaining agreement increase, that increased cost must be passed on to the employee and may be deducted from payroll. These increased costs are those associated with higher premiums or illustrated rates from the previous year, and they do not include increased costs of covering

an individual employee as a result of change in marital or dependent status. (MCL 423.215b(4)(b))

Could a district provide compensation for a “lane change” (in-creases in salary based on educational attainment) during the period between an expired contract and a successor agreement?

PA 54 freezes wages and benefits at the level they are when the collective bargaining agreement expires until a successor agreement is reached. The law specifically provides that it applies to “increases that would result from wage step increases.”However, there are conflicting rulings and interpretations of PA 54 in regards to whether or not it covers all forms of increased remuneration. In one case, Administrative Law Judge Doyle O’Connor concluded that because PA 54 does not require a school district to withhold wage increases for lane changes while a contract is expired, a school district violates its duty to bargain by freezing the lane change increases. Less than a month later, in July 2012, Administrative Law Judge Julia Stern concluded in a separate case with similar facts that PA 54 requires a school district to freeze lane change increases. Both cases are being appealed to the Michigan Employment Relations Commission, which will reconcile the conflicting ALJ opinions and rule whether schools may grant lane changes while they are operating under an expired collective bargaining agreement.

Would a longevity bonus be considered an increase in wages or benefits?

The Act prohibits increases in wages and benefits, but it does not speak to bonuses or longevity pay. (See above for discussion of conflicting interpretations of PA 54.) If the Commission determines that PA 54 freezes increases based on educational attainment, the Commission’s decision might hold that all automatic salary increases are suspended during the expiration of a contract.

Does the Act’s restriction on retroactive wage increases prohibit “off-schedule” salary increases in a successor agreement?

An “off-schedule” salary payment doesn’t change the salary schedule in the contract, so it doesn’t change the base from which future salary increases are adjusted. For example, a collective bargaining agreement ratified on Nov. 1 (after expiring on June 30) could include a one-time off-schedule salary payment of a specified amount

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2011-12 Reform Legislation: Frequently Asked Questions

8 Council News

Questions, continued from page 7

for all bargaining unit members for the period of Nov. 1 to the end of the school year.Thus, PA 54 doesn't prevent parties from agreeing in a successor collective bargaining agreement to an off-schedule payment that increases the wage levels of the bargaining unit members that were in place at the expiration of the previous agreement, so long as the agreement doesn't involve any retroactive adjustment of wage levels during the period after the expiration date of a collective bargaining agreement and until a successor collective bargaining agreement is in place.

What would the effect be on new hires?As a public employee in the collective bargaining unit, new hires are subject to the terms and conditions in the expired bargaining agreement. (MCL 423.211)

PA 53 of 2012 (HB 4929) — Public Employment Relations Act amendmentWhat does this Act do?

It prohibits paycheck deductions for union dues and union service fees.

What impact does the Bailey v. Callaghan injunction have on this Act?

District Judge Denise Page Hood ordered a temporary injunction against enforcement of the Act in June 2012. The court found that it was likely that PA 53 would be declared unconstitutional under the Equal Protection Clause because it only targets teacher unions and not all public unions. This ruling is consistent with the ruling in a similar case in Wisconsin where a federal judge granted an injunction to block the effect of Act 10. (Wisconsin Education Association v. Walker)

What deductions are prohibited under PA 53?The Act defines paycheck deductions for union dues or service fees as a contribution to the administration of a labor organization, which is prohibited unless there was a collective bargaining agreement in place as of March 16, 2012 that required such deductions. As collective bargaining agreements expire, the prohibition against the deductions begins for that bargaining unit if the law is found to be enforceable. (MCL 423.210)

Are other deductions allowed?Common payroll deductions that aren't union dues such as loan, charitable and insurance payments aren't prohibited from being collected by a school district and could still be a service a school district provides to its employees.

Must nonunion member employees pay fees to the union?A collective bargaining agreement may stipulate that all employees pay a service fee to the exclusive bargaining representative. (MCL 423.210(1)(c)) This Act simply bars those dues and service fees from being collected by the school district and passed on to the bargaining unit.

Could a ballot referendum reverse this prohibition?No. Article II, Section 9 of the Michigan Constitution prohibits the public’s use of referenda to reverse acts that appropriate funds. PA 53 appropriated $100,000 for an independent audit of each bargaining representative to determine the costs associated with collective bargaining, contract administration and grievance adjustment. (MCL 423.210(4)) However, if the Protect Our Jobs/Proposal 2 passes, it's possible that many of the reforms enacted recently will be impacted. The exact changes that would result are uncertain.

PA 152 of 2011 (SB 7) — The Publicly Funded Health Insurance Contribution ActWhat does this Act do?

It prohibits public employers, including school districts, from contributing more than certain amounts toward employee health benefits.

What is the maximum a school district can pay for employee health benefits?

By default, public employers are subject to a total hard cap amount that they can spend to provide medical benefits to all of their employees. This hard cap amount is calculated by:[$5,500 × (number of employees with single person coverage)]+[($11,000 × (number of employees with individual and spouse coverage)]+[($15,000 × (number of employees with family coverage)] = total hard cap amountThe calculation will be adjusted annually to reflect changes in the health care component of the consumer price index.

Questions, continued on page 8

Fall 2012 9

The employer may utilize the total hard cap amount as it sees fit to provide medical benefits for its employees. For example, it could allocate more than $5,500 per employee with single coverage or less than $15,000 per employee with family coverage, so long as the employer didn't allocate more than the total hard cap to cover all of its employees. (MCL 15.563)Alternatively, the majority of the governing body of a school district could vote to utilize an 80/20 proportional cap to limit its expenditures for employee health benefits. Under this option, a school district couldn't pay for more than 80 percent of the total annual cost of medical benefit plans, including costs of:• premiums; • employer reimbursement of co-pays;• deductibles; and • payments into health savings accounts, flexible

spending accounts or similar accounts used for health care.

The 80 percent restriction doesn't include: • beneficiary-paid copayments; • coinsurance; • deductibles; • other out-of-pocket expenses; • other service-related fees that are assessed to the

coverage beneficiary; or • beneficiary payments into health savings accounts,

flexible spending accounts, or similar accounts used for health care.

Employees, as a group, are required to pay at least 20 percent of the total annual cost of their health plans. The employer may allocate the employees’ contributions toward the costs of the health plans as it sees fit. Depending on how the health plan is developed, this could mean that some individual employees pay more or less than 20 percent of the cost of their individual health care coverage.

When do the provisions of this Act apply?These provisions apply as of Sept. 27, 2011 unless there was a collective bargaining agreement in place at the time that conflicted with either the hard cap or 80/20 proportional cap. In that case, these caps would apply when the bargaining agreement expires. (MCL 15.565)

May a school district opt-out of these requirements?No. Only municipalities and municipal electric utilities may exempt themselves.

How may a school district collect an employee’s contribution toward health care costs?

A school district may deduct an employee’s contribution toward health care from the employee’s pay. Furthermore, the district could condition eligibility for the health benefit upon the employee’s authorization for the employer to make the deduction. (MCL 15.566)

What is the penalty if a school district doesn't comply with these requirements?

Statute requires the Michigan Department of Education to deduct 10 percent from each School Aid payment for the period during which the school district is out of compliance with this Act. (MCL 15.569)

PA 100 of 2011 (HB 4626), PA 101 of 2011 (HB 4625), PA 102 of 2011 (HB 4627), PA 103 of 2011 (HB4628) — Teacher Tenure Reform Bills What do these Acts do?

These bills were signed into law together and were a major reform of the State’s teacher tenure system as well as the evaluation systems used to determine whether teachers and administrators are effective.

How do teachers earn tenure under the revised system?Generally, new teachers will be probationary for the first five years of employment. For probationary teachers working under contract when the Act was enacted in July 2011, the probationary period is four years, instead of five. (MCL 38.81) If a teacher is rated as highly effective on three consecutive year-end performance evaluations and has completed at least four years of employment as a probationary teacher, then the teacher would be considered to have successfully completed the probationary period and be on continuing tenure. Otherwise, a probationary teacher must receive ratings of effective or highly effective in the teacher’s last three evaluations and have completed five years of employment in order to be considered on continuing tenure. (MCL 38.83(b))

Questions, continued on page 10

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10 Council News

Questions, continued from page 9

How has the process changed if a teacher appeals to the Tenure Commission?

PA 101 shortened the timelines of an appeal. An administrative hearing of the Tenure Commission must be held within 45 days (rather than 60 days) after the board’s answer to the claim of appeal was served, unless good cause can be shown by the teacher or the board to extend the deadline. The hearing proceeding must conclude within 75 days (rather than 90 days) of the teacher’s claim of appeal. MCL 38.104.

What must be included in a teacher evaluation system?Every teacher must be evaluated at the end of each year. (MCL 380.1249(2)) These evaluation systems must include: • student growth;• mid-year progress report for probationary teachers

and those teachers rated as minimally effective or ineffective in the last year-end evaluation; and

• classroom observations.(MCL 380.1249(2)(a)) The evaluation systems must rate each teacher as either highly effective, effective, minimally effective or ineffective.Relatedly, personnel decisions for both teachers and administrators must be made on certain factors: • Individual performance, as the majority factor, in-

cluding,—evidence of student growth;—the teacher’s demonstrated pedagogical skills; —the teacher’s classroom management;—the teacher’s rapport with parents, and—the teacher’s attendance and disciplinary record;

• significant, relevant accomplishments and contribu-tions; and

• relevant special training. (MCL 380.1248)Seniority may only be a factor in a personnel decision when comparing educators and all other factors distinguishing the employees from each other are equal. (MCL 380.1248(2))

How much of an evaluation must be based on evidence of student growth?

For 2013-14, at least 25 percent of the evaluation must be based on student growth. For 2014-15, at least 40 percent

of the evaluation must be based on student growth. For 2015-16, at least 50 percent of the evaluation must be based on student growth.

What are the consequences of getting each of the possible effectiveness ratings?

For probationary teachers, three consecutive highly effective ratings on year-end evaluations can lead to a shorter probationary period. (MCL 38.83(b)(2)) If a probationary teacher receives effective or highly effective ratings, that teacher cannot be displaced by a tenured teacher simply because the probationary teacher lacks tenure. (MCL 38.82(a)) In contrast, if a probationary teacher is rated ineffective or minimally effective in any of the teacher’s last three evaluations during the probationary period, the teacher won't have successfully completed the period. MCL 38.83(b)(1).Beginning in the 2015-16 school year, if a student is assigned to be taught by a teacher who has been rated as ineffective on the two most recent annual year-end evaluations, the district must notify the student’s parent or guardian by July 15 that the student is assigned to such a teacher’s classroom. MCL 380.1249a. If a teacher, probationary or tenured, is rated as ineffective on three consecutive annual year-end evaluations, the school district must dismiss the teacher. MCL 380.1249(2)(a).

Can a teacher challenge an evaluation rating?Generally, yes. A district’s performance evaluation system must allow teachers to request a review of the teacher’s evaluation and rating to be done by the district’s superintendent, so long as that teacher isn't in the probationary period and is rated as ineffective in that evaluation. The request for a review must be submitted in writing within 20 days after the teacher is informed of the rating. Upon receipt of the request, the superintendent must review the evaluation and rating and may make any modifications as appropriate based on the review. However, the performance evaluation system doesn't allow for such a review more than twice in a three-school-year period. MCL 380.1249(2)(g).

What can a district do if a teacher isn't performing well?A school board may dismiss a probationary teacher at any time. (MCL 38.83) If a teacher with continuing tenure receives an ineffective or minimally effective rating on a year-end performance evaluation, the district must

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Fall 2012 11

provide the teacher with an individualized development plan and require the teacher to make progress toward the plan goals within a maximum of 180 days. (MCL 38.93) The discharge or demotion of a teacher with continuing tenure can only occur for a reason that isn't arbitrary or capricious. (MCL 38.101) A demotion is a suspension without pay for 15 days or more, a reduction in compensation that is equivalent to 30 days’ pay or a transfer to another position with a lower salary. (MCL 38.74)Beginning in the 2015-2016 school year, if a student is assigned to be taught by a teacher who has been rated as ineffective on the two most recent annual year-end evaluations, the district must notify the student’s parent or guardian by July 15 that the student is assigned to such a teacher’s classroom. MCL 380.1249a. If a teacher, probationary or tenured, is rated as ineffective on three consecutive annual year-end evaluations, the school district must dismiss the teacher. MCL 380.1249(2)(a).

Can a board grant involuntary leaves of absence?Yes, a board may grant a leave of absence for physical or mental disability either at the request of the employee or without receiving a request. This leave period can't last more than a year, but it may be renewed by the board. (MCL 38.112(1))

What can a district do to ensure that a teacher is fit for service after returning from a leave of absence?

The board may require a teacher who's on involuntary leave due to physical or mental disability to provide verification that the teacher is able to perform essential job functions. (MCL 38.112(2))

When must the district notify a probationary teacher that it won't be hiring the teacher back next year?

Before the end of the school year, the school board must provide the probationary teacher with a written statement indicating whether or not the teacher’s work has been effective. The board must give the probationary teacher written notice at lease 15 days before the end of the school year if the contract won't be continued with that teacher. However, a school board may dismiss a probationary teacher at any time. (MCL 38.83)A collective bargaining agreement may require a district to provide more advanced notice.

Can a district withhold pay from a teacher facing criminal charges?

Yes, if criminal charges have been filed against a teacher, the board may place the teacher’s salary in escrow so long as it provides: notice to the teacher; an explanation of the employer’s evidence; and an opportunity for the teacher to respond. (MCL 38.103(3))

Must administrators be evaluated too?Yes. Administrator evaluations must include student growth and other factors, depending on the administrator’s position. (MCL 380.1249(3))

What are the new prohibited subjects of bargaining?PA 103 added items that may not be bargained under the Public Employment Relations Act. The new items are: • teacher placement; • policies for personnel decisions made when an em-

ployer eliminates a position, or recalls or hires after a position has been eliminated;

• an employer’s performance evaluation system; • a policy for discharging or disciplining employees

subject to the tenure law, and the discharge or disci-pline of an individual employee;

• classroom observation;• performance-based method of compensation (merit

pay); and• parental notification of ineffective teachers.MCL 423.215(3)

What will happen to these reforms if the Protect Our Jobs ballot measure passes?

It's safe to say that there's a strong potential that many of the reforms outlined above could change. The degree and scope of change, however, is unlikely to be worked out until the courts determine how far reaching the ballot measure should be.

Questions, continued from page 10

12 Council News

MCSA School Law Fall Conference Compliance in a Time of Unprecedented Change

7:30 a.m. Registration/Continental Breakfast

8 a.m. Welcome and Overview of Program MichelleCrockett,MCSAPresident Miller,Canfield,Paddock&Stone,PLC

8:05 a.m. Government Relations Update: Election Aftermath and Looking Forward to the Lame Duck Session DonWotruba MichiganAssociationofSchoolBoards

8:35 a.m. What’s New Under the “New” Tenure Act: Recent Tenure Commission Decisions and other Developing Issues GaryCollins Collins&Blaha,PC

9:40 a.m. Break

9:55 a.m. Negotiating Contracts after the 2011 PERA Amendments: Guidance from Recent MERC Decisions and other Bargaining Strategies JohnGierak ClarkHill,PLC

11 a.m. Lunch

Noon Panel Discussion: The Legal, Labor and Public Policy Implications of the New Charter Schools Laws MargaretHackett,ThrunLawFirm,PC ErrolGoldman,Goldman&Associates,PLC JoeUrban,ClarkHill,PLC

1 p.m. Legal Issues to Consider when Integrating Wi-Fi Mobile Devices and other Electronic Gadgets into the Curriculum LisaSwem JenniferJohnston ThrunLawFirm,PC

2 p.m. Break

2:15 p.m. Complying with Public Meetings and Public Records Law in the Age of Skype, Texting and Social Networking BradBanasik MichiganAssociationofSchoolBoards

3:15 p.m. Conclusion and Adjourn

In 2011, the Michigan Legislature passed an unprecedented number of laws that

resulted in substantial changes to the Teachers’ Tenure Act, the Public Employ-ment Relations Act and the Revised School Code. After one year, school districts are beginning to face unfair labor practice charges, tenure appeals and lawsuits, as school boards and administrators attempt to comply with the 2011 amendments when bargaining, disciplining teachers and mak-ing decisions involving layoffs or recalls. The 2012 edition of the MCSA Fall Con-ference includes two early bird sessions at MASB’s Fall Conference that focus on recent legal decisions inter-

preting the 2011 amendments, as well as include discussions on other legal issues currently confronting school officials. MCSA President Michelle Crockett invites you to attend this one-of-kind opportunity to learn from the school law experts about the latest updates and details regarding complying with the Teachers’ Tenure Act, the Public Employment Relations Act, the Revised School Code and other school-related laws.School law experts from Clark Hill, Collins & Blaha, the Thrun Law Firm and MASB

offer information, ideas and insight on a variety of topics while delivering the following presentations:

2012 Fall Conference

Nov. 8, 2012 Agenda

Register online at www .masb .org