Saturday, August 04, 2012

Michigan Supreme Court Decides to Allow Referendum on Public Act 4 on November Ballot

High court's decision to put emergency manager repeal on ballot touches off power struggle

August 4, 2012
By Dawson Bell, Paul Egan, Suzette Hackney, Chastity Pratt Dawsey and Matt Helms
Detroit Free Press Staff Writers

LANSING -- The imminent suspension of Michigan's controversial emergency manager law touched off a flurry of bold and contradictory claims Friday about the status of cities and schools already operating under financial emergencies, including the state's two largest, the City of Detroit and its public school system.

Some opponents of the law -- victorious in court Friday when the Supreme Court ordered a referendum on the law be placed on the November ballot -- said state-appointed emergency managers should pack their bags and leave.

Detroit school board President LaMar Lemmons II said he expects the Detroit board, virtually powerless under the emergency manager law, to cancel emergency manager Roy Roberts' plan to downsize the district as soon as a state elections panel meets to certify the referendum on Public Act 4. The meeting is expected early next week.

Officials in the administrations of Gov. Rick Snyder and Detroit Mayor Dave Bing, among others, said an emergency manager law in place before changes were made in 2011 will go back into effect and allow cities and schools with emergency managers -- or consent agreements aimed at avoiding the appointment of one -- to proceed more or less as they have.

Amid Friday's sniping, one thing was clear: All sides expect to be back in court soon to fight about it more.

What that means for day-to-day operations in the affected cities and schools is unclear.

Four cities (Benton Harbor, Ecorse, Flint and Pontiac) and three school districts (Detroit, Highland Park and Muskegon Heights) have appointed managers. Three more cities (Detroit, Inkster and River Rouge) operate under consent agreements with the state.

Lemmons argued that suspension of Public Act 4 means that there is no emergency manager law -- therefore no emergency mangers or emergency financial managers (the job description under the old law) -- until voters decide in November.

He contends that after the issue is certified for the ballot, the school board should be in charge and that Roberts -- and all emergency managers statewide -- must step down.

"We expect a court battle over Public Act 72 (the 1990 version of the law) -- that's the first court battle," Lemmons said.

Roberts signaled his disagreement with Lemmons by issuing a notice to all Detroit Public Schools employees, through his chief of staff, Kevin Smith, that they are to answer to Roberts, not the board.

"Mr. Roberts has directed that all staff continue with your duties without interruption in conduct of the affairs of this district unless and until directed by him otherwise," a portion of the letter read in bold, capital letters. "The Board of Education has no authority to direct DPS personnel to take any actions to the contrary."

Even if Roberts' interpretation is correct, suspension of the law will resurrect some of the school board's authority. Under the old version of the emergency manager law, the one Snyder and others say will go back into effect, the power of emergency managers assigned to school districts was limited to financial affairs.

Lemmons said the board's first decision will be a vote to repeal the statewide Education Achievement Authority of Michigan, canceling the transfer of 15 schools from DPS to the EAA in the fall.

State Treasurer Andy Dillon, at a briefing with reporters in Lansing, said he doesn't believe the school board would have that authority, but he conceded that the court's decision to order the referendum had touched off considerable confusion.

Dillon and state Superintendent Michael Flanagan said they plan to reappoint each of the emergency managers, with the exception of Michael Brown in Flint. He is a former mayor and therefore ineligible to serve under the old version of the law.

But Dillon, and Snyder himself in a statement released earlier in the day, said the court's ruling will set back progress in dealing with the underlying financial crises that led to the appointment of managers.

Dillon said Detroit should be able to proceed with the refinancing of $80 million in bonds, but he said bond markets are likely to look pessimistically at the development.

Bing said the city's financial stability agreement with the state remains in effect and "is still a critical tool to help fiscally stabilize the city."

Bing said the city is bound by the consent agreement to continue to restructure city government and that the recent imposition of new labor agreements remain valid. The mayor said the nine-member financial advisory board will remain intact and will continue its oversight role of city finances.

"The bottom line is the city's fiscal challenges remain, and Public Act 4 was one tool to help us," Bing said in statement. "Without Public Act 4, we will continue to execute our fiscal restructuring plan."

Others, including the city's union leaders, said key components of the restructuring plan, most notably concession contracts imposed by the mayor and financial advisory board, are voided.

Al Garrett, president of the American Federation of State, County and Municipal Employees Council 25, the city's largest union, said union lawyers were trying to determine whether the imposed employment terms would be tossed out.

"That's our hope," Garrett said. "We'll be meeting with attorneys to find out legally where it puts us."

And Donato Iorio, a lawyer for the Detroit Police Officers Association, which represents about 2,000 officers, said he believes the city's recent pay and benefits cuts and work-rule changes imposed on cops, firefighters and other city workers are "null and void."

But even opponents of the law had not reached a consensus.

John Philo, legal director of the Sugar Law Center for Economic and Social Justice in Detroit, a co-counsel for Stand Up for Democracy, the group responsible for collecting petition signatures to force the referendum on Public Act 4, said actions taken so far in Detroit may stand because they were done under a law valid at the time.

"But going forward, anything under the consent agreement that is ostensibly under Public Act 4 can't be taken -- anything that's clearly a Public Act 4 power is suspended," Philo said. "It raises serious questions about any continuing powers for the financial advisory board and some of the powers granted to the program management director."

Detroit City Council President Pro Tem Gary Brown, a proponent of the city's financial stability agreement, said the questions about what powers remain under the consent deal may take time to untangle -- particularly the parts related to the city's ability to impose work rules and pay cuts on unions, Public Act 4's heaviest hammer.

"In the big scheme of things, it really doesn't matter," Brown said. "We've still got a lot to fix whether we have that tool or not."

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Contact Dawson Bell: 517-372-8661 or dbell@freepress.com

More Details: Highlights of the court decision

• The Stand up for Democracy ballot initiative to repeal the state’s emergency manager law will appear on the Nov. 6 ballot.

• The law will be suspended pending the outcome of the public vote as soon as the Board of State Canvassers follows the high court’s order to put the measure on the ballot.

• A 2002 ruling from Bloomfield Charter Township v. Oakland County Clerk that ballot petitions may be certified if they “substantially” comply with the requirements of state law is overturned. Petitions must fully comply on details such as font size, a majority of the court ruled.

More Details: What's next

• The Board of State Canvassers must meet — likely next week — to certify the ballot petition to repeal the emergency manager law.

• Once the ballot question is certified, the emergency manager law, Public Act 4, will be suspended pending the Nov. 6 election. State officials say all decisions made under the law to date will stand and emergency managers will revert to powers under the former emergency manager law from 1990. Others disagree.

• LaMar Lemmons II, president of the Detroit school board, said the board will vote to repeal the statewide Education Achievement Authority of Michigan approved under the law and cancel the transfer of 15 schools from Detroit Public Schools to the authority in the fall.

• City of Detroit unions say they will use the decision to fight wage cuts imposed by a new city management structure that was established in a consent agreement struck under the law.


August 4, 2012 at 1:00 am

Republican-backed justice decided emergency manager case

Mary Beth Kelly votes with Democrats to put EM repeal on ballot

By Karen Bouffard
Detroit News Lansing Bureau

Lansing— Republican-backed Justice Mary Beth Kelly cast the deciding vote in the Supreme Court's emergency manager ruling Friday and could end up paying a political price, experts said Friday.

In a ruling that surprised many on both sides of the issue, Kelly sided with the panel's three Democrats in voting to place petitions on the ballot to repeal a law that was passed by the Republican-controlled Legislature at the bidding of Republican Gov. Rick Snyder.

She also sided with three other Republican justices in overturning "substantial compliance" as the proper standard for reviewing such cases.

"She may take some heat from Republicans, but I think it's healthy for Supreme Court justices," said Republican activist Colleen Pero, a Laignsburg lawyer who is an expert on state supreme courts. "(This) underlines the whole difference between judicial and political conservatives.

"I think these Republican justices are trying to determine what the law requires them to do and not what the party might like them to do."

Craig Ruff, a senior fellow with Public Sector Consultants in Lansing, said it's rare for a state Supreme Court justice to break ranks with other justices nominated by the same political party.

He said Michigan is unique in that justices of the High Court are nonpartisan, but are nominated by the Republican and Democratic parties.

"It's going to get (Mary Beth Kelly) in trouble with the Republican Party," Ruff said. "We saw that with (retired Republican-nominated) Justice Betty Weaver, who at least in her last term was voting more often with Democratic justices than Republican justices.

"(Weaver) became persona non grata in the Republican Party."

Snyder, who signed the emergency manager law, Public Act 4, into law in 2011, said suspension of the statute would make finding solutions to fiscal problems in municipalities and school districts more difficult.

"Suspending the law limits the state's ability to offer early intervention and assistance, and eliminates important tools that emergency managers need to address financial emergencies as quickly and efficiently as possible," Snyder said in a statement.

Michigan has seven emergency managers operating with the tough, new powers granted under the law.

Enactment of the law sparked bitter protests statewide between proponents who say it's needed to help fix the finances of ailing school districts and municipalities and opponents who say the law strips citizens of their voting rights and voids union contracts.

The Board of State Canvassers voted 2-2 on whether to put the question on the ballot after Stand Up for Democracy gathered 203,238 valid signatures, roughly 40,000 more than needed.

Their opponents, Citizens for Fiscal Responsibility, challenged the petitions over the size of the lettering used on the ballots.

At the Supreme Court, Justices Michael Cavanagh, Marilyn Kelly and Diane Hathaway supported the "substantial compliance" standard, and said the issue should go on the ballot. Justice Mary Beth Kelly, the lead writer on the opinion, said the standard should be "actual" compliance, but the petitions met that stricter standard.

Chief Justice Robert Young and Justices Stephen Markman and Brian Zahra ruled against the petitions. They were joined by Mary Beth Kelly in favor of overturning the standard of "substantial" compliance.

Mark Brewer, the Michigan Democratic Party chairman, said the high court made "the correct decision."

"It's a victory for people and a victory for democracy that that's going to go on the ballot," he said.

Detroiter Cynthia Johnson was among the hundreds of grassroots activists who had gathered signatures for the initiative. She said she was elated by the high court's decision.

"It never should have gone this far," Johnson said. "Getting those signatures, that was no easy feat."

Officials at the Sugar Law Center in Detroit, who have challenged the constitutionality of the law, said they were pleased.

"The will of hundreds of thousands of citizens won out over political wrangling, and now the voters will have their say," John Philo, the center's legal director, said in a statement.

kbouffard@detnews.com
(517) 371-3660

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