By Frank Guido, General Counsel

Difficult economic times often result in drastic measures being taken to achieve financial stability, whether dealing with personal matters or governmental affairs. We have been flooded at POAM with repeated inquiry as to the legal propriety of political subdivisions entering into joint operating agreements for the performance of services, specifically law enforcement and dispatch functions.

This is not a novel occurrence. In the early 1990's, during another wave of economic pressure, a number of governmental entities contemplated merger of functions in an effort to curb financial shortfall caused by dwindling revenues. For a variety of reasons, usually driven by political scrutiny, most efforts failed to materialize. While on paper an economic analysis may show the financial benefit of merged services, there is the political reality of convincing citizens of a community that they must now share resources, personnel and even facilities with other governmental entities. That reality rarely yields warm and fuzzy acceptance of a "Socialist" style sharing by those citizens who will be affected by joint operations.

There are many state statutes which overlap, empowering governmental entities to join together to operate facilities and perform services across geo-political boundaries. One of the earliest statutory enactments is the Inter-Governmental Contracts Between Municipal Corporations Act, P.A. 35 of 1951, as amended, MCL 124.1, et seq. That statutory provision authorizes municipal corporations, which includes counties, cities, townships and villages, to join with one another through contractual agreement, to own, operate and perform either jointly or by one or more of the entities, any service which "each would have the power to own, operate or perform separately."

While the statute makes no direct reference to law enforcement services, there are no judicial decisions prohibiting application of the statute in a law enforcement setting. In fact, a 1989 Attorney General's opinion asserted that the statute could be applied to a law enforcement task force amongst various communities. The statute, through amendment, has been geared toward joint operating agreements associated with self-insurance pools and cable television franchising.

The statute makes no reference to rights of public employees and labor organizations pursuant to the Public Employment Relations Act. As a result, pursuant to the longstanding judicial decision in Local 1383 of International Association of Firefighters v City of Warren, 411 Mich 642 (1981), the Public Employment Relations Act would be deemed to supersede any conflicting legislation, including the inter-governmental contracts between municipalities statute. Because PERA rights prevail, any public employer contemplating a joint operating agreement pursuant to the statute, must give proper notice to the labor organization of its intent, which creates, at a minimum, the right to bargain the impact of such action and, in the event a municipality is relinquishing its function, the right to bargain the decision in the first instance. The level of bargaining would involve consideration of whether the employer could undertake the action and the impact on existing employees as to their job retention or transfer, including impact on wages, hours and other terms and conditions of employment.

In 1967, two statutory enactments went into effect. The Urban Cooperation Act of 1967, Public Acts of 1967, Ex. Sess. No. 7, MCL 124.501, et seq.; and the Transfer of Functions and Responsibilities Act, Public Acts of 1967, Ex. Sess. No. 8, MCL 124.531, et seq. The Urban Cooperation Act also authorizes municipalities to exercise joint authority with each other, including "any power, privilege, or authority that the agencies share in common or that each might exercise separately." Procedurally, the governmental entities must enter into a contract to implement the joint authority. The contractual provisions must establish the procedure and funding of the operation, including distinct provisions regarding the manner of employing personnel.

While this statute is also devoid of any express reference to PERA, the statute does make direct reference that to the extent employees are necessary for the operation of the undertaking created by the interlocal agreement, they shall be transferred from the contracting authorities. The statute mandates that they be given seniority credits, including sick leave, vacation insurance and pension credits in accordance with the labor agreements from the acquired systems. Those rights also pertain to pension provisions.

This particular statute focuses on directing the political subdivision (which assumes the primary responsibilities under the interlocal agreement) to absorb the employees and assume obligations with regard to their wages, hours, terms and conditions of employment. The statute mandates that individuals who are transferred shall not, by reason of the transfer, be placed in any worse position with respect to Workers' Compensation, pension, seniority, wages, sick leave, vacation, health and welfare or any other benefits the employee previously enjoyed as an employee of the acquired system.

It is apparent that despite the absence of reference to the Public Employment Relations Act, provisions were established in the statute which parallel rights emanating from PERA. The statute provides that one or more parties to the agreement may, through such agreement, provide all or part of the services. The statute also allows for a separate legal or administrative entity to be created to administer or execute the agreement with the governing body of each public agency being empowered to appoint a member to a commission, board or council constituted pursuant to the agreement. The statute specifically provides, however, that to the extent the statute conflicts with other statutory provisions pertaining to joint or cooperative agreements, that the provisions of the other statute shall control.

The Transfer of Functions and Responsibilities Act, which went into effect on the same day as the Urban Cooperation Act of 1967, was enacted to allow and regulate transfers of functions and responsibilities between governmental entities. This statute allows two or more political subdivisions to enter into a contract with each other to provide for the transfer of functions or responsibilities to one another or any combination thereof, upon the consent of each political subdivision involved. To that end, this particular statute has emphasis on one political subdivision taking over the responsibilities of another political subdivision through an agreement for the performance of functions and responsibilities. The contract entered into, as with the other similar statutes, must provide for the procedure and financing of the undertaking. As with the Urban Cooperation Act of 1967, the statute provides a mechanism for the transferring of employees from the acquired system with protection as to all rights and benefits the employees previously received from the acquired system. Once again, the statute makes no reference to PERA-based rights, despite the parallel in provisions. As a result, assertion of PERA-based rights by the Union on behalf of employees would continue with regard to both the decision and impact of entering into a joint operating agreement.

The most recent of the statutory enactments governing joint operating agreements is the Municipal Emergency Services Act, P.A. 57 of 1988, as amended, MCLA 124.601 et seq. This statutory enactment allows two or more municipalities defined as a county, city, village or township, to incorporate an authority for the purpose of providing emergency services. The authority is created by articles of incorporation as adopted by the legislative body of each incorporating municipality. The statutory enactment recognizes creation of a regional law enforcement authority; with the authority becoming the "body corporate" with powers similar to a municipality's. Laws of the state which apply to a municipality that is part of the authority continue to be applied to the municipality and the authority. The authority has power to enter into contracts with the incorporating municipalities and to provide emergency services to the constituent municipalities. Any pre-existing contract between, for example, a sheriff's department and a municipality, would remain in effect until its expiration.

The authority has the power to hire employees; however, pursuant to section 10 of the Act, a detailed provision exists pertaining to employees and PERA rights. If duties of existing employees are transferred to an authority, the employees must be given comparable positions with the emergency service established by the authority. The employees maintain their seniority status and all benefit rights of the position they held prior to transfer. If, however, sufficient positions are not available, employees are to be laid off on the basis of least seniority. The layoff list (for recall purposes) does not need to be honored after three years.

The authority is treated as an employer under PERA with the duty to bargain collectively. The authority has to assume a collective bargaining agreement currently in effect for the remainder of its term. In addition, the authority has to recognize the existing labor representative for future bargaining purposes. The law is silent concerning the possibility of several different unions being involved, however, the statute will likely be read consistent with PERA such that an existing union representing a minority number of employees is going to be subject to challenge as an ongoing representative, forcing an election for a new representative for the entire group.

The distinction between the Municipal Emergency Services Act and other legislative enactments providing for joint operating agreements is the emphasis on creation of a separate authority. While the previous legislative enactments, which remain in effect, are geared more toward one contracting municipality taking over the operation for the joint group, or, a mix of functions amongst a joint group of municipalities, the Municipal Emergency Services Act is geared more toward the creation of a separate regional authority.

While there are other statutory provisions providing for joint operating agreements pertaining to a variety of public services (recreation, 911, cable TV, insurance pooling), the interplay of the statutory provisions do not create a reduction in PERA-based rights of employees. To that end, the role of the union on behalf of employees is to ensure that where an intent to enter into a joint operating agreement under one of the many statutes exists, that both the decision and impact of such occurrence are fully bargained with protection to existing employees. This is especially true in the scenario under the Municipal Emergency Services Act, where a separate authority as a body politic is created.

At POAM, we are monitoring the actions of various governmental entities and their sometimes knee jerk reaction to financial difficulties. Our monitoring will include providing direction to the membership as to the proper course of action to protect their wages, hours and terms and conditions of employment. The membership, however, can help itself by becoming politically active in local affairs. Talk to your business agent about what can be done politically at your local level. Also, speak to Ed Jacques at POAM as to the variety of ways in which you can help fund a political action account.

That's my report for this edition … generally speaking …