The meeting of the Civil Service Commission was opened by Civil Service Commission Chairperson Susan Grimes Munsell at 10:15 a.m. in Conference Room A, Lower Level, Capitol Commons Center, 400 S. Pine Street, Lansing, Michigan.

Chairperson Munsell introduced and welcomed James D. Farrell, the new State Personnel Director who was appointed in October 2004. The Chairperson also acknowledged and thanked Chief Deputy Director Janet McClelland, who acted as the State Personnel Director after John Lopez' retirement in December 2003, for her diligent and steady leadership during the interim period. Darby Schlagheck was introduced as the newly-appointed executive secretary to the Commission and the State Personnel Director. Chairperson Munsell expressed her appreciation to Michele Cowgill for her excellent service while serving as the acting secretary to the Commission over the past year.

Chairperson Munsell introduced Susan Zurvalec, Chairperson of the Employment Relations Board (ERB) and ERB member Bill Braman who were in attendance.

On motion duly made and supported, the Commission approved the minutes of July 22, 2004.

B.

Director's Report: The Commission received the following report from State Personnel Director James Farrell.

Unclassified Position Report: Civil Service Commission Rules require the State Personnel Director to report on the establishment or abolition of positions in the unclassified service.

The Department of Attorney General submitted a request to establish an unclassified position to serve as the Director of External Communications. The position of Senior Research Analyst was abolished. This request was approved on July 23, 2004.

The Department of Natural Resources submitted a request to establish an unclassified position to serve as the Chief of the Office of Communications. The position of Resource Management Deputy was abolished. This request was approved on September 7, 2004.

The Department of Treasury submitted a request to establish an unclassified position to serve as Deputy Treasurer of Programs. The position of the Legislative Liaison was abolished. The request was approved on November 17, 2004.

Regulations: Civil Service Commission Rules require the State Personnel Director to report to the Commission on the promulgation of regulations, which are issued to implement Commission rules. Since the last Commission meeting, the following regulations were revised and reissued.

Regulation 1.03, Investigating Reports of Discriminatory Harassment
Effective: August 1, 2004

Summary: The regulation has been amended to include "sexual orientation" in the list of improper discrimination factors and incorporates the definitions of "genetic information" and "sexual orientation" as provided in Chapter 9 of the Civil Service Commission Rules. In addition, the regulation now reflects current rule language.

Regulation 2.10, Drug Testing Complaints by Non-Employees
Effective: August 1, 2004

Summary: The regulation establishes procedures for the filing and review of complaints regarding pre-employment drug testing of new hires. These procedures do not apply to those who are already classified employees, and who may file complaints under the appropriate existing grievance procedures for classified employees.

Regulation 5.02, Premium Payment of Overtime, On-Call Compensation, and Callback Compensation
Effective: October 24, 2004

Summary: The regulation has been revised to reflect the change in the highest eligible employee rate in Standard B.2.b.(3)(b) resulting from the general wage increase effective October 1, 2004.

Premium Pay Approval

Extracurricular premium pay was approved for the 2004-05 school year for nineteen positions in the Department of Education's School for the Deaf and Blind, as provided for in the Letters of Understanding approved by the Civil Service Commission for AFSCME and UAW agreements.

MI HR Service Center

State Personnel Director Farrell also informed the Commission that the HR Optimization Project has been going well and that all departments were on-board as of November 8, 2004. The project was delivered ahead of schedule and under budget and is working very well.

Chairperson Munsell noted there was no unfinished business.

Carol Vargovich, Budget and Financial Services Division, Department of Civil Service, briefed the Commission on the Department of Civil Service Budget. Ms. Vargovich summarized the Department's financial activity for fiscal year 2004 and reported a budget savings of $455,000 for the fiscal year. The Constitution requires the Civil Service Commission to certify the total aggregate payroll of the classified service for the preceding year. Ms. Vargovich reported that the aggregate payroll for the classified state service from October 1, 2003, through September 30, 2004, is $3,758,330,190. One percent of the payroll is $37,583,301, and is the funding base for fiscal year 2005.

Ms. Vargovich also reported that the appropriation for fiscal year 2005 has been enacted with a $3,012,863 increase from the budget approved by the Commission on December 11, 2003.

The Department increased its budget for funding associated with the MI HR Service Center, underestimates in employee salary and wage economics, CS&M savings, retirement rate savings, and banked leave time. Ms. Vargovich highlighted the budget proposal for fiscal year 2006 totaling $37,466,700, along with a recommended staffing level of 241.5 FTEs. This is a continuation budget of the current fiscal year 2005 appropriation, along with two revenue adjustments and an estimated amount of $500,000 for salary and wage economics. Revenue adjustments include an increase of $300,000 for additional participation in Civil Service training programs and an increase of $1,520,000 for user charges related to the MI HR Service Center.

The Civil Service Commission, in fulfillment of the Constitutional requirement to certify the aggregate payroll of the classified service for the preceding fiscal year, certifies the payroll of $3,758,330,190, as recorded in the State's Michigan Administrative Information Network as of November 20, 2004, for the fiscal period October 1, 2003, to September 30, 2004.

On motion duly made and supported, the Commission approved Resolution E-1A, Certification of the Aggregate Payroll for FY 2004.

Consistent with its constitutional authority, and recognizing the funding requirements for the MI HR Service Center, employee economics, CS&M reductions, retirement rate savings, and banked leave time savings, the Civil Service Commission hereby increases the previously approved FY 2004-2005 budget for the Department of Civil Service by $3,012,863.

The State Personnel Director is authorized to take any action necessary to comply with the provisions of this Resolution so that the estimated revenues correspond with the estimated expenditures of the Department of Civil Service as specified for FY 2004-2005.

On motion duly made and supported, the Commission approved Resolution E-1B, Budget Resolution for FY 2004-2005.

The Civil Service Commission approves the Fiscal Year 2006 budget proposal for the Department of Civil Service totaling $37,466,700.

On motion duly made and supported, the Commission approved Resolution E-1C, Budget for FY 2006.

Dan McLellan, General Council for the Commission, presented information and staff recommendations on the following five Memoranda of Understanding which had received interim approval by Acting State Personnel Director Janet McClelland and Chairperson Munsell, and are now before the Commission for approval. Mr. McLellan noted that without approval of these memoranda, interim approval will expire at the end of the Commission meeting.

• Durable Medical Equipment (DME) network with no co-pay.
• Change in the Coordinated Care Management (CCM) program.
• Addition of a third-tier drug program (a $30 co-pay for non-preferred, brand name drugs for both the retail and mail order drug plans).
• Elimination of the 90-day supply at a retail pharmacy with a one-month co-pay.
  

On motion duly made and supported, the Commission confirmed the interim approval granted for E-2, Inter-Agency Memorandum of Understanding between OSE and DCS regarding Retiree Insurances. (Commissioner Pitz abstained from the vote, as a state government retiree.)

On motion duly made and supported, the Commission confirmed the interim approval granted for E-3, Letter of Understanding between OSE and MSEA regarding Overtime Eligibility Codes for the Safety & Regulatory Unit.

The OSE and the SEIU Local 517-M (MPE) submitted two Letters of Understanding to amend the current collective bargaining agreement for the Scientific & Engineering Unit. The Letters of Understanding amend Article 13, Transfers and Article 18, Relocation Expense Reimbursement.

On motion duly made and supported, the Commission confirmed the interim approval granted for E-4, Letters of Understanding between OSE and MPE (Articles 13 & 18) regarding Transfer and Relocation Expense Reimburse-ment in the Scientific & Engineering Unit.

The OSE and the Michigan Public Employees, SEIU Local 517-M (MPE) submitted a Letter of Understanding to amend the current collective bargaining agreement for the Technical Unit. The Letter of Understanding extends the number of hours that a State Worker 4 and co-op employee may work.

On motion duly made and supported, the Commission confirmed the interim approval granted for E-5, Letter of Understanding between OSE and MPE (Technical Unit) regarding State Workers and Co-Op Positions.

The OSE and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) submitted various Letters of Understanding to amend the current collective bargaining agreement for the Human Services Unit and the Administrative Support Unit. Mr. McLellan noted that as part of negotiations included in the upcoming agenda items, the UAW also negotiated with the OSE over the question of concessions for FY '05. An agreement was reached that would have started the banked leave time prior to the date of today's Commission meeting, so the UAW and the OSE requested (and were granted) interim approval. Mr. McLellan pointed out that in all the other cases, there will not be a separate Resolution for the FY '05 concessions and the remaining new collective bargaining agreements beginning FY '06 because banked leave time for FY '05 begins after today's meeting.

• 3.2 hours of banked leave time for 26 pay periods.
• A no-layoff guarantee.
• Letters of Understanding regarding committees to discuss:
  • Registered Nurses
  • State Contracting
  • Caseload Review
• Letter of Understanding regarding changing limited-term appointments to indefinite after 4,160 hours.
• Letter of Understanding regarding mandatory overtime for Registered Nurses in the Department of Corrections.
  

On motion duly made and supported, the Commission confirmed the interim approval granted for E-6, Letters of Understanding Between OSE and UAW Regarding Concessions for FY '05. (Commissioner Lewand abstained from the vote.)

UAW Collective Bargaining Agreement: A proposed primary collective bargaining agreement has been reached between the OSE and the UAW, effective for non-economic provisions for the period of January 1, 2005, through December 31, 2007, and for economic provisions for the period of October 1, 2005, through September 30, 2008. Staff has reviewed the collective bargaining agreements and finds nothing that they believe would violate the Commission rules on prohibited subjects of bargaining.

In addition, Mr. McLellan noted that all the existing secondary collective bargaining agreements under the primary agreements will expire on December 31, 2004, unless extended. As of the date of the Commission meeting, the effected parties have not submitted the secondary agreements for extension. The Commission has not amended its rules on prohibited subjects of bargaining since approving all the current secondary collective bargaining units, and it was recommended that the Commission delegate its authority to the State Personnel Director to temporarily extend the secondary collective bargaining agreements (if requested by the effected parties).

Upon motion duly made and supported, the Commission approved E-7A, UAW Collective Bargaining Agreement and delegated the authority to temporarily extend the expiration date of the existing secondary collective bargaining agreements (if requested by the effected parties prior to December 31, 2004) to the State Personnel Director.

David Fink, Director, Office of the State Employer, noted that the OSE was delighted that they were able to reach complete voluntary agreements with all of the state employee unions, including concession packages. Mr. Fink applauded state employees for their willingness and understanding throughout the difficult negotiation process, as well as their sacrifices.

Chairperson Munsell acknowledged that it has been a difficult situation in which to negotiate with the economics that the OSE currently has to take into consideration.

On motion duly made and supported, the Commission approved E-7A, Collective Bargaining Agreement - UAW. (Commissioner Lewand abstained from the vote.)

Collective Bargaining Agreement - MSEA: Mr. McLellan presented the proposed collective bargaining agreement and noted that staff has reviewed the agreement for violations of the Commission's rules on prohibited subjects of bargaining and has identified the following problem for the Commission's consideration.

An arbitrator had previously reversed the lay-off of fire safety inspectors in the Department of Corrections as a violation of Article 52 of the collective bargaining agreement that provides for the integrity of the bargaining unit. The Department of Corrections filed a complaint concerning the arbitrator's decision and, in CSC 2004-002, the Commission vacated the arbitrator's decision because it violated Commission rules on prohibited subjects of bargaining. The MSEA appealed to the Ingham County Circuit Court, and last week Judge Collette affirmed the decision of the Commission.

In the proposed MSEA collective bargaining agreement, the parties added new language to Article 52(A) regarding the integrity of the bargaining unit. Staff and the Attorney General's office have determined that the proposed new language in Article 52(A) could be interpreted by an arbitrator or a court to reverse Judge Collette's decision to uphold the Commission's decision in CSC 2004-002. Since the proposed new language could be interpreted to change the Commission's interpretation of its rules governing prohibited subjects of bargaining, the proposed new language itself violates those rules.

Both staff and the Attorney General's office believe the only solution to the problem is to delete, in its entirety, the proposed amendatory language to Article 52(A), leaving the Integrity of the Bargaining Unit section, the Civil Service Commission decision, and Judge Collette's decision unchanged.

Jack Yoak, President of MSEA, addressed the Commission concerning the first sentence in Article 52(A) which says …"The Employer recognizes that the integrity of the Bargaining Unit is of significant concern to MSEA." Mr. Yoak feels that the employer showed that at the bargaining table, but that the Civil Service Commission does not appear to have that same level of understanding.

David Fink commented that he shares the concerns expressed by the representatives of MSEA. The OSE supports the contract as agreed to, and Mr. Fink asked that the contract be approved in the form that it was agreed to by the parties.

Commissioner Pitz clarified that the Commission is not voting on the contract, but rather voting on Civil Service policy and rules, which will be what the Commission will have to consider in this vote. He indicated he does not feel that this in any way is a reflection on the collective bargaining process. The collective bargaining system may be imperfect or there may have been some lack of coordination that occurred in the thought process while putting together the contract, but there are still Civil Service rules and the Michigan Constitution that the Commission has to follow when making decisions on issues before them.

Commissioner Lewand proposed that the issue be taken back to the bargaining table for further discussion in light of the court decision and the very tricky legal issues that counsel has briefed the Commission on.

On motion duly made and supported, the Commission approved E-7B, Collective Bargaining Agreement - MSEA. (Commissioner Lewand opposed for the reason noted above.)

Mr. Fink invited the MSEA to join the OSE for further discussions to attempt to design a new Letter of Understanding to address the issues of concern and intentions of the parties, in a manner acceptable to and consistent with, the constitutional powers and rules of the Commission.

Chairperson Munsell called for a ten minute intermission. The meeting reconvened at approximately 11:25 a.m.

C.

On motion duly made and supported, the Commission approved E-7C, Collective Bargaining Agreement - AFSCM

Mary Ellen Gurewitz, attorney for the MPE, SEIU Local 517-M, addressed the Commission. Ms. Guerwitz, on behalf of the MPE, presented the position that the voluntary authorization of payroll deduction of contributions to a union PAC is not a prohibited political assessment and is not, therefore, a prohibited subject of bargaining.

Commissioner Lewand thanked Ms. Guerwitz for her thorough review of the issues, and commented that because of the legal issues, he appreciated MPE's withdrawal of the issue so the Commission can consider separately the question of whether the PAC check-offs are appropriate. He indicated that the Commission is in agreement that all parties involved need more information, analysis, and thought on the issue before making a decision.

David Fink addressed the Commission concerning the issues that were raised. Mr. Fink noted that he agrees with the approach suggested to come back to the Commission at a later time for further action.

Dan McLellan asked for a clear statement from David Fink that the OSE agrees to the withdrawal of the Letter of Understanding concerning PAC check-offs from these three collective bargaining agreements. Mr. Fink affirmed his agreement to withdraw, at this time, the Letter of Understanding concerning PAC check-offs.

On motion duly made and supported, the Commission approved E-7D-1, Collective Bargaining Agreement - SEIU (Scientific & Engineering Unit).

Dan McLellan commented that item E-7D-2, is exactly the same collective bargaining agreement as E-7D-1, but is for the Technical Unit MPE contract.

On motion duly made and supported, the Commission approved E-7D-2, Collective Bargaining Agreement - SEIU (Technical Unit).

Dan McLellan noted that Item E-7D-3, is the bargaining agreement for the Human Services Support Unit of MPE, and is exactly the same as the previous two items.

On motion duly made and supported, the Commission approved E-7D-3, Collective Bargaining Agreement - SEIU (Human Services Support Unit).

On motion duly made and supported, the Commission approved E-7E, Collective Bargaining Agreement - MCO.

Coordinated Compensation Panel Recommendations: Matt Fedorchuk, Civil Service Compensation Director, and Amy Cahoon presented the recommendations contained in the proposed Coordinated Compen-sation Proposal (CCP) for Fiscal Year 2006 developed by the members of the Employment Relations Board, serving as the CCP Panel under Civil Service Rule 5-1.3. The CCP panel recommends approval of the following:

• A 1 percent across-the-board base pay increase for NERES, effective October 1, 2005, and another 1 percent across-the-board pay increase effective April 9, 2006.
• Special pay adjustments for the following:
  • A $1.50 per hour wage increase for excluded Registered Nurse 12, Registered Nurse Manager 12, 13, 14, 15, and Registered Nurse Director 15, 16, and 17 classifications, effective October 1, 2005, to be applied prior to any approved general wage increase.
  • A $1.00 per hour wage increase for Practical Nurse Supervisor 11 and 12 classifications, effective October 1, 2005.
  • A 10 percent wage increase for Pharmacist Manager 13 and 14 classifications, effective October 1, 2005.
• An optional signing bonus program up to $2,500 for new hires in Pharmacist Manager 13 and 14 classifications, effective October 1, 2005.
• An optional signing bonus of up to $5,000 for new hires in excluded Dentist positions, effective October 1, 2005.
• An optional retention bonus in an amount up to $5,000 for employees in excluded Dentist positions who have been employed by the State for at least 2,080 hours by the end of the first full pay period in February 2006.
  • The panel recommends that both of these programs for the Dentists be approved on a pilot basis and re-evaluated during the 2006 CCP proceedings.
• Reassign Treasury Investment Analyst classifications to pay schedules NERE-236 and NERE-237, and Treasury Investment Specialist classifications to new pay schedules mirroring the existing rates in schedule NERE-184, effective October 1, 2005.
• Implement a special Lottery Sales Incentive Program for Lottery sales and marketing staff with incentives of up to $2,500 per year (up to $625 per quarter), awarded to eligible employees based on sales indicators, beginning October 1, 2005. The panel recommends that the effectiveness of this program be re-evaluated during the 2006 CCP proceedings as well.
• A new base minimum pay step for all pay ranges in the compensation plan, effective October 1, 2005.
• Integrate the Coordinated Care Management Program into a comprehensive disease management program (Blue Health Connection), effective October 1, 2005.
• Integrate a PPO network for Durable Medical Equipment and Prosthetic and Orthotic appliances into the State Health Plan PPO, effective October 1, 2005.
• Change Chiropractic Spinal Manipulation benefit reimbursement to a rate of 100% for in-network services after a $10 co-pay, and an out-of-network reimbursement rate of 90 percent after the deductible, effective October 1, 2005.
• Increase the annual visit limitation for Physical, Occupational, and Speech Therapy from 60 to 90 visits, effective January 1, 2006.
• Increase the annual Preventive Services maximum from $750 to $1,500 and exclude covered colonoscopy exams and childhood immunizations from the maximum limit, effective January 1, 2006.
• Limit prescriptions filled under the State Health Plan at retail pharmacies to a 34-day supply, effective October 1, 2005.
• Add the benefit of Brush Biopsy coverage to the State Dental Plan, effective October 1, 2005.
• Limit the benefit period for "mental/nervous" Long-Term Disability claims to 24 months from the beginning of the claim period, effective October 1, 2005.
• Change the Long-Term Disability eligibility period for Plan II claimants who remain totally disabled to age 65, or a period of 12 months, whichever is greater, effective October 1, 2005.
• Add Election Day as a new holiday to be observed on General Election Day in even-numbered years.
• Renew the Professional Development Fund for MSC employees at $150,000, and renew the Professional Development Fund for Business & Administrative Unit employees at $50,000.
  

• Expand the current School Participation Leave provisions to also include community participation, effective January 1, 2005.
• Increase the annual leave maximum accumulation cap at each level by 40 hours, while leaving payoff caps unchanged, effective January 1, 2005.
• Reinstate the banked leave time program for NEREs at 4 hours per pay period for 21 pay periods beginning the pay period of January 2, 2005.

• A special $0.38 per hour wage increase for Assistant Resident Unit Supervisors, as recommended by Mr. Gregory Brady.
• A special $1.50 wage increase for Corrections Shift Supervisors as recommended by Mr. Darwin Berthiaume.

  It was noted that this issue has been raised numerous times during the last 12 years and lacking any new information, the Panel again recommends denying this request. This issue will not be considered in the future, unless new and compelling information is submitted which would indicate recruitment and/or retention difficulties or otherwise support a special adjustment.

• Take no action at this time on the issue of amending the State Health Plan and the Sick Leave Plan to include coverage for same sex domestic partners until such time as the legal questions created by the interaction of these provisions and the new Constitutional Amendment are answered.
• Direct the DCS, with input from the OSE and affected departments, to conduct a study of the effectiveness of the recruitment and retention bonus programs for excluded Dentists and report its findings to the Panel prior to completion of the 2006 CCP proceedings for fiscal year 2008.
• Direct the DCS, with input from the OSE and the Bureau of State Lottery, to conduct a study of the effectiveness of the Lottery Sales Incentive Program and report their findings to the Panel during the 2006 CCP proceedings for fiscal year 2008.
  

Upon motion duly made and supported, the Commission approved E-8, Coordinated Compensation Panel Recommendations.

David Fink commented that the OSE is grateful for the cooperation and assistance of the LROs in working with the OSE on the joint consensus agreement that was submitted to the ERB, and to the ERB for the work they did in reviewing and thoroughly analyzing the data presented and submitting their recommendations. Mr. Fink stated he believes that the concern expressed by the Commission in previous meetings regarding the issue of equity with respect to the NEREs has been addressed, and pointed out that the NEREs have again participated in sharing the sacrifice of the union employees with respect to banked leave time, adjustments in health plans, and structural savings on an equitable and comparable basis with the union employees.

Unclassified Pay Recommendations: Matt Fedorchuk presented staff's proposal for the annual Unclassified Pay Proposal required under Article XI, Section 5 of the Michigan Constitution.

Based on a review of the data, staff requests approval of the following recommendations for the Fiscal Year 2006 Unclassified Pay Proposal:

• A 1 percent merit salary increase, effective October 1, 2005, and a 1 percent merit salary increase, effective April 9, 2006.
• Legislative approval of the line-item funding necessary to support these recommendations.

  Upon motion duly made and supported, the Commission approved E-9, Unclassified Pay Proposal for Fiscal Year 2006.

Chairperson noted that there were no further requests for public comment.

There being no further items for Commission approval or public comments to be heard, Chairperson Munsell adjourned the meeting at 12:15 p.m.