Wednesday, January 22, 2020

Overview Of PA 51

The Road Commissions Best Practice Bill affects any municipality that receives funding from Act 51 Transportation Funds. This law requires a municipality to choose between complying with an employee compensation plan — which mirrors the fiscal year 2013 EVIP/CIP employee compensation criteria requirements OR compliance with PA 152. PA 51 does not require compliance with both PA 152 and the Employee Compensation Plan.

PA 152 Compliance (see complete overview below)*

Section 3 – Hard Caps
Beginning on or after January 1, 2013, a public employer may not pay more of the annual costs for medical benefit plans than a total amount equal to:

  • $5,692.50, times the number of employees with single person coverage
  • $11,385.00, times the number of employees with individual and spouse coverage
  • $15,525.00, times the number of employees with family coverage

These amounts will be adjusted on October 1, 2013, for medical benefit plan coverage years beginning on or after January 1, 2014. Employee agreements entered into prior September 30, 2013 are exempt from the requirements. 

*Valid until Oct. 1, 2013

Section 4 - 80/20
A public employer, by a majority vote of its governing body for each plan year, may elect the 80% employer cap:

  • A public employer may not pay more than 80% of the total annual costs of all the medical benefit plans it offers or contributes to for its employees and elected public officials

Section 5 – Exclusions

  • Sections 3 and 4 do not apply to existing collective bargaining agreements or other contracts until the agreements or contracts expire, are extended, or renewed
  • Any collective bargaining agreement executed on or after September 15, 2011 must comply with sections 3 and 4

Section 8 – Exemption
By a 2/3 vote of its governing body each year, a local unit of government may exempt itself from the requirements of 2011 Public Act 152 for the next succeeding year.


Employee Compensation Plan

Criteria 1:
Caps annual employer contributions to retirement plans for new hires (Defined Benefit, Defined Contribution, or Hybrid Plans)

  • 10% of base salary for employees eligible for Social Security
  • 16.25% of base salary for employees who are not eligible for Social Security

Criteria 2:
Caps for defined benefit multipliers for all employees

Maximum Multiplier

Social Security

Retiree Healthcare













Criteria 3:
Sets limits to defined benefit plans final average compensation calculation for all employees:

  • Minimum of 3 years if compensation
  • Maximum total of 240 hours of paid leave
  • No overtime

Criteria 4:
Sets limits on health care premiums cost for new hires:

  • Health care premium shall include a minimum employee share of 20%, OR
  • An employer’s share of health care plan costs shall be cost competitive with the new state preferred provider organization health plan, on a per-employee basis


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