LANSING – A dramatic reorganization of the state’s economic development and worker protection functions ordered Thursday by Governor Gretchen Whitmer puts a new person in charge of those duties, renames the Department of Talent and Economic Development as the Department of Labor and Economic Opportunity and upends some key boards and commissions.
The actions concentrate essentially all of the state’s economic development, employment relations, workforce development and worker protection functions in the new department with a much thinner Department of Licensing and Regulatory Affairs, which now will have a tighter focus on licensing and rules while still housing the Marijuana Regulatory Agency, Liquor Control Commission, Public Service Commission and Indigent Defense Commission.
Whitmer named Jeff Donofrio, the city of Detroit’s workforce development chief under Mayor Mike Duggan since 2015, to become director of the new department. He will succeed Acting TED Director Stephanie Beckhorn.
“I think this is an opportunity to consolidate a lot of the different pieces of economic development and workforce development most importantly that have been scattered across state government,” Whitmer said at a news conference. “This is going to give us the ability to be much more efficient and strategic.”
The return of “Labor” to a department name for the first time since the old Department of Energy, Labor and Economic Growth at the end of former Governor Jennifer Granholm’s tenure adds clarity to the new department’s role, Whitmer said. “This is about our workforce, this is about labor in Michigan, this is about economic opportunity, and I think it’s important to say what you do so people know where to go,” she said.
Whitmer said Donofrio’s experience in workforce development gives him the experience to work with business and labor “and is exactly the kind of person that we need to lead this rebranded department.”
Donofrio said he is exciting to expand what is happening in Detroit to the whole state. He said all parts of the state must work together to bring economic prosperity in the state. Too many of the state’s residents are struggling to make ends meet or worried about the future even with the economic gains of recent years.
“It’s going to take all of us to make sure that we find a pathway for each of them to have good, family-sustaining wages and jobs,” he said. “We need business and labor. We need public and private sectors. We need workforce and economic development because they’re two sides of the same coin, tied at the hip, making sure we can solve problems.”
The major functions now in TED would carry over to the new Department of Labor and Economic Opportunity under Executive Order 2019-13. The Talent Investment Agency, the lead workforce development agency, would see its functions transferred and the agency abolished. With the Talent Investment Agency gone, the Unemployment Insurance Agency, which had been housed there, will again be a standalone entity and will be part of the new department.
Notably, the executive order abolishes the Michigan Compensation Appellate Commission, an entity former Governor Rick Snyder created in 2011 after merging what was then the Workers Compensation Appellate Commission and the Employment Security Board of Review, and creates new, separate commissions to handle appeals of decisions in workers’ compensation and unemployment insurance cases. Those would be called the Unemployment Insurance Appeals Commission and the Workers’ Disability Compensation Appeals Commission.
The current Michigan Compensation Appellate Commission consists of nine members. Based on the terms of appointment, Whitmer would not have a majority of her appointees in place until August 2021.
Whether this move could trigger the same type of backlash among business organizations that prompted majority Republicans in the Legislature to overturn an executive reorganization order Whitmer issued earlier in the year abolishing commissions handling environmental rules was not clear.
Whitmer said her administration briefed legislative leaders on the reorganization, but did not say she had buy-in from them. Spokespersons for House Speaker Lee Chatfield (R-Levering) and Senate Majority Leader Mike Shirkey (R-Clarklake) were noncommittal. Whitmer said she would work with them to assure they have confidence in the appointments she makes. She said she made some changes to the executive order based on the feedback her team received from Democratic and Republican lawmakers and would continue to communicate with them.
The governor said those hearing unemployment and workers’ compensation appeals require separate expertise and have all such cases handled by the same group was unwieldy.
“Frankly I don’t think that the expertise was there,” she said. “They were all mashed together.”
Wendy Block, who specializes in workers compensation and unemployment for the Michigan Chamber of Commerce, which led the charge to overturn Whitmer’s executive reorganization order on environmental functions, said the elimination of the Compensation Appellate Commission “is one thing that does jump out at us,” but she said the reason for the change might make some sense.
“We want to make sure that those individuals that are appointed are fair and balanced, but we also understand why they may not want those, the workers’ comp and unemployment cases, to be combined at the appellate level because those require different sets of expertise,” she said. “Workers comp is a different animal from unemployment. It may not make sense to have the same people looking at those cases.”
What will be important is who gets appointed to the new commissions, Block said. The Senate has the power to reject appointees within 60 days.
Overall, however, Block said of the executive order, “Nothing really jumps out as anything too extreme or concerning.”
Ron Bieber, president of the Michigan AFL-CIO, praised the reorganization.
“Our state’s economy is driven by the labor of the working men and women of this state,” he said in a statement. “It makes perfect sense that all agencies related to labor and economic development be placed under one coordinated effort. This reorganization is thoughtful leadership from Governor Whitmer that will benefit the working families of this state. We look forward to working with Jeff Donofrio to build an economy in Michigan that works for everyone.”
The executive order involves functions in six departments – Education, Health and Human Services, Licensing and Regulatory Affairs, Talent and Economic Development, Technology, Management and Budget and Treasury.
The new department will include the Michigan State Housing Development Authority, the Michigan Strategic Fund and the Michigan Office of New Americans, which is renamed the Office for Global Michigan. The State Historic Preservation Office would move from MSHDA to the Michigan Strategic Fund. The Michigan Occupational Safety and Health Administration, Workers’ Compensation Agency, Workers’ Compensation Board of Magistrates and Wage and Hour Division will move from the Department of Licensing and Regulatory Affairs to the new department.
The Asian Pacific American Affairs Commission, the Board of Health Safety and Compliance and Appeals, Bureau of Services for Blind Persons, Commission for Blind Persons, Commission on Middle Eastern American Affairs and Hispanic/Latino Commission of Michigan also move to the new department.
The order also abolishes the existing Michigan Strategic Fund Board of Directors, where current four of the six appointees are those of former Governor Rick Snyder, two are named by Republican legislative leadership and two are automatic by virtue of their holding positions in the administration. A new MSF board would be created consisting of the Labor and Economic Opportunity director or the director’s designee, the treasurer or the treasurer’s designee, the director of the Department of Transportation or the director’s designee, the Michigan Economic Development Corporation CEO or the CEO’s designee and seven residents appointed by the governor.
Of those seven, six must be from the private sector with one from a list of three or more nominees by the Senate majority leader, one from a list of three or more by the House speaker, at least two with experience in private equity or venture capital, at least one with experience in commercial lending and at least one with experience in commercialization of technology.
The State Land Bank Fast Track Authority would be moved to the new department with its board of directors abolished. It would be renamed the State Land Bank Authority with a new board created consisting of the Labor and Economic Opportunity director or the director’s designee, the president of the Michigan Strategic Fund or the president’s designee, the executive director of MSHDA or the executive director’s designee and four residents appointed by the governor.
Several functions now in the Department of Licensing and Regulatory Affairs will be transferred to the new department, including the Employment Relations Commission, workers’ compensation Board of Magistrates and the Workers’ Compensation Agency.
The order takes effect in 60 days unless rejected by the House and Senate.
This story was published by Gongwer News Service.