(1) A combination of community mental health organizations or authorities may establish a regional entity by adopting bylaws that satisfy the requirements of this section. A community mental health agency may combine with a community mental health organization or authority to establish a regional entity if the board of commissioners of the county or counties represented by the community mental health agency adopts bylaws that satisfy the requirements of this section. All of the following shall be stated in the bylaws establishing the regional entity:

    (a) The purpose and power to be exercised by the regional entity to carry out the provisions of this act, including the manner by which the purpose shall be accomplished or the power shall be exercised.

    (b) The manner in which a community mental health services program will participate in governing the regional entity, including, but not limited to, all of the following:

    (i) Whether a community mental health services program that subsequently participates in the regional entity may participate in governing activities.

    (ii) The circumstances under which a participating community mental health services program may withdraw from the regional entity and the notice required for that withdrawal.

    (iii) The process for designating the regional entity’s officers and the method of selecting the officers. This process shall include appointing a fiscal officer who shall receive, deposit, invest, and disburse the regional entity’s funds in the manner authorized by the bylaws or the regional entity’s governing body. A fiscal officer may hold another office or other employment with the regional entity or a participating community mental health services program.

    (c) The manner in which the regional entity’s assets and liabilities shall be allocated to each participating community mental health services program, including, at a minimum, all of the following:

    (i) The manner for equitably providing for, obtaining, and allocating revenues derived from a federal or state grant or loan, a gift, bequest, grant, or loan from a private source, or an insurance payment or service fee.

    (ii) The method or formula for equitably allocating and financing the regional entity’s capital and operating costs, payments to reserve funds authorized by law, and payments of principal and interest on obligations.

    (iii) The method for allocating any of the regional entity’s other assets.

    (iv) The manner in which, after the completion of its purpose as specified in the regional entity’s bylaws, any surplus funds shall be returned to the participating community mental health services programs.

    (d) The manner in which a participating community mental health services program’s special fund account created under section 226a shall be allocated.

    (e) A process providing for strict accountability of all funds and the manner in which reports, including an annual independent audit of all the regional entity’s receipts and disbursements, shall be prepared and presented.

    (f) The manner in which the regional entity shall enter into contracts including a contract involving the acquisition, ownership, custody, operation, maintenance, lease, or sale of real or personal property and the disposition, division, or distribution of property acquired through the execution of the contract.

    (g) The manner for adjudicating a dispute or disagreement among participating community mental health services programs.

    (h) The effect of a participating community mental health service program’s failure to pay its designated share of the regional entity’s costs and expenses, and the rights of the other participating community mental health services programs as a result of that failure.

    (i) The process and vote required to amend the bylaws.

    (j) Any other necessary and proper matter agreed to by the participating community mental health services programs.

    (2) Except as otherwise stated in the bylaws, a regional entity has all of the following powers:

    (a) The power, privilege, or authority that the participating community mental health services programs share in common and may exercise separately under this act, whether or not that power, privilege, or authority is specified in the bylaws establishing the regional entity.

    (b) The power to contract with the state to serve as the medicaid specialty service prepaid health plan for the designated service areas of the participating community mental health services programs.

    (c) The power to accept funds, grants, gifts, or services from the federal government or a federal agency, the state or a state department, agency, instrumentality, or political subdivision, or any other governmental unit whether or not that governmental unit participates in the regional entity, and from a private or civic source.

    (d) The power to enter into a contract with a participating community mental health service program for any service to be performed for, by, or from the participating community mental health services program.

    (e) The power to create a risk pool and take other action as necessary to reduce the risk that a participating community mental health services program otherwise bears individually.

    (3) A regional entity established under this section is a public governmental entity separate from the county, authority, or organization that establishes it.

    (4) All the privileges and immunity from liability and exemptions from laws, ordinances, and rules provided under section 205(3)(b) to county community mental health service programs and their board members, officers, and administrators, and county elected officials and employees of county government are retained by a regional entity created under this section and the regional entity’s board members, officers, agents, and employees.

    (5) A regional entity shall provide an annual report of its activities to each participating community mental health services program.

    (6) The regional entity’s bylaws shall be filed with the clerk of each county in which a participating community mental health services program is located and with the secretary of state, before the bylaws take effect.

    (7) If a regional entity assumes the duties of a participating community mental health services program or contracts with a private individual or entity to assume the duties of a participating community mental health services program, the regional entity shall comply with all of the following:

    (a) The manner of employing, compensating, transferring, or discharging necessary personnel is subject to the provisions of the applicable civil service and merit systems and the following restrictions:

    (i) An employee of a regional entity is a public employee.

    (ii) A regional entity and its employees are subject to 1947 PA 336, MCL 423.201 to 423.217.

    (b) At the time a regional entity is established under this section, the employees of the participating community mental health services program who are transferred to the regional entity and appointed as employees shall retain all the rights and benefits for 1 year. If at the time a regional entity is established under this section a participating community mental health services program ceases to operate, the employees of the participating community mental health services program shall be transferred to the regional entity and appointed as employees who shall retain all the rights and benefits for 1 year. An employee of the regional entity shall not, by reason of the transfer, be placed in a worse position for a period of 1 year with respect to worker’s compensation, pension, seniority, wages, sick leave, vacation, health and welfare insurance, or another benefit that the employee had as an employee of the participating community mental health services program. A transferred employee’s accrued benefits or credits shall not be diminished by reason of the transfer.

    (c) If a participating community mental health services program was the designated employer or participated in the development of a collective bargaining agreement, the regional entity assumes and is bound by the existing collective bargaining agreement. Establishing a regional entity does not adversely affect existing rights or obligations contained in the existing collective bargaining agreement. For the purposes of this subsection, “participation in the development of a collective bargaining agreement” means that a representative of the participating community mental health services program actively participated in bargaining sessions with the employer representative and union or was consulted during the bargaining process.