Opinion
334663
12-22-2022
TAXPAYERS FOR MICHIGAN CONSTITUTIONAL GOVERNMENT, STEVE DUCHANE, RANDALL BLUM, and SARA KANDEL, Plaintiffs, v. STATE OF MICHIGAN, DEPARTMENT OF TECHNOLOGY, MANAGEMENT AND BUDGET, OFFICE OF AUDITOR GENERAL, GOVERNOR OF THE STATE OF MICHIGAN, and DIRECTOR OF THE DEPARTMENT OF TECHNOLOGY, MANAGEMENT, AND BUDGET, Defendants.
Original Action.
Before: BORRELLO, P.J., and SHAPIRO and GADOLA, JJ.
Judge Gadola was selected by blind draw to replace our now retired colleague.
ON REMAND
BORRELLO, P.J.
This original action to enforce the Headlee Amendment, Const 1963, art 9, § § 25-34, returns to this Court on remand from our Supreme Court. As observed by our Supreme Court, "[a]t issue in this case is a dispute over what monies should be included in calculating 'total state spending paid to all units of Local Government' under § 30 of the Headlee Amendment, Const 1963, art 9, § 30." Taxpayers for Michigan Constitutional Government v State of Michigan, 508 Mich. 48, 56; 972 N.W.2d 738 (2021) (TMCG). Our Supreme Court has tasked this Court with determining, in the first instance, "whether state funding to PSAs [Public School Academies] authorized by a school district, an intermediate school district [ISD], or a community college should be counted as state spending to a unit of local government for purposes of § 30 of the Headlee Amendment." TMCG, 508 Mich. at 76. This Court is also tasked with reconsidering its decision to grant plaintiffs mandamus "as it deems appropriate" and to "take other action not inconsistent with this opinion." TMCG, 508 Mich. at 81, 86. The parties and the amici have submitted supplemental briefing. Plaintiffs have amended their complaint in an attempt to cure the deficiencies in the pleading of their mandamus request, as identified by our Supreme Court. We hold that state funding to PSAs authorized by a school district, an ISD, or a community college other than the Bay Mills Community College must be counted as state spending to a unit of local government for purposes of § 30 of the Headlee Amendment. Accordingly, we deny plaintiffs' petition for mandamus as plaintiffs have failed to demonstrate an entitlement to mandamus relief.
By order entered on November 23, 2021, this Court granted plaintiffs' motion to file an amended complaint and, thereby, allowed plaintiffs the opportunity to cure the deficiencies in the pleading of their mandamus request. Taxpayers for Michigan Constitutional Government v State of Michigan, unpublished order of the Court of Appeals, issued November 23, 2021 (Docket No. 334663). The amended complaint filed with this Court retained plaintiffs' claims concerning public school funding under Proposal A (Count I) and funding paid to local units of government in satisfaction of the state's funding obligations under § 29 of the Headlee Amendment, Const 1963, art 9, § 29 (Count III). Defendants now seek summary disposition as to Counts I and III. The amendments authorized by this Court did not revive the claims pleaded in Counts I and III. More importantly, our Supreme Court remanded the instant matter to this Court for two express purposes, neither of which involve revisiting the merits of Counts I and III. This Court is bound by the "rule of mandate" to strictly comply with, and not to exceed the scope of, a remand order. International Business Machines Corp v Department of Treasury, 316 Mich.App. 346, 350-351; 891 N.W.2d 880 (2016). The Court has neither the authority nor the justification to revisit either its or our Supreme Court's rulings disposing of Counts I and III. Because the issues advanced in Counts I and III are not before this Court, summary disposition is inappropriate. Accordingly, the motion for summary disposition is dismissed.
Payments to PSA Authorizing Bodies
As noted, we have been tasked with determining whether state funding to PSAs authorized by a school district, an ISD, or a community college should be counted as state spending to a unit of local government for purposes of § 30 of the Headlee Amendment. Section 30 provides:
The proportion of total state spending paid to all units of Local Government, taken as a group, shall not be reduced below that proportion in effect in fiscal year 1978-79. [Const 1963, art 9, § 30.]
Section 33 of the Amendment defines the term "Local Government" as "any political subdivision of the state, including, but not restricted to, school districts, cities, villages, townships, charter townships, counties, charter counties, authorities created by the state, and authorities created by other units of local government." Const 1963, art 9, § 33.
For the reasons detailed below, we hold that school districts, ISDs, and community college districts are units of local government for purposes of § 30. We also hold that state funding paid to PSAs authorized by these three units of local government must be counted as state spending to a unit of local government for purposes of § 30. A PSA is a species of public school that coexists with traditional public schools. These two species of public schools provide local units of government with the means for the delivery of free local public education services. The state funds the operation of these two species of public schools by paying a per-pupil foundation allowance to each school district, as well as to ISDs and community college districts that have authorized PSAs within their limited geographical areas of operation. In other words, the state pays this foundation allowance to units of local government. These units of local government, in turn, disburse this local public education funding provided by the state in the manner prescribed by our Legislature to pay the costs incurred by each species of public school in the delivery of free local public education, and by doing so, further our Legislature's obligation to maintain and support a system of free public education. See Const 1963, art 8, § 2.
Our conclusions follow from an analysis that is guided by the rule of common understanding. Adair v Michigan, 497 Mich. 89, 101; 860 N.W.2d 93 (2014); CVS Caremark v State Tax Comm, 306 Mich.App. 58, 61; 856 N.W.2d 79 (2014). "Under the rule of common understanding, this Court must apply the meaning that, at the time of ratification, was the most obvious common understanding of the provision, the one that reasonable minds and the great mass of the people themselves would give it." CVS Caremark, 306 Mich.App. at 61.
We begin our analysis by acknowledging that our Legislature authorized the creation of PSAs in their current form in 1993 PA 362, which is commonly referred to as the charter schools act. MCL 380.501 et seq.; Council of Organizations and Others for Education about Parochiaid, Inc v Governor, 455 Mich. 557, 560-561; 566 N.W.2d 208 (1997). Act 362 recognizes the following public bodies as authorizing bodies that may issue a contract to organize and operate a PSA: (1) the board of a school district that operates grades K to 12; (2) the board of an ISD; (3) the board of a community college; and (4) the governing board of a state university. MCL 380.501(a)(i)-(iv); MCL 380.502(2).
We also acknowledge that our Supreme Court recently ruled that a state university, although a public school authorizing body, is not a political subdivision of the state under § 33. TMCG, 508 Mich. at 75-76. As a consequence, state spending paid to a state university cannot qualify as state spending to a unit of local government under § 30. In light of this ruling, the first question this Court must answer is whether any or all of the three remaining public school authorizing bodies may be considered to be a political subdivision of the state under § 33 and, thus, a unit of local government under § 30.
To answer this question, we begin with the language of § 33. Section 33 explicitly provides that the term "Local Government" includes "school districts." Const 1963, art 9, § 33; TMCG, 508 Mich. at 67. We need go no further than the plain language of § 33 to discern that a school district that is also a PSA authorizing body constitutes a local government for purposes of § 30.
Because § 33 does not mention ISDs or community colleges, we must determine whether either or both are a "political subdivision of the state" under § 33 and, thus, a "Local Government" for purposes of Headlee. The term "political subdivision of the state" means "a geographically limited unit of government formed to exercise political power and that is beholden to a local electorate." TMCG, 508 Mich. at 72.
Whether an ISD possesses the attributes of a political subdivision of the state and, thus, constitutes a unit of local government, presents a question of first impression. A review of the statutory provisions governing the creation and operation of an ISD reveals that an ISD is a body corporate governed by an intermediate school board, MCL 380.604, with the authority to act within the boundaries of its constituent school districts, MCL 380.626. The Legislature has empowered an intermediate school board to carry out the government functions of educating pupils, MCL 380.601a(1)(a), hiring employees and independent contractors to "carry out intermediate school district powers," MCL 380.601a(1)(d), qualifying for state school aid, MCL 380.601a(1)(d), and entering into contracts "as part of performing the functions" of the ISD, MCL 380.601a(2). Members of the intermediate school board are elected biennially by "an electoral body" composed of one person designated by the board of each constituent school district, MCL 380.614(1), or through "popular elections in an intermediate school district which adopts [MCL 380.615 to MCL 380.617]." MCL 380.615. In other words, the public maintains control of an ISD either through popular elections or the popularly-elected boards of the school districts that compose the electoral body of an ISD. See Council of Organizations, 455 Mich. at 575-576 ("While the boards of the public school academies may or may not be elected, the public maintains control of the schools through the authorizing bodies."). We find these characteristics of an ISD to be sufficient to establish that an ISD bears the distinctive "marks" of a political subdivision, i.e., an ISD serves primarily the residents of its own geographically-limited district and is subject to popular control. TMCG, 508 Mich. at 71-73. Thus, we hold that an ISD qualifies as a political subdivision of the state and a unit of local government under § § 30 and 33.
Our consideration of whether a community college also qualifies as a political subdivision of the state begins with the recognition that Michigan has 28 community college districts that cover 32 of the 83 counties of this state. Kozlowski, Free community college tuition in Mich.? Not for all, The Detroit News (February 9, 2022), p A2 (map insert). We hold that 27 of these 28 community college districts qualify as political subdivisions of the state and, thus, are units of local government within the meaning of § § 30 and 33. We hold that the Bay Mills Community College District lacks the distinctive marks of a political subdivision of the state that the other 27 community college districts have and, thus, is neither a political subdivision of the state nor a unit of local government under Headlee.
In Doan v Kellogg Community College, 80 Mich.App. 316, 321; 263 N.W.2d 357 (1977), this Court provided the following cogent summary of the characteristics of a community college district as authorized by our Legislature:
Community colleges are governed by MCLA 389.1, et seq.; MSA 15.615(101), et seq. Under this statute, a community college district is created by a local vote, not by the constitution nor by an act of the Legislature. From the statement of findings by the trial judge, it appears that the Kellogg Community College district is the same as the intermediate school district. Therefore, the decision to create the community college district was based on a vote of the people in the intermediate school district. MCLA 389.51; MSA 15.615(151). Additionally, the board of trustees of the community college are elected locally. MCLA 389.54; MSA 15.615(154). The tax rate for financing the school is also determined by a local vote. In fact, if the proposition to establish a maximum annual tax rate fails after being submitted three times, the community college
district is dissolved. MCLA 389.55; MSA 15.615(155). Furthermore, the purpose of the community college is local, i.e., to provide education to persons in the community. MCLA 389.105; MSA 15.615(1105). The community college serves primarily residents in its own district and an additional fee is charged if a nonresident is enrolled. Thus, the intent of the Legislature is that community colleges should be local in nature.
In People v Egleston, 114 Mich.App. 436, 441-442; 319 N.W.2d 563 (1982), this Court determined that a community college district, as authorized by MCL 389.1 et seq., constituted a political subdivision of the state for purposes of MCL 750.225. We explained:
Const 1963, art 8, § 7 requires the Legislature to provide by law for the establishment and financial support of public community colleges to be supervised and controlled by locally elected boards. The governing body of the district is elected at large by the voters of the district. The district is a body corporate which may sue and be sued and may take, condemn, use, hold, sell, lease and convey real property without restriction as to location. MCL 389.103; MSA 15.615(1103). The governing board has the power to make plans for, promote, acquire, construct, own, develop, maintain and operate a community college and a vocational-technical education program. The board may borrow, subject to the provisions of 1943 PA 202, as amended, such sums of money on such terms as it deems desirable. It is authorized to borrow money and issue bonds for the obligation incurred, pursuant to MCL 389.122; MSA 15.615(1122), and MCL 389.126; MSA 15.615(1126). The district is specifically granted authority to adopt "bylaws, rules and regulations for its own government and for the control and government of the community college district." MCL 389.125; MSA 15.615(1125). The district is also empowered to do all other things in its judgment necessary for the proper establishment, maintenance, management and carrying on of the community college. MCL 389.125(f); MSA 15.615(1125)(f).
We view three factors as most important in leading to the conclusion that a community college district is a "political subdivision" of the state for purposes of MCL 750.255; MSA 28.452. First, the governing body of the district is responsible only to its own electorate for its management of the district. No other political subdivision of the state exercises authority over the community college board. Second, the Legislature explicitly granted the board authority to adopt rules and regulations for its own government and for the control and government of the district. Third, the district's borrowing power is broad and similar to that of other political subdivisions of the state. We think that a community college district comes clearly within the plain meaning of the term "political subdivision".
The primary rule of statutory construction, however, is to determine and effectuate the Legislature's intent. For that reason, a more restrictive meaning of "political subdivision" might be used where the purposes to be served by the statute would be defeated by use of a general definition. In the present case, an analysis of the Legislature's purpose requires the use of the general definition. Community college districts do not significantly differ from "municipalities" in the types of paper pledging their credit which they issue. The Legislature's purpose in enacting MCL 750.255; MSA 28.452 was to protect the integrity of paper pledging the credit of political entities. In the present case, we can only give full effect to the words of the Legislature by holding that a community college district is a "political subdivision" of the state for purposes of MCL 750.255; MSA 28.452. [Egleston, 114 Mich.App. at 441-442.]
Twenty-seven of the 28 community college districts share the characteristics identified in Doan and Egleston, which include the distinctive marks of a unit of local government. Because they do, these 27 community college districts qualify as political subdivisions of the state and, thus, are units of local government within the meaning of § § 30 and 33.
Turning to the Bay Mills Community College District, its characteristics were summarized in Michigan Education Association v Superintendent of Public Instruction, 272 Mich. 1, 3-4; 724 N.W.2d 478 (2006), as follows:
BMCC is a land grant school recognized under the federal Tribally Controlled College or University Assistance Act and is accredited by the North Central Association of Colleges and Schools. According to its charter, BMCC's district consists of the state of Michigan. . . .
Article XI of the Bay Mills Community College Charter provides in relevant part: "The district for the Bay Mills Community College shall consist of the State of Michigan." <http://www.bmcc.edu/sites/default/files/100.101_bmcc_charter.pdf> (accessed November 22, 2022).
BMCC is run by a nine-member board of regents. Five of those regents are selected from the Bay Mills Indian Community Executive Council and serve two year terms. One is the business manager or representative of the Sault Ste. Marie Tribe of Chippewa Indians, one is the business manager or representative of the Grand Traverse Band of Ottawa/Chippewa Indians, one is the business manager or representative of the Little Traverse Bay Bands of Odawa Indians, and one is the executive director of the Inter-Tribal Council of Michigan, Inc. Additionally, there is one nonvoting member, the student body president of BMCC.
A comparison of the Bay Mills Community College District and the other 27 districts reveals that Bay Mills has some characteristics not shared with the other districts. We find these unique characteristics possessed only by the Bay Mill Community College District to be dispositive of the question whether Bay Mills possesses the attributes of a political subdivision of the state.
Under Michigan's community college act, 1966 PA 331, a community college district is composed of one or more counties or one or more school districts that join together to form a community college district by a majority vote of the electors residing in the proposed district. MCL 389.11; MCL 389.31; MCL 389.32; MCL 389.55. The Bay Mills Community College Charter expressly identifies its district as the entirety of the State of Michigan. In this regard, the boundaries of the Bay Mills Community College District, like those of a public university, are not geographically limited. TMCG, 508 Mich. at 75. They exceed those allowed by the community college act. Moreover, although the Bay Mills Community College District treats Michigan's boundaries as its own, it is not responsive to the statewide electorate. In fact, the parties present no evidence that either Bay Mills Indian Community or the Bay Mills Community College District is responsive to an electorate of any size, let alone "to voters of any particular locale." TMCG, 508 Mich. at 75. A review of art IV of the Constitution of the Bay Mills Indian Community reveals that "[t]he governing body of the Community shall be the General Tribal Council which shall be composed of all qualified voters of the Community." The term qualified voter is a member of the tribe who is 18 years of age or older. Membership is governed by Article III of the Constitution of the Bay Mills Indian Community. The Bay Mills Indian Community currently has 1,657 voting citizens. There is nothing in either Article III or Article IV that requires a qualified voter to reside on the Bay Mills reservation, or even reside in Michigan, in order to be a qualified voter. Under these circumstances, Bay Mills is neither geographically limited nor beholden to the voters of any particular locale in the fashion of a community college district authorized under the community college act. It does not possess the distinctive marks of a political subdivision of the state that traditional community college districts possess.
The term" 'school district' means a school district, a local act school district, or an intermediate school district, as those terms are defined in the revised school code, 1976 PA 451, MCL 380.1 to MCL 380.1852[.]" MCL 389.105(g).
<http://www.baymills.org/tribal-constitution> (accessed September 8, 2022).
<http://www.baymills.org/tribal-organization> (accessed September 8, 2022).
<http://www.baymills.org/tribal-organization> (accessed September 8, 2022).
Additionally, unlike the other 27 community college districts, Bay Mills was not created under the authority of the Michigan community college act and by "local vote" of "any particular locale." Rather, Bay Mills Community College is a community college district under the control of a federally-recognized Indian tribe, that was brought into being with the assistance of the federal government under the tribally controlled community college assistance act of 1978, Public Law 95-471 . See e.g., 25 USC 1804a , 1806. As noted by our Supreme Court in Paquin v St. Ignace, 504 Mich. 124, 135; 934 N.W.2d 650 (2019), the existence of a "unique relationship" between the United States federal government and tribal governments "highlights the difference between tribal governments and local subunits of a state government."
We acknowledge, however, that our Legislature has authorized federal tribally-controlled community college districts, like Bay Mills, to function as a community college district formed under the community college act. See e.g., MCL 380.1475; MCL 390.1251; 390.1572; MCL 380.501; MCL 380.502. In TMCG, our Supreme Court concluded that the fact that our Legislature affixed the label "school district" to PSAs for funding purposes was an insufficient basis to conclude that a PSA was also a "school district" as contemplated by the Headlee Amendment. TMCG, 508 Mich. at 68-69. According to our Supreme Court, "that the Legislature authorized the creation of PSAs and treats them as school districts for the specific purpose of receiving aid from the State School Aid Fund tells us nothing about whether the voters would have understood a PSA to be a 'local government' for purposes of the Headlee Amendment." Id. at 69 (italics in original). As previously noted, the Bay Mills Community College District lacks the distinctive marks crucial to establish its status as a political subdivision of the state. At best, the powers granted Bay Mills by our Legislature renders Bay Mills the functional equivalent of a traditional community college district, and nothing more. That the Bay Mills Community College District may function similarly to the other 27 community college districts does not render Bay Mills a unit of local government where there is nothing in either § 30 or § 33 that suggests that the equivalent of a unit of local government suffices. To conclude otherwise would be to write language into these Headlee provisions that is not there and that the people of our state did not choose to include. Paquin, 504 Mich. at 135.
In sum, for the reasons identified above, the Bay Mills Community College District, like other forms of tribal government, is not a political subdivision of the state and, hence, not a unit of local government as that term is used in either § § 30 or 33. It lacks the distinctive marks of a local government recognized under Michigan law. The voters that adopted the Headlee Amendment simply would not have commonly understood the term "local government" to include subunits of a tribal government.
Although school districts, ISDs, and community college districts are units of local government, it is clear that PSAs are not. TMCG, 508 Mich. at 72-73, 75-76. It is also clear, however, that "[a] PSA is a state-supported public school operating under a charter issued by an authorizing body." TMCG, 508 Mich. at 67-68; see also Council of Organizations, 455 Mich. at 571-579; MCL 380.501(1). This particular species of public school was created by our Legislature as a proper exercise of its authority conferred upon it by Const 1963, art 8, § 2 to "maintain and support a system of free public education ...." Council of Organizations, 455 Mich. at 571-579. "The Legislature has had the task of defining the form and institutional structure through which public education is delivered in Michigan since the time Michigan became a state. See Const 1835, art 10, § 3." Council of Organizations, 455 Mich. at 571. A PSA has been commonly understood to be a public school since the early 1990s. See Council of Organizations, 455 Mich. at 576-583.
Having clarified that school districts, ISDs, and community college districts are units of local government and that a PSA is a species of public school, the question becomes "whether state funding to PSAs authorized by a school district, an ISD, or a community college should be counted as state spending to a unit of local government for purposes of § 30 of the Headlee Amendment." We answer this question in the affirmative.
As previously noted, a PSA is commonly understood to be a public school. Council of Organizations, 455 Mich. at 576-579. Currently, both PSAs and traditional public schools are funded through the use of a per-pupil foundational allowance. In the case of traditional public schools, the state pays the per-pupil foundation allowance to each school district, and the school district then uses the funds to pay the costs of providing education services at each public school in the district. Durant, 238 Mich.App. at 197-198. In the case of a PSA, the state pays the foundational allowance to the public school authorizing body, i.e., a school district, an ISD, or a community college. MCL 380.507(3). The public school authorizing body then serves as a "fiscal agent" for the PSA. MCL 380.507(3). This body receives the funding from the state and then transfers the school aid payment directly to the PSA. MCL 380.507(3). What is clear to this Court is that under either disbursement scheme state aid flows from the state to a unit of local government, and the unit of local government then disburses state funding in the manner prescribed by the Legislature to fund the costs of public school instruction. State funding to a unit of local government is state funding to a local unit of government regardless whether a public school actually takes physical possession of the state aid. For these reasons, we conclude that state school aid paid to a PSA by its authorizing body qualifies as state funding paid to a local government and should be counted for purposes of "total state spending paid to all units of Local Government" under § 30 of the Headlee Amendment.
Mandamus
Plaintiffs seek a writ of mandamus directing the various state defendants to comply with the reporting requirements of MCL 21.235 and MCL 21.241. These statutes require public disclosure of the amount of state disbursements required to be paid to each local unit of government for the necessary costs of each state requirement and the total amount of all disbursements to be paid to local government, as well as other data potentially useful to determining whether the state has complied with its obligations under § § 29 and 30 of the Headlee Amendment.
Mandamus is an extraordinary remedy. Univ Medical Affiliates, PC v Wayne County Executive, 142 Mich.App. 135, 142; 369 N.W.2d 277 (1985). Thus, the issuance of a writ of mandamus is only proper where (1) the party seeking the writ has a clear legal right to performance of the specific duty sought, (2) the defendant has the clear legal duty to perform the act requested, (3) the act is ministerial, and (4) no other remedy exists, legal or equitable, that might achieve the same result. Rental Properties Owners Ass'n of Kent Co v Kent Co Treasurer, 308 Mich.App. 498, 518; 866 N.W.2d 817 (2014). "Within the meaning of the rule of mandamus, a 'clear, legal right' is one 'clearly founded in, or granted by, law; a right which is inferable as a matter of law from uncontroverted facts regardless of the difficulty of the legal question to be decided." Univ Medical Affiliates, 142 Mich.App. at 143; see also Rental Properties Owners Ass'n of Kent Co, 308 Mich.App. at 518-519. "A ministerial act is one in which the law prescribes and defines the duty to be performed with such precision and certainty as to leave nothing to the exercise of discretion or judgment." Hillsdale Co Senior Services, Inc v Hillsdale Co, 494 Mich. 46, 63 n 11; 832 N.W.2d 728 (2013) (quotation marks and citation omitted); see also Berry v Garrett, 316 Mich.App. 37, 42; 890 N.W.2d 882 (2016). "The burden of showing entitlement to the extraordinary remedy of a writ of mandamus is on the plaintiff." White-Bey v Dep't of Corrections, 239 Mich.App. 221, 223; 608 N.W.2d 883 (1999). Mandamus is the appropriate remedy for a party seeking to compel action by "state officers." MCL 600.4401(1).
We deny the requested mandamus relief for two reasons. First, plaintiffs do not identify any statutory duty or "clear legal duty" on the part of the Auditor General or the Office of the Auditor General that arises from the reporting requirements of MCL 21.235 and MCL 21.241. Second, plaintiffs have made no attempt to refute defendants' claim that they have complied with the reporting requirements. Defendants represent in their supplemental brief that they have complied with the reporting requirements of MCL 21.235 and MCL 21.241. In support of this assertion, defendants append to their supplemental brief, as defendants' exhibits B and C, two reports that, on their face, appear to satisfy the requirements of these two statutes. Plaintiffs do not challenge the veracity of defendants' claims. They make no attempt to explain how the proffered reports fail to comply with the statutory reporting requirements. Nor do plaintiffs append any documentation to their reply that contradicts defendants' assertion of compliance. Under these circumstances, plaintiffs have failed to demonstrate any entitlement to a writ of mandamus.
Defendants seek the summary dismissal of the Governor as a party defendant on the ground that mandamus may not issue against a Governor. It is clear that separation-of-powers principles found in Const 1963, art 3, § 2 preclude mandamus against the Governor, regardless of whether the actions sought to be compelled are discretionary or ministerial. Straus v Governor, 459 Mich. 526, 532; 592 N.W.2d 53 (1999); Born v Dillman, 264 Mich. 440, 444-448; 111 N.W.2d 113 (1961); Germaine v Governor, 176 Mich. 585, 588-595; 142 N.W. 738 (1913); People ex rel Sutherland v Governor, 29 Mich. 320; 18 Am Rep 89 (1874). Nevertheless, this Court need not address the issue where plaintiffs have otherwise failed to establish their entitlement to a writ of mandamus.
Douglas B. Shapiro, J. (dissenting).
I respectfully dissent from the majority's conclusion that state funding of public school academies (PSAs) authorized by a school district, an intermediate school district (ISD), or community college must be counted as spending to a "unit of local government" for purposes of the Headlee Amendment. I also respectfully dissent from the majority's conclusion that mandamus is not justified as to the Department of Technology, Management and Budget (DTMB).
I agree with the majority that state funding of PSAs sponsored by state universities and by Bay Mills Community College may not be counted as state aid to a local unit of government.
I. STATE FUNDING OF PSAs
A. TEXT OF THE HEADLEE AMENDMENT
§ 30 of the Headlee Amendment provides:
The proportion of total state spending paid to all units of Local Government, taken as a group, shall not be reduced below that proportion in effect in fiscal year 1978-79. [Const 1963, art 9, § 30.]
The first question before us is whether a PSA is a "unit of Local Government" for purposes of § 30. The answer to that question is contained within the text of § 33 of the Headlee Amendment, which defines "Local Government" as follows:
"Local Government" means any political subdivision of the state, including, but not restricted to, school districts, cities, villages, townships, charter townships, counties, charter counties, authorities created by the state, and authorities created by other units of local government. [Const 1963, art 9, § 33.]
The majority concludes, as I do, that a PSA is not a school district, a city, a village, a township or a county. The only remaining category under Headlee is "authorities created by other units of local government." However, the majority does not address whether PSAs fall within that category, even though this is defendants' primary argument on remand.
Our prior opinion had held that PSAs are school districts and therefore units of local government, but the Supreme Court reversed and held that a PSA is not a school district for purposes of the Headlee Amendment. Taxpayers for Mich. Constitutional Gov't v State of Michigan, 508 Mich. 48, 67-70; 972 N.W.2d 738 (2021).
The claim that PSAs are "authorities" has no support in caselaw or actual practice. Defendants nevertheless argue that a PSA must be an "authority" (a noun) because it is "authorized" (a verb) to operate by local governments. While PSAs are "authorized" by various public agencies, it does not follow that they themselves are "authorities" under § 33. The Revised School Code, MCL 380.1 et seq., repeatedly refers to "authorizing bodies" such as ISDs and community colleges, but never refers to a PSA or its board as an "authority."
Local governments regularly authorize activities by private entities and enter into contracts with private entities, but that does not transform these entities into governmental authorities. A review of state statutes that actually create "authorities" demonstrates that "being authorized" is not the same as being "an authority." Unlike PSAs which are "authorized" to perform certain activities, each of those other entities are expressly referred to by statute as an "authority":
• Hospital Authority Act, MCL 331.1 et seq - allows two or more local governments "to form a hospital authority and issue bonds for the purpose of planning, promoting, acquiring, constructing, improving . . . community hospitals . . . ." MCL 331.1(1).
• Art Institute Authority Act, MCL 123.1201 et seq .-permits establishment of an art institute authority and specifically defines "authority" to mean "an art institute authority established under section 5 [of the act]." MCL 123.1203(e). The Act further provides that "[a]n art institute authority is an authority under section 6 of article IX of the statue constitution of 1963." MCL 123.1205(2).
• Regional Transit Authority Act, MCL 124.541 et seq.-allows establishment of an "authority," which it defines as "a regional transit authority created under this Act." MCL 124.542(a). MCL 124.543 states:
(1). . . . An authority created under this act is a municipal public body corporate and a metropolitan authority authorized by section 27 of article VII of the state constitution of 1963, shall possess the powers, duties, functions, and responsibilities vested in an authority by this act, and shall carry out the rights, duties, and obligations provided for in this act. An authority is not an agency or authority of this state.
(2) The name of an authority created under subsection (1) shall include the phrase "regional transit authority."
• Public Airport Authority Act, MCL 259.108 et seq- allows local governments to form a "public airport authority," which has the "power and duty of planning extending, maintaining, . . . and operating all airports and airport facilities under the operational jurisdiction of or owned by the authority." MCL 259.116(1)(c).
• Mackinac Bridge Authority Act, MCL 254.301 et seq.-establishes the Mackinac Bridge Authority "to provide and maintain a system of highways and bridges for the use and convenience of its inhabitants," and "the authority shall have all powers necessary or convenient to carry out he things authorized." MCL 254.302(1).
• Building Authorities and Joint Building Authorities, MCL 123.951 et seq- allows a local government to establish "1 or more authorities for the purpose of . . . operating and maintaining a building or buildings . . . together with appurtenant properties and facilities . . . ." MCL 123.951(1). MCL 123.955 states that "the authority" shall be governed by a body, "which shall be known as the 'commission,'" MCL 123.955(d), and meetings of the commission must be held in compliance with the Open Meetings Act, MCL 123.955a(5).
• Metropolitan Transportation Authorities Act, MCL 124.401 et seq - permits counties to form regional transportation authorities in major metropolitan
areas. MCL 124.406 provides for the powers and duties of "any authority" established under the statute.
• Sewage Disposal Authority, MCL 124.281 et seq.-allows "2 or more municipalities to form an authority for the purpose of acquiring, owning . . . and operating a sewage disposal system . . . ." MCL 124.282(1).
• Charter Water Authority Act, MCL 121.1 et seq - provides that municipalities "may incorporate a municipal authority comprising the territory within their respective limits for the purpose of . . . operating and maintaining a water supply and transmission system." MCL 121.2.
In sum, the Revised School Code does not define a PSA as an "authority" despite the Legislature's clear use of that term as to those entities it wishes to so classify. Nor are PSAs granted general authority over an area of governmental operation as are authorities that operate and oversee roads, hospitals, airports, building, sewage and water supply. A PSA operates a single school and while it is "authorized" to do so, it is by no means a governmental authority. Given these fundamental differences, I cannot conclude that the Headlee voters would have considered a PSA an authority created by local government or an equivalent thereof. And the Supreme Court has already rejected the argument that PSAs are sufficiently analogous to other authorities such that they should be considered political subdivisions of the state. See Taxpayers for Mich. Constitutional Gov't v State of Michigan, 508 Mich. 48, 75; 972 N.W.2d 738 (2021) ("[Assuming that the authorities identified in the dissent are all political subdivisions of the state, we do not find PSAs sufficiently analogous to them to conclude that, if those authorities are political subdivisions of the state, PSAs must also be political subdivisions of the state.").
II. THE COMMON UNDERSTANDING OF THE HEADLEE VOTERS
The majority never determines whether the common understanding of the Headlee voters in 1978 would have been that public schools operated by private contractors are "units of local government." I respectfully suggest that it fails to do so because such a conclusion is untenable.
First, it is undisputed that an individual school, even a traditional public school, is not a school district or a "unit of local government." This is particularly significant here because the majority seems to conclude that because a PSA is a "public school" any funding directed to it must be considered as state spending to a "unit of local government." But the words "public school," like the words "public school academy," do not appear in the Headlee Amendment.
As the Supreme Court observed:
[W]e conclude that the Headlee voters would not consider PSAs as equivalent with "school districts" as the term was understood at the time the amendment was ratified. Like traditional school districts, PSAs deliver education to the students of this state, but they do not resemble traditional school districts in many other ways. For example, PSAs are organized as nonprofit corporations by a person or other entity, while school districts are legislative creations. PSAs are not limited to a defined local geographic area like school districts. Instead of a locally elected school board directly beholden to the voters of a school district, the governing body of a PSA is made up of a board of directors comprised of privately selected members. MCL 380.503(11). Unlike a school district board, the board of directors of a PSA may enter into a contract with an education-management corporation to manage or operate the PSA or to provide the PSA with instructional or other services. See MCL 380.503c; MCL 380.503(6)(k) and (n). A PSA is funded solely by the state and may not levy taxes like a school district. A PSA, in fact, is often viewed as an alternative to the traditional educational services offered by a school district, not an equivalent. Accordingly, we conclude that a PSA is not a "school district" as Headlee voters would have understood the term. [Taxpayers, 508 Mich. at 69-70.]
Second, PSAs did not yet exist at the time of Headlee's ratification in 1978, and the majority cites no fact or legal argument grounded in events or law that predate that time. Rather, it relies on 1993 PA 362, which created PSAs and was enacted into law 15 years after the voters adopted Headlee. The majority also cites to Council of Organizations and Others for Education about Parochiaid, Inc v Governor, 455 Mich. 557; 566 N.W.2d 208 (1997), which was decided about 20 years after the Headlee Amendment was ratified. Moreover, the sole question in Council of Organizations was whether the 1993 statute permitting establishment of PSAs was constitutional given the bar on the funding of private schools. See Const 1963, art 8, § 2. The case contained no discussion of the Headlee Amendment.
In reversing our earlier decision, the Supreme Court stated that "[t]he Legislature's subsequent enactment of a statute cannot supersede the common understanding of a term adopted by the voters who ratified the constitutional amendment." Taxpayers, 508 Mich. at 68.
While having little to nothing to say about the "common understanding" of the Headlee voters, the majority focuses on what it believes is the common understanding of today. Putting aside whether the majority accurately reflects the common understanding of today, it fundamentally errs in transporting the views of 2022 (or 1997 when Council of Organizations was decided) to those in 1978. As the Supreme Court made clear in Taxpayers, 508 Mich. at 69, "that the Legislature authorized the creation of PSAs and treats them as school districts for the specific purpose of receiving aid from the State School Aid Fund tells us nothing about whether the voters would have understood a PSA to be a 'local government' for purposes of the Headlee Amendment."
Ironically, the majority cites this statement when rejecting the notion that tribal-controlled community college districts should be deemed to fall within Headlee because after the passage of the Amendment, the Legislature authorized tribal community college districts to function under the Community College Act. However, the majority fails to recall this holding when addressing the common understanding of PSAs at the time of Headlee's passage.
Third, the majority fails to address the reality of how PSAs are funded. "Traditional" public schools are not allocated individualized sums of money from the state. Rather, the state funds school districts, and they distribute those funds as the elected board determines best serves its students. In contrast, state funds are allocated specifically to individual PSAs. These funds "pass through" local school or community college districts as the "fiscal agents" of a PSA they authorize, but the elected board has no power to control those funds. The funds do not belong to the local school district, they belong to the PSA, which is operated by a private board of directors. The district is a legal conduit, i.e., a "fiscal agent," and not the recipient of the aid. It has no authority over those funds beyond their receipt and immediate transfer of those funds to the private entity that operates the PSA as required by MCL 388.1622a:
(3) For pupils in membership in a qualifying public school academy, there is allocated under this section to the authorizing body that is the fiscal agent for the qualifying public school academy for forwarding to the qualifying public school academy an amount equal to the 1994-95 per-pupil payment to the qualifying public school academy under section 20. [Emphasis added.]
There is no comparable provision in law under which the state determines support for individual schools and directs the school district to "forward" those funds in the predetermined amounts to individual schools. Rather, the funding is provided to the local school district, whose board determines how best to allocate the funds to the schools within it. The fact that the monies belong to the PSA rather than the local school district is further demonstrated by the fact that each PSA receives its own school district code. And the local school district is permitted to charge for the services it provides to the PSA. MCL 380.502(6) provides that an authorizing body may charge the PSA up to 3% of the "state school aid received by the public school academy."
Notably, the statute refers to "state school aid received by the public school academy" not "state school aid provided to the authorizing body of the public school academy."
In addition, while the authorizing body is required to "oversee" the PSA to ensure compliance with the contract and with state school law, MCL 380.507(1)(d), the authorizing body does not operate or manage PSAs. By statute, PSAs are operated by a private board of directors: "A public school academy shall be organized and administered under the direction of a board of directors in accordance with this part and with bylaws adopted by the board of directors." MCL 380.502(1). And they must comply with the Nonprofit Corporation Act, MCL 450.2101 et seq., which has no applicability to traditional public schools. Traditional public schools have no admission requirements, but PSAs are empowered by state law to set their own "admission policy and criteria." MCL 380.502(3)(c)(iii).
In sum, a PSA is not a "unit of local government" as defined by the text of the Headlee Amendment. In addition, the majority's conclusion that the voters in 1978 would have viewed the funding of PSAs as state spending to "units of local government" lacks any support predating the adoption of Headlee. Further, neither the statute creating PSAs nor Council of Organizations address Headlee or whether a PSA is the equivalent of a "unit of local government," let alone bear on the voter's common understanding in 1978.
Accordingly, I would hold that state funding of PSAs does not constitute aid to a unit of local government and grant summary disposition to plaintiffs.
II. MANDAMUS
The Supreme Court vacated our order of mandamus and directed us to "specify which defendant is failing to perform which clear legal duty and [to] analyze whether granting the extraordinary writ of mandamus is warranted." Taxpayers, 508 Mich. at 86.
Having undertaken such a review, I would conclude that the Governor's request for dismissal should be granted as the Governor is not subject to mandamus. See Straus v Governor, 459 Mich. 526, 532; 592 N.W.2d 53 (1999). I also agree that the Office of the Auditor General is entitled to dismissal as the body tasked by statute to provide the subject reports is the DTMB.
MCL 21.232(6) defines "Department" as "the department of management and budget."
I would, however, not dismiss the request for mandamus directed against DTMB. It clearly has ministerial duties under MCL 21.241 and 21.235. After initially admitting that MCL 21.241's reporting requirements had not been complied with, defendants now maintain that there has been compliance with both statutes and provided two reports-one for fiscal year 2021 and one for fiscal year 2022-that purportedly satisfy the statutory requirements. However, it is not clear from the face of the reports whether they in fact meet the requirements of the two reporting statutes nor, assuming the reports do comply, is it clear whether DTMB has filed reports in any other years or if it disputes its duty to do so in the future. Accordingly, I would deny each side's request for summary disposition regarding mandamus and declaratory relief as to DTMB and hold an evidentiary hearing, after which this Court can decide the issue on the basis of its findings.
While the content of the reports may require discretionary acts, the completion and publication of the reports is ministerial.
As noted in the Supreme Court's opinion: "In answer to the complaint, the state defendants denied that they had not complied with MCL 21.235 but admitted that they had not completed the reporting requirements of MCL 21.241." Taxpayers, 508 Mich. at 83. Defendants' answer read in pertinent part: "Defendants deny as untrue that the reporting requirements of MCL 21.235 are not met . . . . However, Defendants admit that the reporting requirements in MCL 21.241 have not been completed."