Adair v. State, Docket No. 121536, Calendar No. 5.
Decision Date | 09 June 2004 |
Docket Number | Docket No. 121536, Calendar No. 5. |
Parties | Daniel ADAIR, a taxpayer of the Fitzgerald Public Schools, and Fitzgerald Public Schools, et al., Plaintiffs-Appellants, v. STATE of Michigan, Department of Education, Department of Management and Budget, and Treasurer of the State of Michigan, Defendants-Appellees. |
Court | Michigan Supreme Court |
Pollard, Albertson, Nyovich & Higdon, P.C. (by Dennis R. Pollard and Richard E. Kroopnick), Bloomfield Hills, MI, for plaintiffs.
Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and Jane O. Wilensky, Edith C. Harsh, and D.J. Pascoe, Assistant Attorneys General, Lansing, MI, for defendants.
White, Schneider, Young & Chiodini, P.C. (by James A. White, Kathleen Corkin Boyle, and Timothy J. Dlugos), Okemos, MI, for Michigan Education Association, amicus curiae.
This Court is once again called on to decide if the state has met its constitutional mandate to adequately fund public education. Plaintiffs are taxpayers and school districts seeking a declaratory judgment that the state failed to meet its funding responsibility mandated by Const. 1963, art. 9, § 29, a section of our Constitution that is commonly known as the "Headlee Amendment." The complaint asserts that the state did not provide funding to school districts in Michigan for the necessary increased costs of providing activities and services that are new or mandated at an increased level since December 23, 1978. The Court of Appeals found that claims plaintiffs did raise or could have raised in earlier suits were barred pursuant to the doctrine of res judicata.1 As to those issues that were not subject to res judicata analysis, the Court of Appeals held that they were otherwise barred because of releases the parties executed or the activities2 were not new or were not increased activities within the meaning of Const. 1963, art. 9, § 29. We affirm in part, reverse in part, and remand.
Under Michigan's Headlee Amendment,3 as of 1978, the state is forbidden from reducing funding levels for the necessary costs of existing activities or services mandated by the Legislature, and is to completely fund the necessary costs of new or increased activities or services mandated by the Legislature:
The state is hereby prohibited from reducing the state financed proportion of the necessary costs of any existing activity or service required of units of Local Government by state law. A new activity or service or an increase in the [level] of any activity or service beyond that required by existing law shall not be required by the legislature or any state agency of units of Local Government, unless a state appropriation is made and disbursed to pay the unit of Local Government for any necessary increased costs. The provision of this section shall not apply to costs incurred pursuant to Article VI, Section 18. [Const. 1963, art. 9, § 29.]
These two different provisions in art. 9, § 29 have been described by this Court as follows:
The first sentence of this provision prohibits reduction of the state proportion of necessary costs with respect to the continuation of state-mandated activities or services. The second sentence requires the state to fund any additional necessary costs of newly mandated activities or services and increases in the level of such activities or services from the 1978 base year. [Judicial Attorneys Ass'n v. Michigan, 460 Mich. 590, 595, 597 N.W.2d 113 (1999), quoting Mayor of Detroit v. State, Dept. of Management and Budget, 228 Mich.App. 386, 396, 579 N.W.2d 378 (1998).]
To assist the public in understanding the different thrusts of these two sentences, this Court has described the first sentence as a "maintenance of support" (MOS) provision and the second sentence as a "prohibition on unfunded mandates" (POUM) provision. See id. Accordingly, to establish a Headlee violation under the MOS clause, the plaintiffs must show "(1) that there is a continuing state mandate, (2) that the state actually funded the mandated activity at a certain proportion of necessary costs in the base year of 1978-1979, and (3) that the state funding of necessary costs has dipped below that proportion in a succeeding year." Oakland Co. v. Michigan, 456 Mich. 144, 151, 566 N.W.2d 616 (1997) (opinion by Kelly, J.). Under the POUM clause, they must show that the state-mandated local activity was originated without sufficient state funding after the Headlee Amendment was adopted or, if properly funded initially, that the mandated local role was increased by the state without state funding for the necessary increased costs.
However, not all activity changes established pursuant to statute or rule constitute "new or increased" activity requiring state funding. M.C.L. § 21.234(5) explains what the POUM provision excludes:
Thus, under a POUM analysis, not every required change in school activities requires state funding under the Headlee Amendment. Judicial Attorneys Ass'n, supra at 603, 597 N.W.2d 113. Headlee, at its core, is intended to prevent attempts by the Legislature "to shift responsibility for services to the local government ... in order to save the money it would have had to use to provide the services itself." Id. at 602-603, 597 N.W.2d 113.
Taxpayers alleging a violation of the Headlee Amendment may file a request for declaratory relief in the Court of Appeals under Const. 1963, art. 9, § 32.4 In this case, plaintiffs have brought suit under art. 9, § 32, alleging that the Legislature violated the second provision of art. 9, § 29 by requiring new activities and increases in existing activities without providing sufficient additional funding. Because of the extensive history of similar litigation between these parties, a brief review of the earlier suits is required.
Three hundred eighty-two of the local and intermediate school districts named as plaintiffs in the instant suit adopted the statutorily prescribed resolution, timely sent the executed resolutions to the State Treasurer, and received settlement payments.5
Several months later, in 1998, plaintiffs taxpayers and school districts brought a second suit, alleging that the system the state used for distributing funds resulted in an underfunding of the schools for the years 1997-1998 through 2000-2001 in violation of the Headlee Amendment. Durant v. Michigan (On Remand), 238 Mich. App. 185, 605 N.W.2d 66 (1999) (...
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