Adair v. State

• Decision Date: 14 July 2010
• Docket Number: Calendar No. 1.,Docket Nos. 137424, 137453.
• Citation: 486 Mich. 468,785 N.W.2d 119,258 Ed. Law Rep. 709
• Parties: Daniel ADAIR, a taxpayer of the Fitzgerald Public Schools, Fitzgerald Public Schools, a Michigan municipal corporation, and others, Plaintiffs-Appellants, v. STATE of Michigan, Department of Education, Department of Management and Budget, and Treasurer of the State of Michigan, Defendants-Appellees. Daniel Adair, a taxpayer of the Fitzgerald Public Schools, Fitzgerald Public Schools, a Michigan municipal corporation, and others, Plaintiffs-Appellees, v. State of Michigan, Department of Education, Department of Management and Budget, and Treasurer of the State of Michigan, Defendants-Appellants.
• Court: Michigan Supreme Court

486 Mich. 468

785 N.W.2d 119

258 Ed. Law Rep. 709

Daniel ADAIR, a taxpayer of the Fitzgerald Public Schools, Fitzgerald Public Schools, a Michigan municipal corporation, and others, Plaintiffs-Appellants,

v.STATE of Michigan, Department of Education, Department of Management and Budget, and Treasurer of the State of Michigan, Defendants-Appellees.

Daniel Adair, a taxpayer of the Fitzgerald Public Schools, Fitzgerald Public Schools, a Michigan municipal corporation, and others, Plaintiffs-Appellees,

v.State of Michigan, Department of Education, Department of Management and Budget, and Treasurer of the State of Michigan, Defendants-Appellants.

Docket Nos. 137424, 137453.

Calendar No. 1.

Supreme Court of Michigan.

Argued Oct. 6, 2009.

Decided July 14, 2010.

Thrun Law Firm, P.C. (by Dennis R. Pollard, Farmington Hills, and Richard E. Kroopnick), East Lansing, for plaintiffs.

Michael A. Cox, Attorney General, B. Eric Restuccia, Solicitor General, and Timothy J. Haynes, Raymond O. Howd, Joshua S. Smith and Joseph E. Potchen, Prosecuting Attorneys General, for defendants.

Opinion

MARILYN J. KELLY, C.J.

This case involves the Headlee Amendment ¹ and is before this Court for the third time. Most of the legal issues have been resolved and appear in the discussion of facts and procedural history below. The issues remaining are (1) whether plaintiffs must introduce evidence of a specific, quantified increase in costs resulting from a violation of the Headlee Amendment provision prohibiting unfunded mandates to establish entitlement to a declaratory judgment and (2) whether plaintiffs' suit has been "sustained" under Const. 1963, art. 9, § 32, enabling plaintiffs to recover attorney fees. We answer the first question in the negative and thesecond question in the affirmative. Therefore, we affirm in part and reverse in part the judgment of the Court of Appeals.

I. FACTS AND PROCEDURAL HISTORY

The Headlee Amendment is an initiative passed by Michigan voters in 1978. Among its provisions, Headlee added the following section to the Michigan Constitution:

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.^[[^2]

Shortly after the Headlee Amendment was ratified, the Legislature enacted legislation designed to implement it.³

The state has required Michigan public school districts to report certain information, including pupil counts and financial data, for many years. However, in 2000, the Governor issuedExecutive Order No. 2000-9, which established the Center for Educational Performance and Information (CEPI). EO 2000-9 became effective September 28, 2000. Along with later legislation, it required plaintiff school districts to actively participate in collecting, maintaining, and reporting various types of data. The state began warehousing this data in several discrete databases, the single recordstudent database (SRSD), the financial information database (FID), the registry of educational personnel (REP), and the school infrastructure database (SID). Under MCL 388.1752,⁴ in order to receive yearly funding, school districts must furnish all data that the state considers necessary for the administration of the State School Aid Act.⁵

The information collected by the CEPI facilitates compliance with state reporting requirements and requirements imposed by the federal government. ⁶ In order to meet some of these requirements, the state must report data on a student-by-student, teacher-by-teacher, or building-by-building basis. This enables the state to receive federal funds under the No Child Left Behind Act.⁷

On November 15, 2000, plaintiffs filed the present suit in the Court of Appeals. Plaintiffs are 456 Michigan public school districts and a taxpayer from each district.⁸ They alleged that the recordkeeping and reportingrequirements in EO 2000-9 and MCL 388.1752 constituted an unfunded mandate and violated the provision of Const. 1963, art. 9, § 29 prohibiting unfunded mandates (the POUM provision). The parties stipulated midtrial that the database submissions listed in EO 2000-9 and the later legislation were not required until two years after the effective date of the executive order.

In its first adjudication of plaintiffs' claims, the Court of Appeals concluded that the claims raised or that could have been raised in earlier suits were barred by res judicata. It also held that plaintiffs' other claims were barred because of releases the parties had executed or because the activities complained of did not implicate the POUM provision. The Court granted summary disposition to defendants on all claims.⁹

We granted leave to appeal and reversed in part the judgment of the Court of Appeals.¹⁰ A majority of this Court agreed with the Court of Appeals that most of plaintiffs' claims were barred by res judicata or release or did not implicate the Headlee Amendment's POUM provision. However, we concluded that plaintiffs had sufficiently stated a claim on which relief could be granted in their recordkeeping claim. We remanded the case to the Court of Appeals for further proceedings on that claim.

On remand, the Court of Appeals concluded that plaintiffs had not provided documentary support for their claim that the CEPI requirements were an unfunded mandate. Consequently, it again granted summary disposition to defendants. ¹¹ Plaintiffs again appealed,and we vacated the Court of Appeals' judgment and again remanded to that Court.¹² We directed the Court of Appeals to reevaluate plaintiffs' claim "under both the 'new activity or service' and the 'increase in the [level] of any activity or service' prongs of Const. 1963, art. 9, § 29's prohibition of unfunded mandates...." ¹³

On second remand, the Court of Appeals appointed a special master to conduct fact-finding. The special master was instructed to determine

whether the record-keeping obligations imposed on plaintiff school districts by MCL 388.1752 and Executive Order 2000-9 constitute either a new activity or service or an increase in the level of a state-mandated activity or service within the meaning of Mich. Const. of 1963, art. 9, § 29's prohibition of unfunded mandates.^[14]

The special master heard testimony in this case in 2007. On January 27, 2008, she filed an opinion, concluding that the recordkeeping requirements did present an increase in the level of activity required of plaintiff school districts beyond what was previously required. Therefore, she concluded that the requirements violated the POUM provision.

The Court of Appeals adopted the conclusions of law and factual findings of the special master with some modifications and entered a declaratory judgment in favor of plaintiffs.¹⁵ The Court rejected plaintiffs' request for attorney fees under Const. 1963, art. 9, § 32, concluding that this suit "cannot be characterized ashaving been 'sustained' within the meaning of § 32." ¹⁶ Both plaintiffs and defendants appealed, and we granted both applications for leave to appeal in part.¹⁷

II. STANDARD OF REVIEW

Questions involving the proper interpretation of a constitutional provision receive review de novo.¹⁸ The proper interpretation and application of a statute is also a question of law that we consider de novo.¹⁹

III. ANALYSIS

We have established that "[t]he primary and fundamental rule of constitutional or statutory construction is that the Court's duty is to ascertain the purpose and intent as expressed in the constitutional or legislative provision in question." ²⁰ When interpreting constitutional provisions, we are mindful that the interpretation given the provision should be " 'the sense most obvious to the common understanding' " and one that " 'reasonable minds, the great mass of the people themselves, would give it.' " ²¹ "[T]he intent to be arrived at isthat of the people, and it is not to be supposed that they have looked for any dark or abstruse meaning in the words employed...." ²²

Article 9, § 29 of the Michigan Constitution prohibits the state from placing two related but independent burdens on local governmental entities. First, the state may not reduce the state-financed proportion of the necessary costs of any existing activity or service that state law requires of local units of government. Second, no state agency, including the Legislature, may require a new activity or service by a local unit of government. It may not require an increase in the level of an activity or service beyond that required by existing law. If it imposes such a requirement, the state must appropriate and disburse funding to pay the local unit of government for any necessary increased costs. This Court has described the first requirement as the "maintenance of support" (MOS) provision and the second requirement as the "prohibition on unfunded mandates" or POUM provision.²³ These two requirements address different situations and involve different harms. ²⁴ Therefore, the analysis applicable to each differs.²⁵ Only the POUM provision is applicable in this case.

[785 N.W.2d 126, 486 Mich. 479]

A. HEADLEE VIOLATIONS

A majority of this Court has held that to establish a violation of the POUM provision, a plaintiff 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." ²⁶ Also, as the dissent correctly notes, the state ...