Taxpayers for Mich. Constitutional Gov't v. State, Dep't of Tech.

• Decision Date: 22 December 2022
• Docket Number: 334663
• Parties: 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.
• Court: Court of Appeal of Michigan — District of US

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.

No. 334663

Court of Appeals of Michigan

December 22, 2022

Original Action.

Before: BORRELLO, P.J., and SHAPIRO and GADOLA, JJ.^[1]

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

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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.^[2]

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

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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.

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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...