Adair v. State, No. 230858 (Mich. App. July 3, 2008)
The Michigan Court of Appeals has ruled that the record keeping obligations imposed on local school districts by state and federal law violate the Headlee Amendment provision prohibiting unfunded mandates. The Headlee Amendment forbids the state from reducing funding levels for the necessary costs of existing activities or services mandated by the legislature and requires the state to completely fund the necessary costs of new or increased activities or services mandated by the legislature. In 2004, the Michigan Supreme Court dismissed the bulk of the claims raised in a lawsuit brought by a coalition of 467 school districts challenging the adequacy of state funding provided under the state constitution’s "Headlee Amendment." However, the high court did leave intact the school districts’ claim alleging that financial burden imposed by the state’s data collection and reporting requirements violate the Headlee Amendment. It remanded the case to the court of appeals for further proceedings on the one surviving claim. The court of appeals then appointed a special master to hear the remaining claim. The special master concluded that the state requirements violated the Headlee Amendment provision “commonly referred to as the ‘prohibition on unfunded mandates’ or ‘POUM’ clause, because the record-keeping obligations imposed by the state on the school districts require ‘the districts to actively participate in collecting, maintaining and reporting data that the state requires for (only) its own purposes.’”
The court of appeals adopted the special master’s findings of fact and conclusions of law, with modifications, and issued a declaratory judgment in favor of the school districts. It pointed out that in order for the school districts to carry their burden of proof on the claim, they must establish: “(1) an increase in the level of activity or services mandated by the state, and (2) a complete failure on the part of the state to provide any funding to off-set the necessary costs to be incurred by the districts.” Regarding the first factor, the court of appeals found that the evidence established that the state is requiring school districts to collect, maintain, and report data for its own purposes, namely to meet federal government requirements under the No Child Left Behind Act (NCLB). It stated: “The record also establishes that the data collection and reporting implemented through the CEPI [Center for Educational Performance and Information, which implements two statewide databases of student information] resulted in the state offloading some of its responsibilities onto the districts and, therefore, imposing upon the districts obligations to undertake several new activities and to engage in an increased level of activities within the meaning of the POUM clause.” It rejected the state’s argument that any increased reporting burdens on the districts are not as a result of law creating CEPI, but rather “other state and federal laws, such as Michigan’s School Safety Initiative and the federal government’s No Child Left Behind Act.” The court of appeals responded that “[t]he fact that the increases in state-mandated activities required of the school districts is the product of other state statutes is no defense shielding the state.” It pointed out that “Headlee prohibits the imposition of unfunded mandates no matter what particular state statute imposes such mandates” and “[f]urthermore, the position of the state that federal mandates do not constitute state requirements implicating Headlee contradicts the pronouncement of our Supreme Court that there is no exception in [the POUM clause] for federal mandates enforced by the state.”
Turning to the second factor, the court of appeals agreed with the special master that the state had failed to “fund the necessary costs associated with the data collection and reporting mandates associated with the CEPI,” but arrived at that conclusion based on different reasoning. The court agreed with the special master that, given that the districts must pay for any CEPI-related costs and expenses from their general operating budget which is funded by unrestricted funds from the state, “the fact that the state provides a percentage of school district funding does not mean that the state can impose additional mandates upon the districts without appropriating the necessary costs to perform those mandates.” It concluded that the state legislature could not “require the school districts to dip into the ‘discretionary use budget’ to satisfy the state’s Headlee obligation.” The court of appeals also found that the evidence “established that the school districts are expected to shift funds from the discretionary funds bucket to cover any of the costs associated with their data collecting and reporting obligations.” Based on that factual finding, it concluded “the state has not funded the necessary costs associated with the data collection and reporting mandates associated with the CEPI, as required by the POUM clause.”
Adair v. State, No. 230858 (Mich. App. July 3, 2008)
[Editor’s Note: COSA members can read a summary of the Michigan Supreme Court’s 2004 decision remanding the case to the court of appeals at the link below.]
Adair v. Michigan summary