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147794 - Adair v Dep't of Education

Daniel Adair, et al.,
Dennis R. Pollard
(Appeal from Ct of Appeals)
Michigan Department of Education, Budget Director, Treasurer and Superintendent of Public Instruction for the State of Michigan,
Timothy J. Haynes


This dispute arose from a disagreement concerning the funding obligations of the state of Michigan under the Headlee Amendment to the Michigan Constitution, Const 1963, art 9, §§ 25-34.  The Headlee Amendment provides, in part, that the legislature may not impose new or increased activities or services on local government without making an appropriation to pay for such activities or services. Const 1963, art 9, § 29.  This provision is referred to as a prohibition on unfunded mandates (POUM).  In 2010, the Michigan Supreme Court held that the state violated the POUM provision when it required the plaintiff school districts to collect, maintain, and report to the Center for Educational Performance and Information (CEPI) certain types of data for use by the state, without providing funds to reimburse the school districts for the necessary increased costs they would incur in order to comply with those recordkeeping mandates. In making this ruling, the Supreme Court held that, in situations where the Legislature has made no appropriation to cover a new or additional mandate, the plaintiffs did not have to prove the amount of the increased costs.  Adair v Michigan, 486 Mich 468, 480 (2010).  In a footnote, the Supreme Court further explained that “. . . if the state did appropriate funds for the new or increased activity or service, the plaintiff would likely have a higher burden in order to show a POUM violation. Under those circumstances, the state would not have violated the POUM provision per se by failing to provide funding. Because those circumstances are not presented in the instant case, we need not address this issue.” 
In response to the ruling that the Legislature had imposed an unfunded mandate, the Legislature appropriated almost $60,000,000 to reimburse the school districts for the compliance costs incurred during the 2010-2011 and 2011-2012 school years. The plaintiffs - more than 400 school districts and a representative taxpayer from each district – filed an original action in the Court of Appeals to challenge the constitutionality of the method by which the Legislature funded these appropriations. They also challenged the adequacy of the amount of each appropriation. Finally, the plaintiffs alleged that the Legislature violated the POUM provision by imposing new or an increased level of activities on the districts through amendments to several provisions of the Revised School Code, the teacher tenure act, and the public employment relations act without appropriating any funding to reimburse the school districts for the necessary costs associated with satisfying the new mandates.
The Court of Appeals referred the matter to a special master.  In proceedings before the special master, the plaintiffs conceded that they could not establish the dollar amount of the alleged underfunding, although they stated that they would offer expert testimony to establish serious flaws in the methodology used by the Legislature to determine the appropriation.  The plaintiffs argued that this was sufficient to satisfy their burden under the 2010 Adair decision.  The special master did not agree, and ruled that Adair required the plaintiffs to establish a specific amount of underfunding.  He granted the defendants’ motion to dismiss this claim, and issued his final report to the Court of Appeals.
Both sides objected to aspects of the special master’s report.  In a published opinion, the Court of Appeals adopted the findings of fact and conclusions of law of the special master, with the exception of the special master’s characterization of the plaintiffs’ burden of proof.  The Court of Appeals ruled that the plaintiffs’ burden must involve something less than proving the dollar cost of the alleged underfunding.  The plaintiffs’ burden, concluded the appeals court, was to present evidence of a sufficient nature to allow the trier of fact to conclude that the methodology employed by the Legislature to determine the amount of the appropriation was so flawed that it failed to reflect the “actual cost to the state if the state were to provide the activity or service mandated as a state requirement . . . .”  MCL 21.233(6).  The Court of Appeals further ruled that the plaintiffs’ expert testimony, if accepted by the trier of fact, would have satisfied their burden.  The case was remanded to the special master for trial, although the Court of Appeals then issued a stay to permit further appellate review. 
The state appealed. In an order dated February 5, 2014, the Supreme Court granted leave to appeal.