Oakland County v. State

438 N.W.2d 61, 432 Mich. 49

• Court: Michigan Supreme Court
• Decided: March 9, 1989
• Docket: Docket No. 81367
• Status: Published

Opinions

Brickley, J.

This case comes to us for an interpretation of the maintenance-of-effort provision under § 77(1) of 1978 PA 416, which provides road patrol grants to Michigan’s county sheriffs.

The Court of Appeals set forth the historical development of the passage of this act and resulting conflict between the parties.

Defendants appeal as of right from the opinion and order entered February 13, 1986, by the Court of Claims in which the court granted plaintiffs’ motion for summary disposition pursuant to MCR 2.116(0(10) and ordered defendants to pay $422,000 to plaintiffs under 1978 PA 416, specifically MCL 51.77; MSA 5.868(17).

MCL 51.77; MSA 5.868(17) provides for county sheriff departments to receive a grant from Michigan’s Office of Criminal Justice to help defray the cost of road patrol if the county meets certain qualifications. A history of the act in question will aid in understanding the issue on appeal. Neither the common law nor Michigan statutory authority impose[s] a duty on the sheriff of a county to supply full-time road patrol on all county roads and highways. Brownstown Twp v Wayne Co, 68 Mich App 244, 251; 242 NW2d 538 (1976), lv den 399 Mich 831 (1977). In Brownstown Twp, several townships sued the Wayne County Board of Commissioners to provide the necessary funds to enable the Wayne County Sheriff to continue road patrol service in outlying county areas. This Court stated that a stricter duty to maintain law and order was imposed upon the sheriff in areas of the county not adequately policed by local authorities, but added that the sheriff was not required to regularly patrol those areas. Id. .. .

Act 416 arose from the consensus that many of the roads in Michigan were inadequately patrolled and that enforcement of traffic regulations and availability of police officers to the public would be significantly enhanced by placing greater emphasis on road patrols. The Legislature established a list of services to be provided by a county sheriff’s department which would receive grant monies under Act 416. . . . The county sheriff’s department would be' required to provide the expanded services only to the extent that state funds were provided. MCL 51.77(3); MSA 5.868(17)(3). . . .

In short, Act 416 was designed to enhance county road patrol services by providing funds to support those efforts. It was designed to supplement, and not replace, existing county road patrol efforts. Act 416 was guided by the philosophy that if the state was going to mandate greater performance by a county sheriff’s department, the state, in fairness, ought to provide a supplement to local funding. . . .

The controversy in this case concerns the conditions which the Legislature attached to receipt of grant funds. These conditions are contained in MCL 51.77(1); MSA 5.868(17)(1) in a "maintenance of effort” (moe) clause. The moe clause is emphasized in the following passage:

"Before a county may obtain its grant from the amount annually appropriated for secondary road patrol and traffic accident prevention to implement section 76, the county shall enter into an agreement for the secondary road patrol and traffic accident prevention services with the office of criminal justice. . . . An agreement entered into under this section shall be void if the county reduces its expenditures or level of road patrol below that which the county was expending or providing immediately before October 1, 1978, unless the county is required to reduce general services because of economic conditions and is not merely reducing law enforcement services. [MCL 51.77(1); MSA 5.868(17X1).]” [Emphasis in original.]

The purpose of the moe clause was to assure that a recipient county maintained the level of funding and the level of road patrol services that existed immediately prior to October 1, 1978, the effective date of Act 416. General guidelines issued on January 5, 1979, to the chairpersons of county boards of commissioners included the following statement:

"[I]nasmuch as it is [the] legislative intent that PA 416 funds not supplant county budget funding, the county budget for road patrol and the number of road-patrol officers authorized in the county budget prior to 1 October 1978 must be maintained.”

From 1978 until 1983, plaintiffs successfully applied for and were awarded grant monies under Act 416. However, on April 29, 1983, plaintiffs were informed by the Office of Criminal Justice (ocj), . . . [that it] no longer satisfied the eligibility criteria established by MCL 51.77(1); MSA 5.868(17)(1). After negotiations failed, plaintiffs filed the instant suit.

The dispute centers on whether "contractual” sheriffs who were funded only partially by plaintiffs’ county fund could be taken into account in determining the amount of road patrol the county was providing in 1983. The parties agree that the amount of money expended by the county increased from 1978 to 1983. The dispute centers on whether the level of road patrol provided by the county in 1983 declined below the 1978 level. A review of the data submitted by plaintiffs [establishes that the county reduced its general fund support based on an increase in positions funded through contractual arrangements with the township. The net result was an increase in the total number of road patrol officers.¹] . . . Ocj took the position that "contractual” officers, i.e., those supported by the receipt of noncounty general fund monies, could not be included in meeting the service level of 1978. Ocj supported that conclusion by referring to the statutory language "county was expending or providing,” and noting its focus is on a county effort, and not combined local government effort. Further, ocj asserted that its position was consistent with standard legal interpretations of similar phrases. Ocj pointed out that the forms and explanatory materials used in the administration of Act 416 had consistently been based on its interpretation from the inception of the program. Finally, ocj pointed out that to include contractual positions would require counties which suffer a reduction in contractual positions below the 1978 level to have to replace the contractual positions at county expense in order to retain eligibility. In other words, those counties would experience direct added costs. In contrast, the exclusion of contractual positions merely results in a loss of potential savings to counties which increase the number of contractual positions. . . .

The Court of Claims, . . . [included in its calculation of eligibility those deputies partially funded by townships in its determination] that the county expended more money and provided more deputy-hours of service in 1983 than in 1978 for road patrol services. [161 Mich App 335, 336-342; 410 NW2d 812 (1987).]

The Court of Appeals went on to conclude that the Court of Claims came to an erroneous conclusion.

We disagree and conclude that a literal reading of the requisite maintenance-of-effort provision of § 77(1) supports the finding that the funds secured by contract from the township, and the deputies financed therefrom should be included in the determination of eligibility for Act 416 grant monies. Such a reading is also consistent with the overall scheme and purpose of the act.

i

For emphasis, we restate the maintenance-of-effort provision as we begin our analysis with an interpretation of this statutory provision.

An agreement entered into under this section shall be void if the county reduces its expenditures or level of road patrol below that which the county was expending or providing immediately before October 1, 1978, unless the county is required to reduce general services because of economic conditions and is not merely reducing law enforcement services. [MCL 51.77(1); MSA 5.868(17X1). Emphasis added.]

The Court of Appeals stated:

The statute clearly states that an agreement shall be void if "the county reduces its . . . level of road patrol below that which the county was . . . providing” before October 1, 1978. [Id. at 343. Emphasis in original.]

The question to be decided is not, as the Court of Appeals states, whether the county could or could not reduce its level of road patrol. The answer to that is obvious, it cannot. The issue is whether the county failed to meet the maintenance-of-effort requirement only because the money it expended came to the county from township funds, rather than from the county’s general fund, even though the county maintained "its expenditures” and "the level of road patrol” at the required minimum.

There are two requirements of the maintenance-of-effort provision: that (1) county "expenditures” and (2) the "level of road patrol” not be reduced. It is undisputed that the deputy sheriff positions at issue are filled by county employees and are part of the sheriff’s road patrol. Therefore it is undisputed that the number of deputies, and therefore the "level of road patrol,” was not reduced between the year of the passage of the act, 1978, and the year in dispute, 1983.

It is, in our view, difficult to avoid the conclusion that a plain and literal reading of "its expenditures” would include any monies the county secures in any manner which it expends.² The Legislature made no reference to revenue or source of revenue, only to "its expenditures.” Furthermore, no one questions that the 1983 sheriffs road patrol (the year in dispute) is supported by a county expenditure.

Without explanation or analysis, the Court of Appeals has ignored the key words "its expenditures or level of road patrol” in the maintenance-of-effort provision. It has made the controlling factor of its analysis the source of county financial support represented by township funds paid to the county on a contractual basis.

Defendants-appellees see them as township funds, as opposed to county monies, and, for purposes of the maintenance-of-effort language of the act, would have us read into the concept of required county support only activities supported by the county general fund.³ They also focus on the source of funds rather than on the key words of the maintenance-of-effort provision. The appellants, on the other hand, point to a communication from the agency that administers the Act 416 grant funds, Office of Criminal Justice (OCJ), which adopts the general fund standard for evaluating county effort, but nonetheless comments on the various sources of county funding and includes, in addition to general fund tax revenues, "specific grant funds (i.e., . . . contractual arrangements with other governmental units).” Apparently without realizing it, the Court of Appeals gave the correct answer to the right question when it said, "[t]he parties agree that the amount of money expended by the county increased from 1978 to 1983.” Oakland Co v Michigan, supra at 341 (emphasis added). However, the Court of Appeals, led by a deference to an ocj interpretation of the statute,⁴ placed a gloss on the maintenance-of-effort provision of the act which shifted the focus from county "expenditures” to county source of funds. Such a distortion of the very precise words of the maintenance-of-effort provision could only be justified, if at all, if an overall reading of the intent and purpose of Act 416 dictated such a result.

ii

There is nothing in the legislative history of Act 416, or in its overall scheme or objective, that would argue against a literal interpretation of the maintenance-of-effort provision of § 77(1).

A

Appellees have convinced themselves and, without any reference to the statute or its legislative history, attempt to convince us that it is their mission to prevent counties from seeking to maintain their required road patrol level by contributions from townships that rely on their services. The appellees argue:

Counting township funded deputies as county funded means Plaintiffs are using township monies to supplant the county monies which would otherwise have gone to fund the road patrol. This is precisely the evil which ocj intended to avoid by refusing to allow counties to take credit for township funded offices.

What the Office of Criminal Justice sees as an evil was not the concern of Act 416. In fact, the act was clearly intended to augment the then-existing levels of county expenditures (which at that time included township funds), which is what the maintenance-of-effort provision is all about. Contractual agreements between county and township governments, in order to help counties defray the costs of road patrol activities within specific townships, were recognized facts at the time of the passage of the act. A requirement in the act that such agreements be reported annually, § 77(6)(d), is evidence that the Legislature recognized the existence and purpose of these contracts.

It is interesting to note that the act also provides for a maintenance-of-effort arrangement, § 76(3), when the county contracts with a municipality for § 76 duties. By agreement, the local unit would be required by the § 76(3) maintenance-of-effort provision to maintain its preexisting level of services, thus insuring that any Act 416 funds being spent by the county within those local units would not be replacing the effort of those local units involved. However, in spite of the facts that Act 416 grew out of the conflict between the county and township governments, Brownstown Twp, supra, and that county-township contracts were not uncommon, the Legislature did not address the relationship between the townships and the counties. A third maintenance-of-effort arrangement for the townships, similar to that between the municipalities and the county, and the county and the state, is conspicuously absent from the act.

B

The Legislature clearly intended, and so stated, that Act 416 state funds not replace the level of road patrol funding existing at the time of the passage of the act. There would have been no purpose in requiring that "its expenditures” had to be from the county’s general fund. Under the Court of Appeals rationale, the county would effectively be precluded, for example, from adopting special millage and earmarking it for road patrol purposes in order to free up general fund monies for less popular endeavors. Similarly, a bequest from a generous law-enforcement-minded taxpayer earmarked for the road patrol could not be credited toward the county’s maintenance of effort.

The fact that the Legislature did not impose a maintenance-of-effort provision on townships similar to that which it imposed on cities and villages, indicates that it viewed the county and the township as one for purposes of carrying out the intention of the act. This is further buttressed by the fact that cities and villages, unless otherwise agreed to, are not included in the sheriff’s law enforcement responsibilities under the act. The townships and their inhabitants then are the primary service area of the county road patrol. Outside cities and villages, there are no county roads that are not in townships. This may also account for the fact that the maintenance-of-effort provision for the county refers to "its expenditures” and "level of road patrol,” rather than as in the maintenance-of-effort provision for cities and villages, where it is measured only in "the number of sworn law enforcement officers employed by the city or village.” The Legislature certainly knew that part of the fiscal support for the road patrol was coming from the townships through contractual agreements. All of this, then, argues for the conclusion that the maintenance-of-effort provision of § 77(1) envisions the effort of the township and the county as one. There simply is no aspect of Act 416 that is frustrated by allowing a county to make its expenditures for the road patrol from funds derived from townships.⁵

iii

The Court of Appeals also advanced the policy argument of the ocj that its interpretation of the maintenance-of-effort provision would be in the county’s best interest. If only county general funds are counted toward the maintenance-of-effort requirement, in the event of a reduction of "contractual positions,” the county would not be forced to replace them with its own funds in order to stay at the 1978 level. Not only does the plaintiff—Michigan’s second largest county—not find this position to be in its best interest, but more importantly it works against the overall goal of the statute to enhance road patrol services beyond the 1978 level. Under this ocj position, the level of the county’s road patrol could be reduced below the 1978 level at the will of the township, without jeopardizing an Act 416 grant, as long as the county did not reduce its 1978 general fund support. Under our interpretation of the statute, the county would presumably have to use its own funds to make up any reduction in the township portion of the 1978 level of road patrol services, thus fulfilling the purpose of the maintenance-of-effort provision.

CONCLUSION

Rather than beginning with a literal reading of the statute, the Court of Appeals began with an unexamined assumption that it was the source of funding that controlled, rather than the net "expenditures” and "level of road patrol.” Having asked the wrong question, the Court of Appeals, in our judgment, comes to an erroneous conclusion.

In the final analysis, the plaintiff county is not using Act 416 grant monies to supplant a preexisting level of road patrol. Rather, it is using township contributions to supplant its preexisting general fund contribution to the road patrol.

There is no legislative intention, expressed or implied, that preexisting general fund expenditures must be maintained. There was no intention expressed or implied that townships must be discouraged from paying an increased share in the cost of maintaining the preexisting level of the road patrol, or that a county must be discouraged from seeking other than general fund support for the road patrol as part of its maintenance of effort. The only expression in the act is that the county must not supplant "its expenditures” with Act 416 funds. There is no suggestion that a county cannot ask a township to increase its spending to help the county maintain a level of road services necessary to avoid a loss of Act 416 monies.

We reverse the decision of the Court of Appeals and remand to the trial court for further proceedings not inconsistent with this opinion.⁶

Riley, C.J., and Levin, Cavanagh, Boyle, and Griffin, JJ., concurred with Brickley, J.

1 1978 1983

Gross Expenditures for Secondary Road Patrol $5,555,160 $9,163,329

Number of Fully Funded Secondary Road Patrol Deputies 48 25

Number of Contract Deputies Assigned to Local Units of Government 32 64

Total Number of Secondary Road Patrol Deputies 80 89

2 The parties labor over a strict versus liberal interpretation of the maintenance-of-effort provisions. We find such a distinction unnecessary when the language is clear and so susceptible to a literal reading that results in a conclusion not inconsistent with the purposes of the statute.

3 The appellees’ only citation to case law in support of their interpretation of the maintenance-of-effort provision is to Bennett v Kentucky Dep’t of Ed, 470 US 656; 105 S Ct 1544; 84 L Ed 2d 572 (1985), in which the Supreme Court decided a maintenance-of-effort question under title i of the Elementary and Secondary Education Act. The appellees analogize to the relationship between the federal government and the State of Kentucky in Bennett with the relationship between the state and the county herein. However the analogy breaks down because the Supreme Court made no mention of Kentucky’s mix of state and local spending in its finding that the State of Kentucky had used title i funds to supplant its own educational program. In fact, it lumped them together and referred to "state and local” expenditures. Unlike our situation, where the county-township total expenditures exceed the required level of road patrol, in Bennett the combined state and local expenditures were reduced.

4 The Court of Appeals added:

The construction given to a statute by those charged with executing it, although not binding on the courts, is entitled to the most respectful consideration and ought not be overruled without cogent reasons. [Id. at 345, citing Production Credit Ass’n of Lansing v Dep’t of Treasury, 128 Mich App 196, 197-198; 339 NW2d 871 (1983).]

The Office of Criminal Justice is an agency which operates under the direction of the Department of Management and Budget for the purpose of performing specific administrative duties. MCL 18.403; MSA 3.519(3). However, the statute does not authorize the ocj to act in a judicial or quasi-judicial capacity, nor does it limit the jurisdiction of appellate courts as to the scope of judicial review. There is nothing in the statute to suggest that the Legislature intended the ocj to act as an exclusive administrative factfinder and that because of its expertise the court should afford due deference to its findings.

The leading case setting forth the scope of judicial review of administrative decisions is MERC v Detroit Symphony Orchestra, 393 Mich 116, 121; 223 NW2d 283 (1974), in which we stated:

Const 1963, art 6, § 28 . . . sets forth the minimum constitutional scope of judicial review of administrative decisions.

"All final decisions, findings, rulings and orders of any administrative officer or agency existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights or licenses, shall be subject to direct review by the courts as provided by law. This review shall include, as a minimum, the determination whether such final decisions, findings, rulings and orders are authorized by law; and, in cases in which a hearing is required, whether the same are supported by competent, material and substantial evidence on the whole record.”

In a footnote, we stated that similar language is used in the Administrative Procedures Act which sets forth the scope of appellate review:

(1) Except when a statute or constitution provides for a different scope of review, the court shall hold unlawful and set aside a decision or order of an agency if substantial rights of the petitioner have been prejudiced because the decision or order is any of the following:

(b) In excess of the statutory authority or jurisdiction of the agency.

(e) Arbitrary, capricious or clearly an abuse or unwarranted exercise of discretion. [MCL 24.306; MSA 3.560(206).]

5 Since the most obvious purpose of the act is to have more funds spent on county road patrols, it would be helpful to know if either outcome has more effect than the other on the total amount of money that would be spent on the road patrol in a given county. The record is not helpful in that regard. One could speculate that, following the Court of Appeals result, Oakland County would increase its general fund support, while at the same time continue to receive the same support from the townships, resulting in a net increased expenditure for the road patrol. On the other hand, the Court of Appeals result might cause the county to give up state funding and attempt to secure even greater portions of its road patrol costs from townships. It is also possible that the Court of Appeals result would cause the county to increase its own county general fund contribution sufficiently to qualify for the state funds, and at the same time for political capital, forgo its acceptance of township contributions. In the latter two situations, the Court of Appeals holding may not result in an increase in the level of the road patrol. In any event, because of the lack of record support for these speculations, this factor has not been considered in our analysis.

6 Defendants-appellees argue alternatively that, even in light of our decision, plaintiffs-appellants are still not eligible for grant monies. This ineligibility is based on plaintiffs-appellants’ failure to comply with proper documentation and other application requirements to support the county’s qualification for grant monies. Since this issue was not dealt with by the Court of Appeals or the Court of Claims, we do not consider it here. If deemed appropriate, the Court of Claims may entertain further proceedings not inconsistent with this opinion.