In Adair v. Michigan Department of Education, the Michigan Court of Appeals held that a plaintiff alleging insufficient appropriation for a state-mandated task must make a showing that the Legislature used flawed methodology to calculate the appropriation.
In 2010, the plaintiffs (465 school districts and a representative tax payer from each) successfully sued over an unfunded state mandate pursuant to the Headlee Amendment, Const 1963 art. 9 §§ 25-34. See Adair v. Michigan, 785 NW2d 119 (2010) (“Adair I”). The Legislature had required local school districts to collect maintain and report data for use by the state. But initially, the state did not provide funding for local school districts to do so. After plaintiffs’ first lawsuit, the Legislature allocated funding for such reporting. Then, the plaintiffs brought this suit alleging that the appropriations were insufficient. The court of appeals referred the matter to a special master, who required that plaintiffs show the specific dollar amount of the alleged under-funding, and directed a verdict for the defendant when the plaintiffs were unable to do so.
On review, the court of appeals found that the Adair I majority rejected any requirement that plaintiffs produce evidence of specific dollar-amount increases in costs incurred by the districts in order to comply. Accordingly, the appellate court held that the appropriate burden for plaintiffs alleging an insufficient appropriation is to present evidence that would 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 fails to reflect the ‘actual cost to the state if the state were to provide the activity or service mandated as a state requirement.’” quoting MCL 21.233(6). The court of appeals remanded for an evidentiary hearing under that standard.
The plaintiffs also challenged four public acts as unfunded mandates prohibited by the Headlee Amendment. But the court of appeals determined that none of these acts, which made changes to existing provisions in the Teacher Tenure Act, Revised School Code, and the Public Employee Relations Act, imposed new or increased activities upon the school districts to trigger an unfunded mandate. Finally, the appellate court rejected the Government’s res judicata argument.