Mich. Educ. Ass'n v. Sec'y of State

488 Mich. 18

793 N.W.2d 568

189 L.R.R.M. 3121

264 Ed. Law Rep. 371

MICHIGAN EDUCATION ASSOCIATION, Petitioner-Appellant,

v.SECRETARY OF STATE, Respondent-Appellee.

Docket No. 137451.

Calendar No. 7.

Supreme Court of Michigan.

Argued November 5, 2010.

Decided Dec. 29, 2010.

White, Schneider, Young & Chiodini, P.C. (by Kathleen Corkin Boyle), Okemos, for petitioner.

Michael A. Cox, Attorney General, B. Eric Restuccia, Solicitor General, and Heather S. Meingast, Denise C. Barton, and Ann Sherman, Assistant Attorneys General, for respondent.

Foster, Swift, Collins & Smith, P.C. (by Eric E. Doster), Lansing, for amici curiae the Michigan Chamber of Commerce.

Sachs Waldman, P.C. (by Andrew Nickelhoff), Detroit, for amici curiae Michigan State AFL-CIO; SEIU Michigan State Council; and International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America.

Patrick J. Wright for amici curiae the Mackinac Center for Public Policy.

Opinion

HATHAWAY, J.

At issue in this case is whether a public school may administer payroll deductions for its employees who remit funds to the Michigan Education Association Political Action Committee (MEA-PAC), a segregated fund under MCL 169.255.

We conclude that the Court of Appeals clearly erred by holding that administration of a payroll deduction system is not allowed under Michigan law. We reverse the Court of Appeals' judgment because a public school's administration of a payroll deduction system (the system) that remits funds to a segregated fund is not precluded by any prohibition in MCL 169.257(1) and is therefore permitted.

MCL 169.257(1), commonly referred to as § 57 of the Michigan Campaign Finance Act (MCFA),¹ specifically prohibits a public body from using public resources to do three things: (1) make an expenditure, (2) make a contribution, and (3) "provide volunteer personal services that are excluded from the definition of contribution under section 4(3)(a)" of the MCFA,MCL 169.204(3)(a).² First, the administration of such a system is not an "expenditure" under the MCFA because the cost of administration is an "expenditure for the establishment, administration, or solicitation of contributions to a separate segregated fund or independent committee," ³ which is an enumerated exception to the statutory definition of "expenditure." Second, administrationof the system is not a "contribution" as defined by the MCFA because there is no net conveyance of anything of monetary value made for the purpose of influencing the nomination or election of a candidate or for the qualification, passage, or defeat of a ballot question. Last, a public school's administration of a payroll deduction system does not "provide volunteer personal services that are excluded from the definition of contribution under section 4(3)(a)" ⁴ as defined by the MCFA because the MEA-PAC fully anticipates prepayment for any administration costs. Thus, the administration of a payroll deduction system by a public school is permitted under the MCFA.

I. FACTS AND PROCEEDINGS

Petitioner, the Michigan Education Association (MEA), is a voluntary, incorporated labor organization that represents members employed by public schools, colleges, and universities throughout Michigan. The MEA's political action committee, MEA-PAC, is a separate segregated fund under § 55 of the MCFA. MCL 169.255. According to the MEA, the MEA-PAC is funded in part by MEA member payroll deductions. The MEA (or its affiliates) has entered into collective bargaining agreements with variouspublic school districts throughout the state that require the school district employer to administer a payroll deduction plan for contributions to the MEA-PAC. The current case involves such an agreement between the Kalamazoo County Education Association/Gull Lake Education Association and the Gull Lake Public Schools. The Gull Lake collective bargaining agreement also requires the Gull Lake Public Schools to make other payroll deductions, such as the payment of MEA dues and service fees. The MEA plans to pay the Gull Lake Public Schools, in advance, for all anticipated costs to Gull Lake Public Schools attributable to administering payroll deductions to the MEA-PAC or any other separate segregated fund affiliated with the MEA. The MEA contends that under this proposal, Gull Lake Public Schools would not incur any costs or expenses in administering the requested deductions because the Gull Lake Public Schools would be paid in advance for such costs and expenses.

As a condition to implementing the collective bargaining agreement, a representative of the Gull Lake Public Schools requested that the MEA obtain a declaratory ruling on the validity of the payroll deduction system. On August 22, 2006, the MEA filed a request for a declaratory ruling with respondent, the Secretary of State. The MEA detailed its proposal for payroll deductions to be made by the Gull Lake Public Schools and asserted that the administration of the payroll deductions by the school district would not be an "expenditure" under the MCFA and would not violate § 57 of the MCFA, MCL 169.257. The MEA requested that the Gull Lake Public Schools be allowed to make and transmit payroll deductions requested by MEA members to MEA-PAC as long as the members had filled out voluntary consent forms andeither the MEA or the MEA-PAC had paid the school district, in advance, for any costs associated with administering those payroll deductions. The MEA also asked the Secretary of State for a declaratory ruling on what costs it should consider in determining the costs attributable to administering the payroll deductions that are to be transmitted to the MEA-PAC.

On November 20, 2006, the Secretary of State ruled that the Gull Lake PublicSchools could not make and transmit payroll deductions requested by MEA members to the MEA-PAC because § 57 of the MCFA prohibits a public body from making expenditures or collecting contributions for a political action committee. The ruling noted that the Department of State and the Attorney General had both previously concluded that a public body is prohibited from collecting and remitting contributions to a committee through its administration of a payroll deduction plan. The ruling explained that § 55 of the MCFA allows named private entities to make expenditures for the establishment and administration and solicitation of contributions to a separate segregated fund. However, the ruling stated that no explicit provision in the MCFA authorizes a public body to do so and concluded that the school district is prohibited from expending governmental resources for a payroll deduction plan that deducts wages from its employees on behalf of the MEA-PAC.

The Secretary of State's ruling further concluded that paying the costs of administering the payroll deductions in advance would not effectively avoid a violation of § 57. This conclusion was based on an analysis of this issue in a recent opinion of the Attorney General. OAG, 2005-2006, No 7187, p. 81(February 16, 2006). Because the Secretary of State concluded that administration of a payroll deduction system would violate the MCFA, the ruling did not address what costs should be considered attributable to administering the payroll deductions or the dollar amount that should be prepaid.

The MEA petitioned for review of the declaratory ruling in the Ingham Circuit Court. On September 4, 2007, the trial court issued an opinion setting aside the declaratory ruling on the grounds that it was arbitrary, capricious, and an abuse of discretion. The trial court opined that if the costs of administration are paid in advance, administration of payroll deductions does not result in transfer of money to a union's political action committee and, therefore, an "expenditure" has not been made within the meaning of the MCFA. Thus, the trial court held that a public body may administer payroll deductions as long as all the costs of making deductions are paid in advance.

The Secretary of State applied for leave to appeal in the Court of Appeals, which was granted. In a split decision, the Court of Appeals reversed the trial court's opinion and held that, regardless of advance payment for the associated costs, a public school's administration of a payroll deduction system is still an "expenditure" under the MCFA and thus prohibited.⁵ Judge Whitbeck dissented, and would have held that administration of a payroll deduction system is not an "expenditure" ⁶ as the MCFA defines it.

The MEA sought leave to appeal in this Court. This Court granted oral argument on whether to grant theapplication ⁷ andsubsequently granted leave to appeal.⁸

II. ANALYSIS

The issue in this case is whether § 57 of the MCFA, MCL 169.257(1), prohibits a public school from administering a payroll deduction system that remits funds to the MEA-PAC. This is an issue of statutory construction, which we review de novo.⁹

To interpret the MCFA, we apply the established rules of statutory construction. "Assuming that the Legislature has acted within its constitutional authority, the purpose of statutory construction is to discern and give effect to the intent of the Legislature." ¹⁰Accordingly, a Court must interpret the language of a statute in a manner that is consistent with the legislative intent.¹¹ In determining the legislative intent, the actual language of the statute must first be examined.¹² "As far as possible, effect should be given to every phrase, clause, and word in the statute." ¹³ When considering the correct interpretation, a statute must be read as a whole.¹⁴ Individual words and phrases, while important, should be read in the context of the entire legislative scheme.¹⁵ In defining particular words within a statute, a court "must 'consider both the plain meaning of the critical word or phrase as well as "its placement and purpose in the statutory scheme." ' " ¹⁶ When a statute explicitly defines a term, the statutory definition controls.¹⁷

In applying...