OTTAWA COUNTY V FAMILY INDEPENDENCE AGENCY

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STATE OF MICHIGAN COURT OF APPEALS OTTAWA COUNTY, ALLEGAN COUNTY, BAY COUNTY, BERRIEN COUNTY, EATON COUNTY, GRAND TRAVERSE COUNTY, KALAMAZOO COUNTY, MARQUETTE COUNTY, MIDLAND COUNTY, SAGINAW COUNTY, and WASHTENAW COUNTY, FOR PUBLICATION March 22, 2005 9:10 a.m. Plaintiffs-CounterdefendantsAppellants, V No. 251365 Court of Claims LC No. 01-018083-CM FAMILY INDEPENDENCE AGENCY, Defendant-CounterplaintiffAppellee. Official Reported Version Before: Markey, P.J., and Murphy and O'Connell, JJ. MURPHY, J. (concurring). I concur with the majority that the trial court correctly granted defendant's motion for summary disposition. I write separately to voice a slightly different approach and analysis than that utilized by the majority. I glean the following from MCL 400.117a and MCL 400.117c. As a starting point, and without yet considering any statutory conditions and the Headlee Amendment, Const 1963, art 9, § 29, a county is entitled to fifty-percent reimbursement by the Family Independence Agency (FIA), now the Department of Human Services, of annual "juvenile justice service"1 expenditures paid from the county's child care fund established under § 117c. MCL 1 "'Juvenile justice service'" means a service, exclusive of judicial functions, provided by a county for juveniles who are within or likely to come within the court's jurisdiction . . . . A service includes intake, detention, detention alternatives, probation, foster care, diagnostic evaluation and treatment, shelter care, or any other service approved by the office . . . ." MCL 400.117a(1)(c). -1- 400.117a(4)(a). If, however, a county does not comply with the requirements of the Social Welfare Act, MCL 400.1 et seq., the FIA cannot make a distribution. MCL 400.117a(4)(a). Further, any reimbursement made by the FIA must be predicated on the submission of billings relative to the "care given to a specific, individual child." MCL 400.a(8). Moreover, if the expenditures exceed the amount approved by the FIA in a county's budget under § 117c, the excessive expenditures shall not be subject to fifty-percent reimbursement by the state. MCL 400.117a(4)(a).2 The FIA cannot approve budgets that exceed the Legislature's appropriations. MCL 400.117c(5). The FIA exercises superintending control over child care funds, and, within the statutory framework, it must promulgate rules to monitor money for juvenile justice services, promulgate rules to prescribe fund accounting, reporting, and authorization controls and procedures and fund expenditure classifications, and establish guidelines for developing juvenile justice service plans. MCL 400.117a(2),(3), and (6). "For counties required to have a child care fund, the department shall fund services that conform to the child care rules promulgated under this act." MCL 400.117a(3). To reduce it to a simple proposition, the FIA is required to reimburse fifty percent of county expenditures for juvenile justice services; however, through promulgated authorization controls, the authority to approve budgets, and the power of superintending control, the FIA effectively has dominion over the determination whether expenditures will be considered and included in calculating the fifty-percent reimbursement mandate. Of course, other statutory conditions also guide the determination in regard to reimbursement. If a county decides to expend child care fund money on building, equipping, and improving juvenile detention facilities, or on any other matter, it cannot expect reimbursement absent authorization and approval by the FIA of the expenditures and compliance with the statutory scheme. As the majority states, reimbursement is conditional. This is reflected in Oakland Co v Michigan, 456 Mich 144, 156-157; 566 NW2d 616 (1997) (opinion by Kelly, J.), in which our Supreme Court, making clear that a county is not necessarily entitled to reimbursement of every expenditure from the child care fund, stated: The state is correct in its statement that a county must qualify for reimbursement. . . . One of the purposes of the fund is to pay for foster care services under § 25 of ch 12A of the Probate Code. Counties are entitled to reimbursement from the state for child care expenditures if they satisfy the conditions for reimbursement prescribed by statute. They include submitting a plan and budget . . . . The [office] is required to withhold funds from any county that does not comply with the § 117a conditions for reimbursement. [Citations omitted.] Here, provisions of the Child Care Fund Handbook indicate that the unit cost of purchasing property and equipment, in general, and the cost of leasing property and buildings will only be reimbursed if the cost is less than $500. Aside from the problem that the handbook 2 MCL 400.117c(5) also provides that "[f]unds shall not be distributed under section 117a except for reimbursement of expenditures made under an approved plan or budget." -2- was not properly promulgated as a rule as required by § 117a(3), the relevant language of the handbook, as drafted, conflicts with the dictates of § 117a(4)(a) that the FIA reimburse fifty percent of the counties' expenditures. The language of the handbook suggests that the FIA can limit reimbursement to $499 or less while implicitly or expressly approving of the county's expenditure, and otherwise assuming compliance with the law, even if fifty percent of the expenditure is $500 or more. Read in this manner, the language is not a condition for reimbursement, but rather a limit on the extent of the reimbursement for an approved expenditure. In my opinion, this is not permitted by § 117a. However, the problem is more a matter of semantics than substance. Because of the FIA's authorization and approval authority relative to budgets and expenditures, the FIA would be within its purview to state that any expenditure for the purchase of property or equipment shall not be approved or authorized in an amount of $500 or more, while approving expenditures of $499 or less. Here, there is no indication that the FIA knowingly approved of the expenditures at issue when reviewing and approving budgets or in reimbursing counties pursuant to the counties' monthly submission of FIA-207 forms that outlined expenditures for which reimbursement was sought. To the contrary, the FIA clearly indicated that the expenditures relevant to this action were not allowed or approved and will not be approved. For the most part, plaintiffs conceded at oral argument that the FIA has the authority to deny approval of a proposed expenditure, such as the kind in dispute here, that is contained in a budget or presented through some other request mechanism. I do not accept plaintiffs' attempt to delineate between this preexpenditure authority and the authority of the FIA to deny reimbursing an expenditure after it has been made, where the expenditure was never approved. The bottom line is that the FIA did not approve the expenditures at issue. As noted by plaintiffs, the troublesome aspect of § 117a is that the FIA could conceivably deny budgetary approval of clearly legitimate expenditures, thereby decreasing its obligations to reimburse the counties at fifty percent of the expenditures. The FIA acknowledges this point, but refers us to the protections against such activity found in the Headlee Amendment. This position does not, however, contemplate required services that may arise post-Headlee. Regardless, because there is no clear legislative direction indicating that the building, equipping, and improving of juvenile detention facilities are reimbursable expenditures, and some language suggesting the contrary, and because there is no evidence of an absolute need to construct detention facilities, I see no need for further exploration of the matter. With respect to the plaintiffs' claim premised on the Headlee Amendment, they were required to "plead facts showing (1) that there is a continuing state mandate, (2) that the state actually funded the mandated activity at a certain proportion of necessary costs in the base year of 1978-79, and (3) that the state funding of necessary costs has dipped below that proportion in a succeeding year." Oakland Co, supra at 151 (opinion by Kelly, J.). Although actual costs would be satisfactory as a prima facie indicator of necessary costs, the counties have failed to present any documentary evidence showing a lack of private, state, or federal facilities that could be utilized for placements relative to providing juvenile justice services, thereby failing to show that construction of their own facilities is a "necessary" cost for the purposes of boarding juvenile wards. See id. at 164-165. There is no genuine issue of material fact for trial. Accordingly, the Headlee claim fails. I concur with the majority's ruling to affirm. -3- /s/ William B. Murphy -4-