The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)


STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5432

January 29, 1979

SCHOOLS AND SCHOOL DISTRICTS:

'Rollback' provision of the State School Aid Act

STATE SCHOOL AID ACT:

Constitutionality of 'rollback' provision

CONSTITUTIONAL LAW:

Equal protection

TAXATION:

Uniformity of ad valorem taxes

CONSTITUTION OF MICHIGAN:

Article 9, Section 3 (Tax Uniformity)

The 'rollback' provision of the State School Aid Act, which provides more school aid for less affluent school districts that increase operating millage levied in excess of 30 mills, does not violate the equal protection clauses of the Federal and State constitutions nor the tax uniformity clause of Const 1963, art 9, Sec. 3.

Honorable Robert C. Law

State Representative

The Capitol

Lansing, Michigan

You have requested my opinion on whether the 'rollback' provision of Sec. 21(1) of the State School Aid Act of 1977, 1977 PA 90, Sec. 21(1); MCLA 388.1421(1); MSA 15.1919(721)(1), violates either the tax uniformity clause of Const 1963, art 9, Sec. 3 or the equal protection clause of US Const, Am XIV and Const 1963, art 1, Sec. 2.

The 'rollback' provision of 1977 PA 90, supra, Sec. 21(1), as amended by 1978 PA 404, reads as follows:

'. . . In addition a district having a state equalized valuation per pupil of less than $40,000.00 shall receive reimbursement in 1978-79 under this section for operating millage levied in excess of 30 mills if the district levies no more operating millage in excess of 30 mills than that amount computed by multiplying the operating millage the district is authorized to levy in excess of 30 mills by the state equalized valuation behind each membership pupil and dividing the resulting product by $40,000.00 . . .'

This 'rollback' provision only applies to millage levies in excess of 30 mills by school districts having state equalized valuations (hereinafter SEV) of less than $40,000 per pupil. The provision requires a district to which it applies to levy only a portion of any authorized millage in excess of 30 mills or lose state aid reimbursement for those mills levied in excess of 30 mills. Because of the structure of the 'rollback' formula, the lower the district's SEV per pupil, the lower is the portion of any authorized millage which the district can levy. For example, Districts A and B are each authorized to levy 35 mills. District A has a SEV of $20,000 per pupil, while District B's SEV is $30,000 per pupil. Under the 'rollback' formula, District A is limited to levying 32.50 mills (30 mills plus 5 mills X $20,000/$40,000), while District B may levy only 33.75 mills (30 mills plus 5 mills X 30,000/40,000), if they wish to receive any state school aid funds for the millage levied in excess of 30 mills. The dual effect of this 'rollback' provision is first, to encourage school districts to support primary and secondary education by increasing their tax limitation to more than 30 mills in order to provide quality education and, second, to allow less affluent school districts to receive a greater sum of state support than the more affluent school districts.

Const 1963, art 9, Sec. 3, provides, in pertinent part, that:

'The legislature shall provide for the uniform general ad valorem taxation of real and tangible personal property not exempt by law . . .'

This constitutional provision requires that property of similar value be assessed similarly and that the tax rate imposed by a taxing unit be uniform throughout the territory of the taxing unit. In Titus v State Tax Commission, 374 Mich 476, 480; 132 NW2d 647 (1965), the rule was stated as follows:

'. . . [T]his Court adopted the following from Exchange Bank of Columbus v. Hines, 3 Ohio St 1, 15:

"'What is meant by the words 'taxing by a uniform rule?' And to what is the rule applied by the Constitution? No language in the Constitution, perhaps, is more important than this; and to accomplish the beneficial purposes intended, it is essential that they should be truly interpreted, and correctly applied. 'Taxing' is required to be 'by a uniform rule;' that is, by one and the same unvarying standard. Taxing by a uniform rule requires uniformity not only in the rate of taxation, but also uniformity in the mode of the assessment upon the taxable valuation. Uniformity in taxing implies equality in the burden of taxation; and this equality of burden cannot exist without uniformity in the mode of the assessment, as well as in the rate of taxation. But this is not all. The uniformity must be coextensive with the territory to which it applies. If a State tax, it must be uniform over all the State; if a county, town or city tax, it must be uniform throughout the extent of the territory to which it is applicable."'

Thus, the uniformity provision requires that tax rates must be uniform within a tax levying district; e.g. all taxpayers within the same school district must pay the same rates. The uniformity provision does not require that taxpayers in different districts pay the same rate. Consequently, the 'rollback' provision of 1977 PA 90, supra, Sec. 21(1) does not violate the uniformity provision of Const 1963, art 9, Sec. 3.

The 'rollback' provision does, however, require districts with identical authorized millage levels but different state equalized valuations to rollback to different levels, if they desire to receive state aid for millage levied in excess of 30 mills. A question thus arises as to whether this result violates the Equal Protection Clause of the 14th Amendment of the United States Constitution and the Michigan Constitution.

The Fourteenth Amendment to the United States Constitution states, in pertinent part:

'. . . nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the law.' US Const, Am XIV

Const 1963, art 1, Sec. 2, provides in part as follows:

'No person shall be denied the equal protection of the laws . . .'

These two constitutional provisions have been construed to afford the same right of equal protection of the laws. Wolodzko v Wayne County Circuit Judge, 382 Mich 528, 533; 170 NW2d 9, 12 (1969).

The United States Supreme Court considered the federal equal protection standards as applied to school financing in San Antonio Independent School District v Rodriguez, 411 US 1; 93 S Ct 1278; 36 L Ed2d 16 (1973) and sustained the Texas public school financing system, which relied on a combination of local property taxes and state aid funds. The Court noted that the Texas financing system was implemented in an effort to extend public education and to improve its quality. The same is unquestionably true of the present Michigan financing system. The Court held that the appropriate standard for reviewing such a system under the Equal Protection Clause:

'. . . requires only that the State's system be shown to bear some rational relationship to legitimate state purposes . . .'

. . . It has been pointed out that in taxation, even more than in other fields, legislatures possess the greatest freedom in classification. Since the members of a legislature necessarily enjoy a familiarity with local conditions which this Court cannot have, the presumption of constitutionality can be overcome only by the most explicit demonstration that a classification is a hostile and oppressive discrimination against particular persons and classes . . .'

San Antonio Independent School District v Rodriguez, supra, 411 US at 40, 41; 93 S Ct at 1300, 1301; 36 L Ed 2d at 47

Moreover, it should be remembered that the board of education may only levy school operating taxes within the maximum millage limits voted by the school district's electors. Const 1963, art 9, Sec. 6. Persons may not complain with justification when the state provides an incentive for a school district to levy taxes at lower rates than the voters have approved, merely because the incentive might cause some districts to levy a lower rate than others. It may be said, therefore, that the 'rollback' provision does bear a rational relationship to a legitimate state purpose. The Equal Protection Clause only requires that persons not be singled out for invidious discrimination. As the United States Supreme Court noted in San Antonio Independent School District v Rodriguez, supra, 411 US at 45; 93 S Ct at 1307-1308; 36 L Ed2d at 55:

'. . . It has simply never been within the constitutional prerogative of this Court to nullify statewide measures for financing public services merely because the burdens or benefits thereof fall unevenly depending upon the relative wealth of the political subdivisions in which citizens live.'

It is, therefore, my opinion that the 'rollback' provision of 1977 PA 90, supra, Sec. 211(1), as amended by 1978 PA 404, does not violate either the Uniformity Clause of Const 1963, art 9, Sec. 3 or the Equal Protection Clause of the US Const, Am XIV and Const 1963, art 1, Sec. 2. The wisdom of the 'rollback' provision is, of course, a matter reserved for the legislature.

Frank J. Kelley

Attorney General