Opinion #6501

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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. 6501

February 26, 1988

APPROPRIATIONS:

Reimbursement of local department for required and allowable services

PUBLIC HEALTH AND PUBLIC HEALTH CODE:

Reimbursement of local department for required and allowable services

A local health department must carry out the legislative mandate to demonstrate the ability to provide the required services to the extent that funds are available, and the Public Health Code mandates that the local health department carry out this duty for cost sharing, even though the 50% reimbursement is not met for the local governing entity.

To the extent the Legislature has appropriated funds, the Department of Public Health is required to reimburse the reasonable and allowable cost of both required and allowable services as determined by the Department, irrespective of the fact that the appropriation for reimbursement for required services has not reached the reimbursement schedules mandated by the Legislature in MCL 333.2475; MSA 14.15(2475).

Honorable Ralph Ostling

State Representative

The Capitol

Lansing, Michigan 48909

You have requested my opinion on two questions concerning the Public Health Code, MCL 333.2475; MSA 14.15(2475). Your first question is:

May the Michigan Department of Public Health, as a requirement of reimbursement, mandate that a local health department provide required services under 1978 PA 368 before the 50% reimbursement level of Sec. 2475 of the Act has been reached?

Participation in the cost reimbursement program set forth in MCL 333.2471 to 333.2498; MSA 14.15(2471) to 14.15(2498), is not mandatory for a local health department. MCL 333.2435; MSA 14.15(2435), provides discretionary powers to a local health department, and provides in pertinent part:

'A local health department may:

'(h) Participate in the cost reimbursement program set forth in sections 2471 to 2498.'

However, the Legislature has also set forth mandatory duties for a local health department. MCL 333.2431; MSA 14.15(2431), provides in pertinent part:

'(1) A local health department shall:

'(b) Demonstrate ability to provide required services.'

Additionally, MCL 333.2433; MSA 14.15(2433), provides:

'(2) A local health department shall:

'. . . .

'(e) Provide or demonstrate the provision of required services as set forth in section 2473(2).'

Thus, the Legislature has established a requirement that a local health department provide, or demonstrate the provision of, required services.

Your question deals with MCL 333.2475; MSA 14.15(2475), which provides:

'(1) The department shall reimburse local governing entities for the reasonable and allowable costs of required and allowable health services delivered by the local governing entity as provided by this section. Subject to the availability of funds actually appropriated reimbursements shall be made in a manner to provide equitable distribution among the local governing entities and pursuant to the following schedule beginning in the second state fiscal year beginning on or after the effective date of this part:

(a) First year, 20%.

(b) Second year, 30%.

(d) Fourth year and thereafter, 50%.

'(2) Until the 50% level is reached, a local governing entity is not required to provide for required services if the local expenditure necessary to provide the services is greater than those funds appropriated and expended in the full state fiscal year immediately before the effective date of this part.' (Emphasis added.)

The Legislature has not mandated that the local governing entity expend funds greater than it spent prior to September 30, 1978. Even so, the language of MCL 333.2475; MSA 14.15(2475), does not abolish the local health department's duty contained in MCL 333.2431(1)(b) and 333.2433(2)(e); MSA 14.15(2431)(1)(b) and 14.15(2433)(2)(e), to demonstrate ability to provide the required services. This is further confirmed by MCL 333.2481 and 333.2483; MSA 14.15(2481) and 14.15(2483), which provide in pertinent part:

'As a condition for the approval of funding for a service under sections 2471 to 2498, a local health department shall:

'(a) Provide the required health services which the local health department is designated to provide in substantial accord with the program plan developed under part 23 and rules promulgated under section 2495, including standards as to the scope and quality of services.' MCL 333.2481; MSA 14.15(2481).

'A local health department desiring reimbursement under sections 2471 to 2498 shall:

'(a) Submit annually to the department a program statement approved by the local governing entity defining the status of the current required and allowable services the local health department provides. After review and approval by the department, the program statement shall serve as a basis of determining priorities for local development with appropriate state policy and technical assistance.' MCL 333.2483; MSA 14.15(2483).

Participation in the cost reimbursement program, MCL 333.2471 to 333.2498; MSA 14.15(2471) to 14.15(2498), is not mandatory on the part of local health departments and local governing entities. But, if there is participation, they are, at least, entitled to the level of reimbursement in the fiscal year immediately prior to September 30, 1978; this would be mandated in MCL 333.2477(1); MSA 14.15(2477)(1), which provides:

'A local governing entity shall not receive less in any year under sections 2471 to 2498 than it received under Act No. 306 of the Public Acts of 1927, as amended, being sections 327.201 to 327.208a of the Michigan Compiled Laws, in the full state fiscal year immediately before the effective date of this part.'

This minimum level of reimbursement may still be subject to reduction since it is limited by the funds actually appropriated by the Legislature, MCL 333.2475(1); MSA 14.15(2475)(1). See OAG, 1987-1988, No. 6415, p 6 (January 8, 1987).

Nevertheless, the Legislature, in MCL 333.2475(1); MSA 14.15(2475)(1), has limited the amount of the reimbursement that the Michigan Department of Public Health can make to local governing agencies to an equitable distribution of the funds that have been appropriated. In pertinent part, that section provides:

OAG, 1987-1988, No 6415, supra, reviewed MCL 333.2475; MSA 14.15(2475), and concluded that the Legislature's intent was to provide moneys to the Michigan Department of Public Health for reimbursement for the local cost shared health services, and that the Legislature is to annually determine what amount, if any, shall be appropriated for cost sharing purposes for each fiscal year.

That opinion, however, did not address the consequences to local health departments where the fiscal appropriation was insufficient to meet the reimbursement requirements mandated in MCL 333.2475; MSA 14.15(2475).

A similar issue was addressed in OAG, 1983-1984, No 6177, p 167 (August 5, 1983), concerning an executive order that reduced appropriations but did not abolish licensing and registration requirements for certain occupations. In part, the opinion stated:

'In a letter opinion addressed to Colonel Hough, dated December 28, 1977, the question considered whether the Department of State Police may decline to license and regulate alarm system contractors under 1968 PA 330, Sec. 5; MCLA 338.1055; MSA 18.185(5). The Department took the position it was not required to issue licenses to qualified alarm system contractors because the Department believed the Legislature had not appropriated the necessary funds for an effective program. The opinion stated that the Department must implement the legislative mandate to license and regulate alarm system contractors and may not decline to do so because of the belief that the Legislature has failed to appropriate sufficient funds to perform these duties adequately. This opinion is controlling here.

'In King v Midland County Department of Social Services, 73 Mich App 253, 261-262; 251 NW2d 270 (1977), the Court of Appeals held that under a statute mandating a county to maintain a general assistance program by appropriating sufficient funds therefor, payments to qualified recipients may not be suspended because the original appropriation was insufficient. The court held that the county may reduce expenditures and administrative costs in discretionary areas so as to assure that availability of funds for the mandatory programs.

'It is my opinion, therefore, that the Department of Licensing and Regulation and the boards involved must carry out the legislative mandate to license, register, discipline and regulate their respective occupations.' Id., p 169.

The opinion concluded that even though the agency believed that it had failed to receive a sufficient appropriation to adequately perform its duties, it was still mandated to perform those duties. The conclusion in that opinion is controlling here.

It is my opinion, therefore, in answer to your first question, that a local health department must carry out the legislative mandate to demonstrate the ability to provide the required services to the extent that funds are available, and that the Public Health Code mandates that the local health department carry out this duty for cost sharing, even though the 50% reimbursement is not met for the local governing entity.

Your second question is:

May the Michigan Department of Public Health reimburse local governing entities for cost of allowable health services delivered when it has not reached the reimbursement schedule mandated by the Legislature for reimbursement of required health services delivered by local governing entities?

The Public Health Code defines 'allowable services' and 'required services' as follows:

"Allowable service' means a health service delivered in a city, county, district, or part thereof, which is not a required service but which the department determines is eligible for cost reimbursement pursuant to sections 2471 to 2498.' MCL 333.2403(1); MSA 14.15(2403)(1).

"Required service' means a local health service specifically required pursuant to this part or specifically required elsewhere in state law, except a service specifically excluded by this part or a rule promulgated pursuant to this part.' MCL 333.2408(1); MSA 14.15(2408).

The cost reimbursement program is prescribed in MCL 333.2471 to 333.2498; MSA 14.15(2471) to 14.15(2498). MCL 333.2471; MSA 14.15(2471), provides in pertinent part:

'The department shall establish a program pursuant to sections 2471 to 2498 with the following objectives:

'(d) To assure that state reimbursement for reasonable and allowable costs for required and allowable local health services shall be provided at the level necessary to assure maintenance of services on an equitable basis for the people of this state.' (Emphasis added.)

MCL 333.2472(2); MSA 14.15(2472)(2), provides:

'The department shall prescribe criteria and procedures for designating additional services proposed by a local health department as allowable services.'

As to the rate of the reimbursement for this program, MCL 333.2479; MSA 14.15(2479), provides that the Department shall establish criteria for determining the reasonable and allowable cost for required and allowable services. Additionally, MCL 333.2488; MSA 14.15(2488), requires the Department to submit as a separate part of its annual health appropriations request funds to reimburse for allowable health services as well as for required services.

On the actual reimbursement side, MCL 333.2475(1); MSA 14.15(2475)(1), provides in pertinent part:

'The department shall reimburse local governing entities for the reasonable and allowable costs of required and allowable services delivered by the local governing entity as provided in this section.' (Emphasis added.)

In statutory construction, generally the use of the word 'shall' means that the statute is mandatory, unless other considerations compel a contrary conclusion, King v Midland County Social Services, 73 Mich App 253, 259; 251 NW2d 270 (1977).

The primary rule of statutory construction is to give effect to the intention of the Legislature, and when a statute is plain, certain and unambiguous, the literal sense must prevail. Owendale-Gagetown School Dist v State Board of Education, 413 Mich 1, 8; 317 NW2d 529 (1982), Polites v Flint Public Schools, 132 Mich App 609, 613; 347 NW2d 762 (1984).

The language of MCL 333.2475; MSA 14.15(2475), specifically mandates that the Department of Public Health reimburse local governing entities for both required and allowable services. This language is plain, certain and unambiguous.

As observed in OAG, 1987-1988, No 6415, supra, the Legislature may determine what amount, if any, shall be appropriated for cost sharing purposes for a fiscal year, not only in respect to required services, but also in respect to allowable services.

Appropriations bills 1985 PA 119 and 1986 PA 209 contain specified line-item amounts for reimbursement to local governing entities for required and allowable cost sharing services for FY 1985-1986 and FY 1986-1987, respectively. In addition, these acts contain specified line-item amounts for reimbursement to local governing entities for allowable cost sharing services. Thus, the Legislature has prescribed that specified allowable services are to be reimbursed to the extent of their line-item appropriations, irrespective of the amount of the appropriation for reimbursement of required services.

It is my opinion, therefore, in answer to your second question, that to the extent the Legislature has appropriated funds, the Department of Public Health is required to reimburse the reasonable and allowable cost of both required and allowable services as determined by the Department, irrespective of the fact that the appropriation for reimbursement for required services has not reached the reimbursement schedules mandated by the Legislature in MCL 333.2475; MSA 14.15(2475).

Frank J. Kelley

Attorney General

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