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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. 6022 January 7, 1982 CONSTITUTIONAL LAW: Const 1963, art 9, Sec. 30 (Headlee Amendment)--state grants to local units MENTAL HEALTH, DEPARTMENT OF: Community mental health programs In the event a community mental health board assumes control of the responsibility of providing mental health services, reimbursement of the resultant expenditures incurred by the state represents money paid to local units of government in accordance with Const 1963, art 9, Sec. 30. A community mental health board which voluntary agrees to take over such responsibility is not mandated or required to take over any new service as provided in Const 1963, art 9, Sec. 29. No change is required in the proportinate state/county funding of mental health services voluntarily assumed by a community mental health board. Honorable Donald H. Gilmer State Representative The Capitol Lansing, MI You have asked for my opinion on several questions regarding the appropriation act for the Department of Mental Health, 1981 PA 39. Your concern centers around portions of that act which make 248.4 million dollars available to community mental health boards so that they may pay for the cost of care of mentally ill or developmentally disabled residents of the county or counties served by the board. 1981 PA 39, Secs. 1, 24. Similar provisions were contained in the 1980-81 appropriation act for the Department of Mental Health, 1980 PA 360. Previously, the money had been appropriated directly to the Department of Mental Health to provide those services in state institutions. The appropriation act anticipates that the money will be used by community mental health boards to provide services in alternative settings or in the same state institutions. The state considers the resulting expenditure as money paid to local units of government under Const 1963, art 9, Sec. 30. 1981 39, Sec. 2. (1) Your questions will be separately stated and answered: 1. May the money made available to the community mental health boards be counted as money paid to local units of government in order to maintain compliance with Const 1963, art 9, Sec. 30? Const 1963, art 9, Sec. 30, part of the Headlee Amendment (Const 1963, art 9, Secs. 25-34), provides: 'The proportion of total state spending paid to all units of Local Government, taken as a group, shall not be reduced below that proportion in effect in fiscal year 1978-79.' The Mental Health Code, 1974 PA 258; MCLA 330.1001 et seq: MSA 14.800(1) et seq, provides for and encourages increased local responsibility for the furnishing of mental health services. Thus, 1974 PA 258, Sec. 116(e)(ii); MCLA 330.1116(e)(ii); MSA 14.800(116)(e)(ii), provides, in pertinent part: '[i]t shall be the objective of the department to shift from the state to a county the primary responsibility for the direct delivery of public mental health services whenever such county shall have demonstrated a willingness and capacity to provide an adequate and appropriate system of mental health services for the citizens of such county.' Furthermore, 1974 PA 258, Sec. 244(a); MCLA 330.1244(a); MSA 14.800(244)(a), provides that it shall be the duty of the Department of Mental Health to: 'Seek to develop and establish arrangements and procedures for the effective coordination and integration of state services and county program services.' Community mental health boards have the authority to provide all forms of mental health services, including inpatient services. 1974 PA 258, Sec. 208; MCLA 330.1208; MSA 14.800(208). These services may be provided directly or they may be provided by contract, including a contract with a facility of the Department of Mental Health. 1974 PA 258, Sec. 228; MCLA 330.1228; MSA 14.800(228). The appropriation in question implemented the language of the Mental Health Code quoted above. This is apparent upon reading of 1981 PA 39, Sec. 24(1) and (2), which provide: '(1) The funds, appropriated in section 1, for purchase of services from state facilities and for approved community-based programs to reduce utilization of state facility inpatient services will be allocated to community mental health boards under a formal contract with the department. The spending plans, authorizations and allocations for each board will be determined by the department central and regional office staffs, in cooperation with community mental health boards. '(2) If any boards have not indicated the willingness or capacity to accept the shift of responsibility as provided in subsection (1), they may enter into contracts with the department that clients of those counties in state facilities shall continue to be served by the department, which shall retain full allocation authority on behalf of those counties for state facility services.' Under these provisions, community mental health boards have the option to either accept greater local responsibility for the providing of mental health services to their clients or to contract with the department for such services. Nothing in Const 1963, art 9, Sec. 30 prevents the Legislature from making offers to local units of government to assume such local control of previously state-run programs and providing funds to local units to carry out the program. When such offers are accepted and local units of government do assume control of the offered program along with the funds, however, the result must be that the funds are considered local government spending within the contemplation of Const 1963, art 9, Sec. 30. While there are as yet no appellate court decisions interpreting Const 1963, art 9, Sec. 30, the language of the Court of Appeals in Monticello House v Calhoun County, 20 Mich App 169; 173 NW2d 759 (1969), lends support for the conclusion that the funds in question are, in fact, expenditures for local units of government once the county community mental health boards agree to accept responsibility under 1980 PA 360, Sec. 70. In Monticello House, supra, 20 Mich App 169, 173, in determining when state funds lose their identity and become county funds, the court stated: 'In a project of this nature, admittedly there is some state reimbursement. However, it appears that these funds are actually county moneys. Although there is no Michigan authority on this point, the Ohio case of State v. Lucas (1949), 39 Ohio Op 519 (85 NE2d 155), holds that state funds appropriated and paid to a county lose their identity as state funds upon being paid to that county. The reason expressed in Lucas applies to the situation before us: "Political subdivisions of the state are entitled to a share of many funds collected by the state for express purposes, such as the gasoline fund, auto tax fund, sales tax fund, school fund, and others, all of which by express direction of the law must be used by the counties and other political subdivisions for the purposes provided by statute. It would not be contended that any of such funds, after payment thereof to the political subdivisions, are still state funds, although collected and distributed by the state, although, under the provisions of the various statutes, such funds may only be legally used for specified purposes." (Emphasis added.) Similarly, once the funds which are the subject of 1981 PA 39, Sec. 24, are 'paid' (2) to the community mental health boards, in accordance with the requirements of that act, they became county funds and are, therefore, expenditures paid to local units of government under Const 1963, art 9, Sec. 30. It is important to note that if the community mental health boards choose to participate in this program, the appropriation act does not limit them to purchasing inpatient services from state facilities. The language provides that funds are allocated for such purchase and for community-based programs which would reduce utilization of state facility and patient services. A community mental health board may choose to operate its own inpatient service or to contract with a local hospital for the services. The appropriation act contemplates that when community mental health boards do choose to use facilities of the Department of Mental Health to provide services, a contract will be entered into between the community mental health board and the department facility. The community mental health board is free to negotiate that contract so as to maintain significant controls over the expenditure of the money in question and over an integrated mental health program affecting residents of the county or counties served by the board. This ability to retain control is another indication that the appropriation in question does in fact represent local government spending. In answer to your first question, it is my opinion that in the event a community mental health board assumes control of the responsibility for providing services pursuant to 1981 PA 39, Sec. 24(1), then the resultant expenditures represents money paid to local units of government under Const 1963, art 9, Sec. 30. (3) Under the provisions of 1981 PA 39, Sec. 24(2), however, a community mental health board may elect to maintain existing arrangements of caring for county clients in state facilities and the necessary expenditures to care for such persons will not be considered as monies paid to local units under Const 1963, art 9, Sec. 30. 2. Has the state mandated a new or expanded activity for local units of government and has the state fully funded the new or expanded activity as required by Const 1963, art 9, Sec. 29? Const 1963, art 9, Sec. 29 provides: 'The state is hereby prohibited from reducing the state financed proportion of the necessary costs of any existing activity or service required of units of Local Government by state law. A new activity or service or an increase in the level of any activity or service beyond that required by existing law shall not be required by the legislature or any state agency of units of Local Government, unless a state appropriation is made and disbursed to pay the unit of Local Government for any necessary increased costs. The provision of this section shall not apply to costs incurred pursuant to Article VI, Section 18.' With respect thereto, OAG, 1979-1980, No 5594, p 473 (November 16, 1979), observed that: '[Const] 1963, art 9, Sec. 29 requires state appropriation to finance a new activity or service or an increased level of activities or services; no state appropriation is mandated where the new or increased activities or services are not imposed upon a local governmental unit by the legislature.' It is my opinion that under 1981 PA 39, Sec. 24, the community mental health boards are not mandated or required to take over any new service. The Act made it entirely voluntary on the part of the boards whether to participate. Under such circumstances, Const 1963, art 9, Sec. 29 is not violated. Assuming, arguendo, that county boards are mandated to deliver new services, the Legislature did, in 1981 PA 39, fund the services so that no increased costs would result to community mental health boards. Again, therefore, the constitutional provision in question is not violated. 3. If the appropriation does result in a legitimate local government expenditure, are any changes required in Chapter 3 of the Mental Health Code, 1974 PA 258; MCLA 330.1300 et seq; MSA 14.800(300) et seq, regarding the proportionate state/county funding of mental health services? 1974 PA 258, Sec. 308; MCLA 330.1308; MSA 14.800(308), provides that counties must pay 10 percent of the cost of their existing community mental health programs. In addition, counties are liable for 10 percent of the cost of services provided by the Department of Mental Health to residents of the counties. 1974 PA 258, Sec. 302; MCLA 330.1302; MSA 14.800(302). Whether the service is provided by the counties or by the Department of Mental Health does not, therefore, affect the countys' liability. A greater percentage of the countys' liability may be attributed to their own programs if they choose to assume greater control, but the amount of that liability does not change. In fact, the appropriations act assures that the shift to county responsibility will not increase county costs, 1981 PA 39, Sec. 24(9). In answer to your third question, it is my opinion that there is no need to make fundamental changes to the Mental Health Code, 1974 PA 258; MCLA 330.1101 et seq; MSA 14.800(1) et seq, at least with regard to the matching fund provisions of Chapter 3. Frank J. Kelley Attorney General (1)
(2)
See footnote 3, infra.(3)
Of course, the funds must actually be 'paid' to the community mental health board. Whether payment involves the physical delivery of the funds by warrant to the community mental health board would depend on the arrangements developed by a particular board with the state Department of Mental Health for the delivery of services. Nevertheless, at a minimum, a board electing to participate in the process must have actual control over the plan of expenditure of the funds, subject to the restrictions contained in 1981 PA 39, Sec. 24 and in the Mental Health Code, supra.
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