STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6218

April 18, 1984

INCOMPATIBILITY:

Office of member of Board of Trustees of Michigan State University and position of director of local finance programs, Department of Treasury.

The offices of member of Board of Trustees of Michigan State University and the public position of director of local finance programs, bureau of local government services, Department of Treasury, are not incompatible and may be simultaneously occupied by the same person.

Ms. Barbara J. Sawyer

Member

Board of Trustees

Michigan State University

East Lansing, Michigan

You have requested my opinion on the following question:

Your question relates to the following facts. You were elected to the office of member of the Board of Trustees of Michigan State University at the November, 1978 general election for a term expiring at noon on January 1, 1987. You presently occupy that office. You are also employed by the Department of Treasury in the state classified civil service position of State Executive II under the working title of director of local finance programs, bureau of local government services.

Const 1963, art 8, Sec. 5 continues the Board of Trustees of Michigan State University as a body corporate empowered with the general supervision of the university and countrol and direction of the expenditure of university funds. The office of member of the Board of Trustees of Michigan State University is a state office. Attorney General, ex rel Cook, v Burhans, 304 Mich 108; 7 NW2d 370 (1942).

In addition to the constitutional authority conferred upon the Board of Trustees, the Legislature has enacted 1909 PA 269; MCLA 390.101 et seq; MSA 15.1121 et seq, to prescribe statutory powers and to impose duties upon the board. It is noted that 1909 PA 269, supra, Sec. 3 expressly provides that members of the board shall serve without compensation, but shall receive actual and necessary expenses incurred in the performance of the duties of their office.

The head of the Department of Treasury is the State Treasurer. 1965 PA 380, Sec. 76; MCLA 16.176; MSA 3.29(76). One of the bureaus in the department is the bureau of local government services. As director of this bureau, you work under the supervision of the deputy treasurer, bureau of local government services, and your work product is that of the department.

Although there are four separate divisions in the bureau of local government services in the Department of Treasury, as director of local finance programs, you supervise the work of only two divisions, the municipal finance division and the local government audit division.

The municipal finance division reviews for recommendation to the State Treasurer applications of eligible municipalities for a prior approval exception for the issuance of certain obligations. Prior approval exception is given by the State Treasurer. 1943 PA 202, c 3, Sec. 11, as last amended by 1983 PA 16; MCLA 133.11; MSA 5.3188(12d). If a municipality does not meet the requirement of 1943 PA 202, c 3, Sec. 11, supra, the Municipal Finance Commission, composed of the Attorney General, the State Treasurer, and the Superintendent of Public Instruction, or his or her respective deputy, assistant, officer or employee designated in writing by him or her, must give its prior approval to issuance of the obligation. 1943 PA 202, c 2, Sec. 1; MCLA 132.1; MSA 5.3188(3). Although the State Treasurer is, on occasion, represented on the commission by a deputy treasurer or a designated employee, he is never represented by the director of local finance programs. It is noted that the staff of the municipal finance division reviews and makes recommendations on applications for permission to issue obligations to be acted upon by the Municipal Finance Commission. The commission is, of course, free to exercise its independent judgment with respect to an application for permission to issue an obligation and, in fact, often does so.

The Municipal Finance Commission will no longer exist after June 30, 1984. 1943 PA 202, c 2, Sec. 1, supra. The Municipal Finance Commission, on March 20, 1984, delegated, pursuant to 1943 PA 202, c 3, Sec. 11(8), supra, all of its authority to approve the issuance of all obligations for which its approval is required by law to the Department of Treasury.

The staff of the municipal finance division advises that Michigan State University does not file applications with the Department of Treasury for permission to issue obligations directly. See, OAG, 1955, No 2227, p 721 (December 9, 1955). It also informs this office that the university has entered into a lease contract with the State Building Authority (Authority) in accordance with 1964 PA 183; MCLA 830.411 et seq; MSA 3.447(101) et seq, whereby it has contracted to pay true rental to the Authority for use and occupancy of a building to be constructed by the Authority upon lands deeded to it by the university. The Authority, not the university, has issued revenue bonds pursuant to 1964 PA 183, supra, Sec. 8, to finance the cost of a number of buildings for state institutions of higher education, including Michigan State University, after approval of the Municipal Finance Commission, upon review and recommendation of the municipal finance division.

The revenue bonds issued by the Authority, supported exclusively by revenues generated from the payment of true rental arising from leases of buildings, are not debts of the state. The obligation of a state university to pay rent under a lease of a building from the Authority does not involve the borrowing of money so that the execution of the lease does not result in the incurring of debt. Advisory Opinion on Constitutionality of 1976 PA 240, 400 Mich 311, 319, 320-321; 254 NW2d 544 (1977).

The local government audit division of the bureau of local government services examines the books and financial accounts of certain local governmental units as provided in 1919 PA 71; MCLA 21.41 et seq; MSA 3.591 et seq, which function was transferred to the Department of Treasury by 1965 PA 380, Sec. 80; MCLA 16.180; MSA 3.29(80). Authority is conferred to prescribe uniform charts of accounts for all local units of government and to receive annual financial reports from all local governmental units by virtue of the interaction of the Uniform Budgeting and Accounting Act, 1968 PA 2; MCLA 141.421 et seq; MSA 5.3228(21) et seq, Secs. 1 and 4, and 1919 PA 71, supra, Sec. 1 et seq, as transferred to the Department of Treasury by 1965 PA 380, Sec. 80, supra.

The Department of Treasury has no authority to examine the books and financial accounts of state universities. This authority is vested in the Auditor General pursuant to Const 1963, art 4, Sec. 53.

The Legislature has changed the common law relating to incompatibility of public offices and public positions. These changes are codified in 1978 PA 566; MCLA 15.181 et seq; MSA 15.1120(121) et seq.

1978 PA 566, supra, Sec. 2, provides:

In 1978 PA 566, supra, Sec. 1, the Legislature has defined, for the purposes of the Act, the phrase 'incompatible offices' to mean

When the provisions of 1978 PA 566, Secs. 1 and 2, supra, are read against the background of the title to the Act, it is clear that the Legislature intended the Act to apply to both public officers and public employees. OAG, 1979-1980, No 5626, p 537, 541 (January 16, 1980).

1978 PA 566, supra, Sec. 3(1) and (5), in pertinent part, provides:

It follows that the provisions of 1978 PA 566, Sec. 2, supra, apply to members of the governing boards of state institutions of higher education only with respect to 1978 PA 566, Sec. 1(b)(iii), supra, in that an incompatibility arises if the simultaneous holding of a public office or a public position and the office of member of the governing board of the institution of higher education results in a breach of public duty as a public officer or public employee, on the one hand, or as a member of the governing board of an institution of higher education, on the other hand.

In OAG, 1979-1980, No 5626, supra, the provisions of 1978 PA 566, Sec. 1(b)(iii), supra, were reviewed in the context of one person simultaneously serving upon two local governmental bodies. It was there concluded that the failure of the public officer to perform legally required duties by abstaining from participation in matters involving the negotiation of, or approval of, a contract between the two governmental units is itself a breach of duty.

The director of local finance programs, in supervising the work of both divisions within the Department of Treasury, has no governmental contact with Michigan State University. Similarly, a member of the Board of Trustees of Michigan State University has no governmental contact with either the municipal finance division or the local government audit division of the Department of Treasury. It is also significant that pursuant to 1978 PA 566, Sec. 3(1), supra, a person occupying the public position of director of local finance programs may seek election to the office of member of the Board of Trustees of Michigan State University. Because the director of local finance programs has no duties relating to the university, there is no basis to conclude that a breach of duty would arise.

The state ethics act, 1973 PA 196; MCLA 15.341 et seq; MSA 4.1700(71) et seq, Sec. 2, imposes certain standards of conduct upon public officers and employees. Members of the Board of Trustees of Michigan State University are not subject to the provisions of 1973 PA 196, supra. OAG, 1983-1984, No 6134, p 66 (March 17, 1983); OAG, 1983-1984, No 6135, p 73 (March 17, 1983). The director of local finance programs, Department of Treasury, as a classified state civil service employee, is expressly made subject to the provisions of 1973 PA 196, supra, by section 1(b).

The standards of conduct imposed by 1973 PA 196, Sec. 2, supra, of possible application here, are found in subsection (6), which provides:

The director of local finance programs has no duties to perform which relate to Michigan State University. The members of the Board of Trustees have no duties which relate to either the municipal finance division or the local government audit division of the Department of Treasury. Thus, there is no basis to conclude that a member of the Board of Trustees of Michigan State University, who also occupies the position of director of local finance programs, is rendering service which 'is incompatible or in conflict with the discharge of the officer or employee's official duties' or that her service 'may tend to impair . . . her independence of judgment or action in the performance of official duties,' contrary to the standard of conduct imposed by 1973 PA 196, Sec. 2(6), supra.

It is my opinion, therefore, that the office of member of the Board of Trustees of Michigan State University and the public position of director of local finance programs, bureau of local government services, Department of Treasury, are not incompatible and may be simultaneously occupied by the same person.

Frank J. Kelley

Attorney General