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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)



Opinion No. 6415

January 8, 1987


Funding of local health services


Authority to determine amount of appropriations for local health services


Annual funding of local health services

MCL 333.2475; MSA 14.15(2475), states an intent to appropriate moneys to the limits set therein to the Department of Public Health for the purpose of reimbursement of local health services, but the amount actually appropriated for a particular fiscal year rests in the discretion of the Legislature.

Honorable Connie Binsfeld

State Senator

The Capitol

Lansing, MI

You have requested my opinion on two related questions regarding the State of Michigan's fiscal responsibility in participating in the funding of local health services, as required by the Public Health Code, MCL 333.2475; MSA 14.15(2475), which provides, in pertinent part:

"(1) The department [of Public Health] 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 ...:

"(a) First year, 20%.

(b) Second year, 30%.

(c) Third year, 40%.

(d) Fourth year and thereafter, 50%."

[Emphasis added.]

As background for your inquiry, a Michigan Department of Public Health report states:

"Under the provisions of the Code, the state's contribution was to move from 20 percent in the first year to 50 percent by year four. During the second year, however, the state's cost sharing contribution as a percent of the total matchable expenditures fell to 13 percent. Since that time, although state cost sharing appropriations have slowly risen and are expected to represent 16 percent of total matchable expenditures in 1984, the first year's funding mark has yet to be reached. The funding lag was tied directly to the severe financial downturn in Michigan's economy in the early '80s.

"During the latter part of 1979 Michigan experienced a severe recession. In response to falling revenues, state departments were ordered to cut expenditures to meet the constitutional requirement for a balanced budget. To achieve the necessary savings, MDPH initiated a two-fold approach generating half the savings by reducing internal operations and the other half by reducing the level of funding going to local health departments. In this regard, the cost sharing line absorbed the bulk of these reductions. In all, four budget reductions totalling $23.8 million were required during the period 1979-1983. As a result of an executive order, the first year's cost sharing appropriation was reduced by 5 percent. However, because actual costs ran less than budgeted costs, a majority of the local health departments still received a full 20 percent state share." Office of Special Studies, Michigan Department of Public Health, State/Local Cost Sharing in Michigan: A Review of the First Five Years 7, 8 (March, 1986)

Your questions are:

1) Whether the language "subject to the availability of funds" applies to a state surplus or a departmental surplus?

2) Whether a legislative obligation accrues to fulfill the 50 percent level if any surplus exists?

Const 1963, art 9, Sec. 17, provides:

"No money shall be paid out of the state treasury except in pursuance of appropriations made by law."

Pursuant to this provision, an agency of the state may only spend state money which the Legislature has appropriated to that agency for that purpose. White v. Department of Social Services, 20 Mich App 481, 484; 174 NW2d 315, lv den, 383 Mich 768 (1970).

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 makes the reimbursement of local governments "subject to the availability of funds actually appropriated." This language is plain, certain and unambiguous. Also, it is consistent with strictures of Const 1963, art 9, Sec. 17.

It is my opinion, in answer to your first question, that MCL 333.2475; MSA 14.15(2475), limits the amount which may be paid for reimbursement for local health services to the amount actually appropriated by the Legislature for such purpose.

Turning to your second question, MCL 333.2475; MSA 14.15(2475), sets forth a specifically scheduled duty of the state to reimburse local entities, subject to the funds actually appropriated:

"[R]eimbursements shall be made in a manner to provide equitable distribution among he local governing entities and pursuant to the following schedule ...:

"(a) First year, 20%.

(b) Second year, 30%.

(c) Third year, 40%.

(d) Fourth year and thereafter, 50%."

[Emphasis added.]

The case of Advisory Opinion on Constitutionality of 1975 PA 227 (Questions 2-10), 396 Mich 465, 501-502; 242 NW2d 3 (1976), is instructive on the nature of legislative appropriations:

"After the ensuing fiscal year, in which revenues can be matched with the appropriation, the conflict with art 4, Sec. 31 created by such a statute is identical with that created by the type of provision found in Oakland (392 Mich 613; 221 NW2d 345); in both situations, the budgetary procedure required by the constitutional provisions becomes impossible.

"Therefore, under the rationale of Oakland, there can be an appropriation to the state campaign fund, only for the ensuing fiscal year, but not thereafter, appropriations necessarily being made on a year to year basis. [Emphasis added.]

Inasmuch as MCL 333.2475; MSA 14.15(2475), merely states an intent to appropriate a certain sum in future years, the Legislature may determine the amount to be appropriated for such purposes for the particular fiscal year. In authorizing a specific appropriation to the Michigan Department of Public Health for local cost-shared services, the Legislature is not required to amend MCL 333.2475; MSA 14.15(2475), if it elects to appropriate a different amount from the amount specified therein. See, OAG, 1983-1984, No 6216, p 277 (April 9, 1984).

It is my opinion, in answer to your second question, that MCL 333.2475; MSA 14.15(2475), states an intent to appropriate moneys to the Department of Public Health to fund local cost-shared health services, and in making a yearly appropriation for this purpose, the Legislature may determine what amount, if any, shall be appropriated during a particular fiscal year for such purpose.

Frank J. Kelley

Attorney General

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