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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. 6442

June 5, 1987

EDUCATION, STATE BOARD OF:

Authority over educational corporations

The State Board of Education is not authorized to regulate changes in ownership of educational corporations.

An educational corporation incorporated on or after September 29, 1939 and under new ownership cannot offer new programs beyond those set in its articles of incorporation without the prior approval of the State Board of Education.

Educational corporations incorporated on or after September 29, 1939 may only grant those degrees previously approved by the State Board of Education.

The State Board of Education may not restrict existing educational corporations from exercising their powers, but may inspect and monitor them for compliance with those provisions of 1931 PA 327 dealing with educational corporations.

Mr. Gary D. Hawks

Interim Superintendent of Public Instruction

Ottawa Street Building

South Tower

Lansing, Michigan

On behalf of the State Board of Education, your predecessor has requested my opinion on four questions which may be phrased as follows:

1. Does the State Board of Education have the authority to regulate changes in the ownership of educational corporations?

2. May an educational corporation under new ownership offer new programs beyond those set forth in its articles of incorporation without the prior approval of the State Board of Education?

3. What authority does the State Board of Education have over the granting of degrees by educational corporations?

4. What restrictions may the State Board of Education place on educational corporations that presently exist?

Addressing your questions seriatim, the Legislature has provided for the incorporation of domestic educational corporations in MCL 450.170-MCL 450.177; MSA 21.171-MSA 21.178. OAG, 1983-1984, No 6185, p 188 (October 3, 1983), concluded, based on the above-cited statutory provisions, that the Legislature has not given the State Board of Education the statutory authority to regulate changes in the ownership of educational corporations. A current review of the statutory provisions in question demonstrates that the conclusion reached in OAG, 1983-1984, No 6185, supra, is still correct today.

Answering your first question, it is my opinion that the State Board of Education does not have the authority to regulate changes in the ownership of educational corporations.

Turning to your second question, the relevant legal inquiry is whether an educational corporation under new ownership intends to offer programs beyond those programs set forth in the articles of incorporation without the approval of the State Board of Education. In MCL 450.171; MSA 21.172, the Legislature has provided, in pertinent part:

"No educational corporation shall be permitted to expand its program beyond that specified in its articles of incorporation until it has presented to the Michigan corporation and securities commission a statement in writing from the state board of education approving the facilities, equipment and staff or the proposed facilities, equipment and staff as adequate for the offering of the additional educational program."

It is noted that this statutory language was added by 1939 PA 162 to 1931 PA 327 and is only applicable to educational corporations incorporated after 1939 PA 162 became effective. OAG, 1983-1984, No 6185, supra.

The above-quoted statutory language plainly requires State Board of Education approval for new programs beyond those authorized by the articles of incorporation.

Answering your second question, it is my opinion that an educational corporation under new ownership cannot offer new programs beyond those set forth in its articles of incorporation without the prior approval of the State Board of Education unless it was incorporated prior to 1939.

Turning to your third question, in MCL 450.173; MSA 21.174, the Legislature has provided:

"The articles of every educational corporation shall clearly set forth the educational system of the institution to be founded and the character of the degrees, honors, diplomas, or certificates which it proposes to grant, and same shall be approved by the state board of education prior to the filing of the articles of incorporation." (Emphasis added.)

The underscored language was also added to 1931 PA 327 by 1939 PA 162 and it is applicable to educational corporations incorporated after the effective date of 1939 PA 162. Pursuant to the above-quoted statutory language, all prospective corporations may only grant those degrees approved by the State Board of Education.

Answering your third question, it is my opinion that educational corporations incorporated after the effective date of 1939 PA 162 may only grant those degrees previously approved by the State Board of Education.

Turning to your fourth question, the State Board of Education may not restrict existing educational corporations from exercising those powers set forth in their respective articles of incorporation. In MCL 450.177; MSA 21.178, the Legislature has authorized the State Board of Education to inspect and monitor educational corporations as follows:

"Every such educational corporation shall be visited and inspected by the state board of education, in person or through visitors or inspectors appointed by them, at least once very 3 years. Said state board of education shall at the time of visitation ascertain and publish information upon all matters pertaining to the condition, management, instruction and practices of such corporations, and shall file a copy of their report with the Michigan corporation and securities commission. Upon evidence that the property is at any time less than is required by law, or that any such educational corporation is not otherwise complying with the provisions of this act, they shall serve notice on such corporation to remedy the defects within a reasonable time to be fixed in such notice, and in case the deficiency is not corrected within the time fixed by them, they may institute proceedings at law for the dissolution of such corporation."

Answering your fourth question, it is my opinion that the State Board of Education may not restrict educational corporations from exercising their powers, but may inspect and monitor existing educational corporations for compliance with those provisions of 1931 PA 327 dealing with educational corporations as authorized in MCL 450.177; MSA 21.178.

Frank J. Kelley

Attorney General


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