Opinion #6611

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. 6611

February 23, 1990

INCOMPATIBILITY:

City treasurer and school board trustee in the same city

OFFICERS AND EMPLOYEES:

Incompatibility

PUBLIC OFFICES AND OFFICERS:

Incompatibility

The offices of city treasurer and school board trustee in the same city are incompatible under MCL 15.182; MSA 15.1120(122), and may not be held simultaneously by the same person.

Honorable Christopher D. Dingell

State Senator

The Capitol

Lansing, Michigan

You have requested my opinion on the question of whether a person may simultaneously hold the positions of city treasurer and school board trustee in the City of Ecorse.

1978 PA 566, MCL 15.181 et seq; MSA 15.1120(21) et seq, governs the incompatibility of public offices. Act 566, Sec. 2, provides in pertinent part that "[a] public officer or public employee shall not hold 2 or more incompatible offices at the same time."

The term "incompatible offices" as used in Act 566 is defined in Sec. 1(b) as follows:

" 'Incompatible offices' means public offices held by a public official which, when the official is performing the duties of any of the public offices held by the official, results in any of the following with respect to those offices held:

(i) The subordination of 1 public office to another.

(ii) The supervision of 1 public office by another.

(iii) A breach of duty of public office."

The material submitted with your request asserts that the positions of city treasurer and school board trustee are incompatible because a city treasurer may, by taking advantage of a 15 day grace period after tax payments are due to be made by the city to the school district, retain interest earned by the tax collections owed to the school board.

Interest earned on school tax collections while in the possession of a local treasurer belongs to the school district and not the collecting unit of government. Grand Rapids Public Schools v City of Grand Rapids, 146 MichApp 652; 381 NW2 783 (1985). Subsequent to the decision in Grand Rapids Public Schools, the Legislature enacted 1988 PA 169, amending the General Property Tax Act, MCL 211.1 et seq; MSA 7.1 et seq, to modify the holding in Grand Rapids Public Schools, supra. 1988 PA 169 amended MCL 211.43; MSA 7.84, by adding a new subsection (11) which specifically states that interest earned on school taxes invested by the collecting local unit of government before remittance to the school district belongs to the school district and not the collecting unit of government. The statute further provides, however, that:

"This subsection does not apply to interest or penalties imposed by law or charter and does not nullify or prohibit any agreements made between a collecting unit and a taxing unit regarding the earned interest." (Emphasis added.)

Unless the Ecorse school district and Ecorse city council have entered into an agreement related to the distribution of interest earned on school tax collections while in the possession of the city, the city treasurer may not lawfully retain such interest on behalf of the city. If such an agreement does in fact exist, the parties to it would be the school board and the city council. A breach of duty of public office occurs where a person occupying two positions simultaneously participates in the negotiation or approval of both sides of an agreement between the two public entities which he or she serves. The city treasurer is a distinct elective office and is not a member of the city council. Therefore, this is not a situation where a person occupying two positions simultaneously seeks to negotiate a contract on behalf of both public entities he or she serves.

However, irrespective of the existence of such an agreement, the nature of the duty owed to a school board by a city treasurer in the collection of school taxes has been likened to that of a fiduciary. As stated by the Court of Appeals in Grand Rapids Public Schools, supra, p 657-658:

"This Court has noted that a city or county treasurer is a fiduciary in the management and application of public funds. Romulus City Treasurer v Wayne County Drain Comm'r, 86 MichApp 663, 667; 273 NW2d 514 (1978), aff'd 413 Mich 728; 322 NW2d 152 (1982). See 62 CJS, Municipal Corporations, Sec. 697, pp 1392-1395. The Court recognized the fiduciary and trust responsibilities of the city treasurer when dealing with school taxes in Lansing School Dist v. City of Lansing, 264 Mich 272, 275; 249 NW 848 (1933), by calling the treasurer 'virtually a stranger to the city' in the collection of school taxes. Similarly, in New Orleans v Fisher, supra, the Court stated that in collecting school funds, the city and its treasurer were acting as trustees for the school board. 180 US 197."

In a similar matter it has been held that county supervision of the city treasurer pertaining to the collection of county taxes by the city treasurer necessitates the conclusion that simultaneous holding of the offices of city treasurer and member of the county board of commissioners would be contrary to the prohibition against occupying incompatible offices in MCL 15.181; MSA 15.1120(122). OAG, 1987-1988, No 6418, p 15 (January 13, 1987).

The instant matter is analogous to that presented in OAG, 1987-1988, No 6418, supra. The city treasurer is responsible for collecting school taxes and acts as the school district's agent and fiduciary in that regard. The city treasurer must account to the school board for the school tax collections. MCL 211.43; MSA 7.84. If the city treasurer fails to pay to the school district all taxes collected which are due to the school district (and interest thereon in the absence of an agreement to the contrary), the city may be held liable for the deficiency. It is clear, therefore, that the duties of the city treasurer, insofar as they pertain to the collection of school taxes, are subject to the supervision of the school board.

It is my opinion, therefore, that the offices of city treasurer and school board trustee in the City of Ecorse are incompatible under MCL 15.182; MSA 15.1120(122), and may not be held simultaneously by the same person.

Frank J. Kelley

Attorney General