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. 6815

August 24, 1994

STATE ADMINISTRATIVE BOARD:

Prior approval of contracts of the Michigan Truck Safety Commission for $100,000 or more

MICHIGAN TRUCK SAFETY COMMISSION:

Prior approval of its contracts for $100,000 or more by the State Administrative Board

The Michigan Truck Safety Commission is required to obtain the prior approval of the State Administrative Board before entering into contracts for $100,000 or more for the purchase of materials or services.

Honorable Phil Arthurhultz

State Senator

The Capitol

Lansing, Michigan

You have asked if the Michigan Truck Safety Commission is required to obtain the prior approval of the State Administrative Board before entering into contracts for $100,000.00 or more.

The Michigan Truck Safety Commission (Commission) administers the Truck Safety Fund (Fund) under section 25 of 1951 PA 51, MCL 247.675; MSA 9.1097(25). Subsections (1) and (2) of that section set forth the establishment and administration of the Commission and the Fund:

(1) The truck safety fund is established and shall be maintained in the state treasury. The truck safety fund shall be administered by the office of highway safety planning within the department of state police.

(2) The Michigan truck safety commission is established in the office of highway safety planning within the department of state police. The commission shall control the expenditures of the truck safety fund. [Emphasis supplied.]

The membership of the Commission is set forth in section 25(2)(a)-(e). The Commission administers and controls the priority and level of Fund expenditures under section 25(4).

Section 25(5) requires the Commission to make an annual legislative report on expenditures from the Fund as follows:

The commission shall make an annual report to the chairpersons of the house transportation and senate state affairs, tourism, and transportation committees on the status of the fund. The report shall be submitted within 45 days after the end of the fiscal year and shall include the year and balance of the fund and the disbursements made from the fund during the previous fiscal year.

Given the Commission's statutory authority to control Fund expenditures, and the requirement of an annual report to legislative committee chairpersons pertaining to those expenditures, you have inquired whether the Commission must nevertheless obtain State Administrative Board (Administrative Board) approval for certain expenditures from the Fund.

The Legislature created the Administrative Board to promote efficiency in state government. Under section 3 of 1921 PA 2, the Administrative Board has supervisory control over the activities of all administrative departments of the State of Michigan. House Speaker v State Administrative Bd, 441 Mich 547, 550-551; 495 NW2d 539 (1993). The six members of the Administrative Board are the Governor, Lieutenant Governor, Attorney General, Secretary of State, State Treasurer and Superintendent of Public Instruction. MCL 18.1145(4); MSA 3.516(145)(4).

1921 PA 2, section 3; MCL 17.3; MSA 3.263, sets forth the supervisory powers of the Administrative Board:

The state administrative board shall exercise general supervisory control over the functions and activities of all administrative departments, boards, commissioners and officers of the state, and of all state institutions: Provided, however, The said board shall not have power to transfer any appropriation to the general fund at any time or use the same for any purpose other than that designated by the legislature: Provided further, That said board shall not have power to allow to any state department, board, commission, officer or institution any funds, not appropriated therefor by the legislature, from any source whatever, except as provided in the emergency appropriation act of 1931; and said administrative board shall not have the power to transfer to any state department, board, commission, officer or institution any sum from the amount appropriated by the legislature for any other purpose, except to inter-transfer funds within the appropriation for the particular department, board, commission, officer or institution. Said board may in its discretion intervene in any matter touching such functions and activities and may, by resolution or order, advise or direct the department, board, commission, officer or institution concerned as to the manner in which the function or other activity shall be performed, and may order an interchange or transfer of employees between departments, boards, commissions and state institutions when necessary. It is hereby made the duty of each and every official and employee connected with any administrative department, office or institution of the state to follow the direction or order so given; and to perform such services in the carrying out of the purposes and intent of this act as may be required by the board. Failure so to do shall be deemed to constitute malfeasance in office and shall be sufficient cause for removal. [Emphasis added.]

This long-standing supervisory power of the Administrative Board includes the power to regulate purchases by state commissions. See OAG, 1937-1938, p 319 (August 13, 1937); OAG, 1937-1938, p 447 (March 8, 1938).

Pursuant to its statutory supervisory authority, on February 15, 1983, the Administrative Board adopted a resolution requiring that all state contracts of $100,000 or more for the purchase of materials or services, with certain exceptions, be approved by the Administrative Board prior to execution:

'Be it resolved that unless specifically approved by the Governor, all State contracts involving $100,000 or more for the purchase of materials or services be approved by the State Administrative Board prior to execution. Provided, however, that prior approval is not required in emergency cases involving public health or safety. All contracts of $100,000 or more executed in response to such emergency shall be reported to the Board as soon as practicable.' [Emphasis added.]

The February 15, 1983 Resolution was implemented by Administrative Circular No. 31, dated September 15, 1983, from the Acting Director of the Department of Management and Budget to all principal departments. Administrative Circular No. 31 sets forth the contracts that require or do not require Administrative Board approval:

This circular applies to all state departments and agencies except for institutions of higher education, community colleges or local units of government.

State contracts of $100,000 or more, regardless of source of funding or duration, requiring approval include, but are not limited to, the following:

1. Contracts or purchase orders for all supplies, materials and equipment.

2. Contracts or purchase orders for all services, including consulting, research and professional services.

3. Contracts or purchase orders between state departments and educational institutions or other governmental units.

4. Contracts or blanket orders whose dollar values are not fixed in the contract but which are estimated to be $100,000 or more.

5. Contracts or purchase orders for commodities or services available from only one source.

Contracts not requiring review are as follows:

-- All contracts less than $100,000 in value unless review is otherwise mandated by statute.

-- Any contract exempted by the Governor's determination as Chairman of the State Administrative Board.

-- Emergency contracts of $100,000 or more involving public health or safety. See Administrative Manual, Chapter 8, Section 2(3). These shall be reported to the Board as soon as practicable after execution.

-- Interdepartmental contracts.

-- Statutory state grants to other units of government.

Administrative Circular No. 31 also sets forth examples of the types of contracts of $100,000 or more requiring Administrative Board approval. One of the examples given is "[p]ublic and private transportation grants." Documents provided to this office demonstrate that the grant here in question is in the amount of $420,000.00 for contractual services for a public information and education program and a research project to assess the effectiveness of that program.

The Commission is a state commission established within the Department of State Police. It controls the expenditures of the Fund, which is maintained in the state treasury. In light of its status as a state commission, the Commission is subject to the statutory supervisory authority of the Administrative Board, under MCL 17.3; MSA 3.263, to approve all state contracts for materials and services of $100,000 or more.

The Administrative Board's supervisory authority does not impinge upon the Commission's statutory responsibility to determine the priority and level of Truck Safety Fund expenditures. The Commission responsibilities remain intact, subject to the Administrative Board review of state contracts described above. The fact that the Commission is required to provide an annual report to certain legislative committee chairpersons pertaining to the Fund's expenditures does not alter the Administrative Board's supervisory authority over the Commission.

It is my opinion, therefore, that the Michigan Truck Safety Commission is required to obtain the prior approval of the State Administrative Board before entering into contracts for $100,000.00 or more for the purchase of materials or services.

Frank J. Kelley

Attorney General