STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6915

September 4, 1996

SCHOOLS AND SCHOOL DISTRICTS:

Public school academies and section 1231 of the Revised School Code

RETIREMENT:

Independent contractors providing instructional services at public school academies and the Michigan Public School Employees' Retirement System

A public school academy is not subject to section 1231 of the Revised School Code, which requires the board of a school district to "hire and contract with qualified teachers," and it may contract with an outside company for the provision of instructional services by employees of that company.

Teachers who are providing instructional services to students of a public school academy, but who are employed by an outside company rather than by the public school academy, are not members of the Michigan Public School Employees' Retirement System.

Mark A. Murray

Director

Department of Management and Budget

P.O. Box 30026

Lansing, MI 48909

You have asked two questions regarding public school academies (PSAs) operating under Part 6A ⁽¹⁾ or 6B ⁽²⁾ of the Revised School Code, 1976 PA 451, MCL 380.1 et seq; MSA 15.4001 et seq, and the Michigan Public School Employees' Retirement System (MPSERS).

You first ask whether a PSA is subject to section 1231 of the Revised School Code, which requires the board of a school district to "hire and contract with qualified teachers." In a prior opinion of this office, the nearly identical predecessor to section 1231 was interpreted as requiring school districts to contract directly with their teachers and as prohibiting school districts from contracting with an outside company to provide teachers. See, OAG, 1961-1962, No 3656, pp 407, 409 (May 25, 1962). Subsequent letter opinions reiterated this interpretation. See, Letter Opinion of the Attorney General (Senator John F. Toepp, March 12, 1976); Letter Opinion of the Attorney General (Senator James E. O'Neill, Jr., October 14, 1977.) See also, the Order of Summary Judgment, dated April 5, 1979, in Scott Educational Services v Frank J. Kelley and Michigan, Berkley & Ferndale Education Assns, Oakland County Circuit Court No. 78-180-249-CZ, at page 2, which construed section 1231 and held that "school districts lack any lawful authority to contract with private agencies for the providing of substitute teachers."

In 1995 PA 289, the Legislature extensively amended the School Code of 1976 and retitled it the Revised School Code. Although many of the provisions of the School Code of 1976 were amended, repealed or replaced with new sections, section 1231 was not revised.

Subsection 1 of section 1231 states, in part, that "[t]he board of a school district shall hire and contract with qualified teachers." (Emphasis added.) Section 6(2) of the School Code of 1976 defined "[s]chool district" as a primary school district or a school district of the first, second, third or fourth class. The Revised School Code rewrote this definition in section 6(1) and defines "[s]chool district" as "a general powers school district organized under this act, regardless of previous classification, or a school district of the first class." The Legislature did not include PSAs within the general definition of "[s]chool district" in either the School Code of 1976 or the Revised School Code. This definition governs "[f]or the purposes" of the Revised School Code as stated in section 2 thereof.

PSAs were initially authorized under Part 6A of the School Code of 1976, which was added by 1993 PA 362. Shortly thereafter litigation resulted in a ruling that 1993 PA 362 was unconstitutional. See, Council of Organizations and Others for Education About Parochiaid v Governor, 216 Mich App 126; 548 NW2d 909 (1996). An application for leave to appeal is before the Michigan Supreme Court. See, Council of Organizations and Others for Education About Parochiaid, Inc v Governor (Supreme Court Docket Nos. 106109, 106110 and 106111). While that litigation was before the Court of Appeals, the Legislature enacted Part 6B of the School Code of 1976 in 1994 PA 416. Both Parts 6A and 6B are retained in the Revised School Code, but section 518 provides that Part 6B is repealed if a court of competent jurisdiction holds that Part 6A is valid. After Part 6A was declared unconstitutional, any PSA desiring to receive state school aid incorporated under Part 6B.

Under both Parts 6A and 6B, a PSA is defined as a "school district" for the limited purpose of sharing in the State School Aid Fund created under Const 1963, art 9, section 11. See section 501(1) of Part 6A and section 511(2) of Part 6B. Effective July 1, 1996, a PSA is also defined as a "school district" in section 501(1) and 511(2), as amended by 1995 PA 289, for the limited purpose of borrowing under section 1225 of the Revised School Code. While the Legislature has made numerous provisions of the Revised School Code applicable to PSAs, either by reference in Parts 6A and 6B or by amendment to the specific sections of that statute, it is clear that the Legislature did not intend to equate PSAs with school districts as a general proposition.

Section 503(6)(e), as added by 1993 PA 362, required Part 6A PSAs to comply with sections 1267 and 1274. Section 513(8)(e), as added by 1994 PA 416, required Part 6B PSAs to comply with sections 1263(3), 1267 and 1274. 1995 PA 289 amended both sections 503(6)(e) and 513(8)(e) to now require PSAs to comply with seven enumerated sections of the Revised School Code.

Since permitting the creation of PSAs in 1993 PA 362, the Legislature has also amended numerous sections of the Revised School Code to make them specifically applicable to PSAs. For example, within Part 16 the Legislature amended over 20 different sections to include PSAs within their application. Section 1231 is in Part 16. The Legislature has not amended section 1231 since it was enacted in 1976 PA 451.

In sum, the Legislature has not generally defined the term "[s]chool district" to include PSAs. It also has not amended Part 6A or Part 6B or section 1231 of the Revised School Code to make that section applicable to PSAs. It must, thus, be concluded that section 1231 does not apply to PSAs.

This conclusion is buttressed by a review of sections 505 and 506 of Part 6A and sections 515 and 516 of Part 6B of the Revised School Code. Sections 506 and 516 are identically worded and permit a PSA to "employ or contract with personnel as necessary for the operation of the public school academy." Sections 505 and 515 are also identically worded and require that a public school academy "shall use certificated teachers," except as otherwise provided by law. (Emphasis added.) Reading these provisions together, it is clear that the Legislature has required that instruction in PSAs be generally provided by certificated teachers, but that PSAs are not required to directly employ these teachers. In addition, sections 504a(d) and 514a(d) both authorize PSAs to contract with "persons or entities" for their operation and management. The Revised School Code contains no provision similar to sections 504a(d) and 514a(d) that applies to traditional school districts. Thus, PSAs have broad authority to contract with other entities as necessary for their operation. Accordingly, sections 504a(d) and 514a(d) clearly authorize PSAs to contract with outside companies for the provision of instructional services.

It is my opinion, therefore, in answer to your first question, that a public school academy is not subject to section 1231 of the Revised School Code, which requires the board of a school district to "hire and contract with qualified teachers," and it may contract with an outside company for the provision of instructional services by employees of that company.

You next ask whether employees of an outside company who are providing instructional services to students of a public school academy are members of the Michigan Public School Employees' Retirement System (MPSERS).

MPSERS is governed by 1980 PA 300, MCL 38.1301 et seq; MSA 15.893(111) et seq. Section 5(1) of that act defines "member," with several exceptions not relevant here, as "a public school employee." Section 6(5) states, in part, that a "'[p]ublic school employee' means an employee of a ... public school academy." A public school academy is within the definition of a "[r]eporting unit" in section 7(3) of that act and, thus, is required to make MPSERS employer contributions to the Department of Management and Budget on a monthly basis. See, section 42 of the same act. Thus, it is clear that a teacher employed by a PSA is considered a MPSERS member and must be enrolled in the retirement system.

However, under 1985 AACS, R 38.1117(d), an independent contractor employed directly by a school district is not within the MPSERS' membership. Parts 6A and 6B of the Revised School Code permit PSAs to use teachers who are employees of an outside company. Where a PSA uses teachers provided by an outside company, the teachers are not employees of the PSA and, consequently, not public school employees for purposes of the MPSERS.

It is my opinion, therefore, in answer to your second question, that teachers who are providing instructional services to students of a public school academy, but who are employed by an outside company rather than by the public school academy, are not members of the Michigan Public School Employees' Retirement System.

Frank J. Kelley

Attorney General