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



AUDITOR GENERAL:

CONSTITUTIONAL LAW:

COUNTIES:

FREEDOM OF INFORMATION ACT:

Auditor General's authority to audit local units of government and to access their records




1996 PA 341, section 502, to the extent that it requires the Auditor General to audit local units of government, violates Const 1963, art 4, 53, and is therefore unconstitutional.

1996 PA 341, section 502, does not authorize the Auditor General to audit county road commissions and other local units of government in order to conduct a performance audit of the Michigan Departments of Transportation and Treasury.

The Auditor General may, in the discharge of his duties to audit the state and its departments, access public records of local units of government under the Freedom of Information Act, 1976 PA 442.


Opinion No. 6970

January 28, 1998


Honorable Thomas H. McTavish, C.P.A.
Auditor General
201 N. Washington Square
Lansing, Michigan 48913


You have asked two questions regarding the Auditor General's authority to audit a local governmental unit's use of transportation funds and to access records pursuant to such audit.

You first ask whether the Auditor General has authority, under 1996 PA 341, section 502, to audit county road commissions and other local units of government in order to conduct a performance audit of the Michigan Departments of Transportation and Treasury, to the extent that those departments distribute funds to those local units of government under 1951 PA 51, MCL 247.651 et seq; MSA 9.1097(1) et seq.

1996 PA 341 is the fiscal year 1996-1997 appropriations act for the Michigan Department of Transportation. Section 502 of this act provides as follows:

The legislative auditor general shall perform audits and make investigations of the disposition of all state funds received by county road commissions or county boards of commissioners, as applicable, and cities and villages for transportation purposes to determine compliance with the terms and conditions of Act No 51 of the Public Acts of 1951, being sections 247.651 to 247.675 of the Michigan Compiled Laws. County road commissions or county boards of commissioners, as applicable, and cities and villages shall make available to the legislative auditor general the pertinent records for the audit.

Thus, section 502 authorizes the Auditor General to audit county road commissions and other units of local government. This authorization is invalid, however, if it exceeds constitutional limitations on the authority of the Auditor General.

The office of the Legislative Auditor General was created through Const 1963, art 4,  53, which provides, in part, as follows:

The auditor general shall conduct post audits of financial transactions and accounts of the state and of all branches, departments, offices, boards, commissions, agencies, authorities and institutions of the state established by this constitution or by law . . . . He shall be assigned no duties other than those specified in this section.

(emphasis added).

Under the prior constitution, the Auditor General was an elected official of the executive branch, and the Legislature was given complete authority to establish the scope of the Auditor General's powers. Const 1908, art 6, 1. The 1963 Constitution eliminated the office of Auditor General as it had existed and created the new Legislative Auditor General, an official appointed by the Legislature with specific powers listed in the constitutional provision. Under Const 1963, art 4,  53, the Legislature cannot bestow any additional powers or duties upon the Auditor General. OAG, 1963-1964, No 4284, p 278, 279 (February 18, 1964).

In interpreting Const 1963, art 4, 53, this office has repeatedly concluded that the Auditor General does not have authority to audit local units of government. See OAG, 1983-1984, No 6225, p 303 (May 7, 1984); Letter Opinion of the Attorney General to Auditor General Albert Lee, dated December 17, 1975; Letter Opinion of the Attorney General to Auditor General Albert Lee, February 6, 1975. This conclusion is supported by the following exchange found in the Official Record of the 1961 Constitutional Convention, discussing the elimination of the office of Auditor General, as it then existed, and the creation of the new office of Legislative Auditor General:

MR. AUSTIN: Mr. Chairman--thank you, Mr. Downs--I would like to ask one question of Mr. Martin, too, in regard to the elimination of the auditor general, whom, I presume, will be replaced by the legislative
auditor. We have indicated on page 1, line 12, of the substitute proposal that

The legislative auditor general shall conduct comprehensive fiscal post audits of all transactions and accounts kept by or for all branches, departments, offices, boards, commissions, agencies, authorities and institutions of the state… .

Now am I to assume this would exclude local units of government, Mr. Martin?

MR. MARTIN: Yes, Mr. Austin, that is correct. It is not intended that the legislative auditor general should do anything more than handle state agencies, departments and institutions. These other units would, of course, continue to be subject to such audits as the legislature required. At the present time the counties are audited. The townships are not audited, generally, unless there are special problems. The school districts are not audited except that the legislature requires that they themselves have an independent audit made. So there are different provisions and it is to be presumed that the legislature would make such provision for them. They would not be audited by the legislative auditor general.

MR. AUSTIN: Mr. Chairman, Mr. Martin, on line 8 of page 2, you have provided that

The legislature shall provide by law with respect to the maintenance of uniform accounting systems and the auditing of units or agencies of local government.

MR. MARTIN: That is correct.

MR. AUSTIN: Now, if you are eliminating the present auditor general and if the legislative auditor general is to have no other duties than those specifically assigned to him in this proposal--which would, of course, exclude local units of government--what do you envision will be the auditing agency for these local units of government?

MR. MARTIN: Well, we would leave that entirely to the legislature, Mr. Austin, to place that where it appeared to be most desirable. As you know, we do propose that there be some reconsolidation of some of the departments. If that is approved it would be placed by the legislature in one of those departments, presumably--

MR. AUSTIN: Mr. Chairman--

MR. MARTIN: --or might be made a separate department depending upon what the legislature saw fit to do.

1 Official Record, Constitutional Convention 1961, pp 1681-1682 (emphasis added).

Constitutional Convention debates are considered a useful resource in interpreting constitutional provisions. House Speaker v Governor, 443 Mich 560, 580-581; 506 NW2d 190 (1993). The above excerpt demonstrates that the framers of the 1963 Constitution did not intend that the Legislative Auditor General be authorized to audit local units of government.

Const 1963, art 9, 21, which requires the Legislature to provide for the auditing of units of local government, provides as follows:

The legislature shall provide by law for the annual accounting for all public moneys, state and local, and may provide by law for interim accounting.

The legislature shall provide by law for the maintenance of uniform accounting systems by units of local government and the auditing of county accounts by competent state authority and other units of government as provided by law.

Thus, the Legislature has the clear constitutional authority, indeed the duty, to provide for audits of local governmental units. Pursuant to Const 1963, art 9, 21, however, the Legislature must assign this responsibility to some entity other than the Legislative Auditor General. Following the passage of the 1963 Constitution, and consistent with these requirements, the Legislature transferred many of the powers and duties of the elected Auditor General to the Department of Treasury. See, the Executive Organization Act of 1965, 1965 PA 380, MCL 16.101 et seq; MSA 3.29(1) et seq. Section 80 of the Executive Organization Act of 1965 specifically transferred the Auditor General's powers, duties and functions "relating to uniform system of accounts for county offices and examination thereof" to the Department of Treasury. Section 82 of the Act generally transferred "[a]ll powers, duties and functions of the auditor general elected under the constitution of 1908, excepting those reassigned by sections 79, 80 and 81 of this act and those granted to the auditor general appointed under article 4, section 53 of the Constitution of 1963" to the Department of Treasury, and abolished the office of the elected Auditor General. Thus, the Auditor General's former authority to audit local governmental units, including the authority to audit county road commissions' use of funds allocated under 1951 PA 51, was transferred to the Department of Treasury. County Rd Ass'n v State Highway Comm, 68 Mich App 390, 397-399; 242 NW2d 786 (1976).

You advise that the Auditor General does not interpret section 502 of 1996 PA 341 as authorizing the audit of local governmental units. Rather, the Auditor General interprets section 502 simply as allowing an examination of records of local governmental units in conjunction with a performance audit of the Departments of Transportation and Treasury. While an agency's interpretation of a statute which the agency administers is entitled to some deference, "an administrative interpretation . . . cannot be used to overcome the statute's plain meaning." Grand Rapids Ed Ass'n v Grand Rapids Bd of Ed, 170 Mich App 644, 651; 428 NW2d 731 (1988). When the language of a statute is clear and unambiguous, no interpretation is warranted. Turner v Auto Club Ins Ass'n, 448 Mich 22, 27; 528 NW2d 681 (1995).

Section 502 of 1996 PA 341 requires that the Auditor General "perform audits and make investigations of the disposition of all state funds received by county road commissions or county boards of commissioners, as applicable, and cities and villages for transportation purposes." The language of this section is clear, therefore, and requires no interpretation. Section 502 does not merely allow the Auditor General to access a local governmental unit's records in the course of auditing state agencies; it affirmatively requires that the Auditor General audit local governmental units.

County road commissions and other local governmental units are not entities "of the state" as that term is used in Const 1963, art 4,  53, even when they are using state funds allocated under 1951 PA 51. Accordingly, legislation requiring the Auditor General to audit such local governmental units is unconstitutional.

It is my opinion, therefore, in answer to your first question, that section 502 of 1996 PA 341, to the extent that it requires the Auditor General to audit local units of government, violates Const 1963, art 4, 53. Accordingly, section 502 does not authorize the Auditor General to access records of the county road commissions and other local units of government in order to complete a performance audit of the Michigan Departments of Transportation and Treasury.

The answer to your first question does not mean that local governmental units are free from being audited and from having to produce their records. As noted above, Const 1963, art 9, 21, requires the Legislature to provide for the audit of local governmental units. The Legislature, in section 80 of the Executive Organization Act of 1965, has already given the Department of Treasury the power to audit counties. Section 27 of the county road law, MCL 224.27; MSA 9.127, mandates annual or biennial audits of the county road commissions by the State Treasurer, in the absence of an audit by an independent certified public accountant. In addition, sections 12(22) and 13(10) of 1951 PA 51, as recently amended by 1997 PA 79, require that the Department of Treasury "conduct performance audits and make investigations of the disposition of all state funds received by" counties, cities and villages for transportation purposes, in order to determine compliance with 1951 PA 51. Sections 12(22) and 13(10) also require that counties, cities and villages "make available to the department of treasury the pertinent records for the audit." Moreover, the Auditor General remains authorized to audit the Michigan Departments of Transportation and Treasury and can effectively follow the trail of state funds to local governmental units by obtaining local records that are in the possession of these state departments.

Your second question asks whether the Auditor General may access public records of county road commissions and other local units of government under the Freedom of Information Act (FOIA), 1976 PA 442, MCL 15.231 et seq; MSA 4.1801(1) et seq.

Under section 2(d)(iii) of the FOIA, local governmental units are public bodies subject to the statute's disclosure requirements. Section 3 of the FOIA mandates that "[u]pon providing a public body's FOIA coordinator with a written request . . . a person has a right to inspect, copy, or receive copies of the requested public record," subject to any exemptions from disclosure found in section 13 of the FOIA. Under section 2(c) of the FOIA, governmental entities are "persons" entitled to make requests and to access records under the FOIA. Thus, if the Auditor General determines a need to conduct an audit of the state and its departments, he may submit a FOIA request and thereby obtain nonexempt records of local units of government.

It is my opinion, therefore, in answer to your second question, that the Auditor General may, in the discharge of his duties to audit the state and its departments, access public records of local units of government under the Freedom of Information Act, 1976 PA 442, MCL 15.231 et seq; MSA 4.1801(1) et seq.



FRANK J. KELLEY
Attorney General