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

JENNIFER M. GRANHOLM, ATTORNEY GENERAL


PUBLIC CONTRACTS:

PUBLIC SCHOOL ACADEMIES:

SCHOOLS AND SCHOOL DISTRICTS:

WAGES AND FRINGE BENEFITS:

Payment of prevailing wages on construction and remodeling of public school academy school buildings


Under the Wages and Fringe Benefits on State Projects Act, a contract for construction or remodeling of a school building authorized by a public school academy pursuant to bid, sponsored or financed in whole or in part by state funds, and using construction mechanics, must provide for the payment of prevailing wages.


Opinion No. 7057

July 19, 2000


Honorable Michael J. Hanley
State Representative
The Capitol
Lansing, MI 48913


You have asked if, under the Wages and Fringe Benefits on State Projects Act, a contract for construction or remodeling of a school building, authorized by a public school academy pursuant to bid, supported or financed in whole or in part by state funds, and using construction mechanics, must provide for the payment of prevailing wages. The answer to this question requires an analysis of both the statute you cite and the Revised School Code.

The Wages and Fringe Benefits on State Projects Act (Prevailing Wage Act), 1965 PA 166, MCL 408.551 et seq; MSA 17.256(1) et seq, requires prevailing wages and fringe benefits on state projects, and establishes requirements and responsibilities of contracting agents and bidders. Section 503(6)(d) of the Revised School Code (Code), 1976 PA 451, MCL 380.1 et seq; MSA 15.4001 et seq, states that a public school academy shall "comply with" the provisions of the Prevailing Wage Act. In Western Michigan Univ Bd of Control v Michigan, 455 Mich 531, 536; 565 NW2d 828 (1997), the Michigan Supreme Court articulated the elements that bring a project within the Prevailing Wage Act:

[A] project must: (1) be with a "contracting agent," a term expressly defined in the act; (2) be entered into after advertisement or invitation to bid; (3) be a state project, a term also defined in the act; (4) require the employment of construction mechanics; and (5) be sponsored or financed in whole or in part by the state.

The Prevailing Wage Act expressly includes a "school board" within its definition of "[c]ontracting agent." Section 1(c). A public school academy is a public school under Const 1963, art 8,  2, and a school district for purposes of Const 1963, art 9,  11. Code, section 501(1). The Michigan Supreme Court has confirmed that public school academies are public schools, subject to general supervision of the State Board of Education "to the same extent as are all other public schools." Council of Organizations and Others for Education About Parochiaid, Inc v Governor, 455 Mich 557, 583-584; 566 NW2d 208 (1997); OAG, 1997-1998, No 6956, p 72 (September 23, 1997). The board of directors of a public school academy is a school board and a contracting agent within the purview of the Prevailing Wage Act, thus satisfying the requirements of the first element.

Turning to the second element requiring advertisement or invitation to bid, the Code requires the board of directors of a public school academy, seeking to construct1 a new school building or to repair or renovate an existing school, to seek and obtain "competitive bids" on all material and labor costs. Section 1267(1). If the costs are less than $12,500, or the repair work is normally performed by school employees, no bids are required. Section 1267(6). Thus, the board of directors of a public school academy must seek bids for the construction or remodeling of its school buildings, provided that the cost is $12,500 or more. This statutory requirement satisfies the second element of a project entered into after "invitation to bid."

The third element of the Prevailing Wage Act expressly includes public "schools" within its definition of state project. Section 1(b). A public school academy is a public school. Code, section 501(1). Council of Organizations, supra, 455 Mich at 583. Thus, the Act's third element is satisfied.

The fourth element of the Prevailing Wage Act requires the employment of construction mechanics, other than employees in the state classified civil service, to construct or renovate the proposed project. This is a factual question to be resolved for each individual project, and is not appropriate for resolution by the Attorney General's opinion process.

The fifth and final element of the Prevailing Wage Act requires that the project be "sponsored or financed in whole or in part by the state." Section 2. In Western Michigan Univ, supra, at 539, the Michigan Supreme Court, citing OAG, 1991-1992, No 6723, p 156 (June 23, 1992), analyzed what constitutes state sponsorship of a project and concluded:

We find no ambiguity in the prevailing wage act's threshold requirement that a project must be "sponsored or financed in whole or in part by the state." No construction of these terms is required. If the "state," including any part of state government, helps to finance a project, or undertakes some responsibility for a project, this criterion is met. Because we agree with the analysis of the Attorney General regarding whether the state has sponsored or financed a project in whole or in part, specifically regarding the university's project at issue in this case, we will set forth that analysis here:

Direct legislative appropriation of funds is not . . . the only means by which a project can be sponsored or financed by the state. In West Ottawa Public Schools v Director, Dep't of Labor, 107 Mich App 237; 309 NW2d 220 (1981), lv den 413 Mich 917 (1982), for example, the state did not directly appropriate any funds for the project in question but did act as a surety for the payment of bonds issued to finance the project. The Court held that this was sufficient to constitute "sponsorship" within the meaning of the prevailing wage act. In reaching this conclusion, the Court defined "sponsor" as "one who assumes responsibility for some other person or thing."

With regard to funding, the Legislature has authorized a public school academy to receive state school aid payments. Pupils in attendance at a public school academy entitle the academy to receive the foundation allowance2 for each pupil, payable by the state to the authorizing body as fiscal agent for the public school academy. See for example, sections 20(2), 20(6), 20(7), 51a(2)(a), and 51a(12) of the State School Aid Act of 1979, 1979 PA 94, MCL 388.1601 et seq; MSA 15.1919(901) et seq. These state school aid payments are paid to the public school academy in accordance with section 507(1) of the Code. Not more than 20% of the total foundation allowance received by the academy may be transferred to a capital projects fund. Section 18(1) of the State School Aid Act of 1979. Monies in such fund would presumably be used by a public school academy to pay for the construction of new school buildings or the remodeling of existing school buildings. Since the governing body of a public school academy has no taxing authority, it is reasonable to assume that funds needed to pay for construction or remodeling of its school buildings would come from state school aid payments received by the academy. In that event, the academy's construction or remodeling of its school buildings would be sponsored or financed, in whole or in part, with state funds.3

It is my opinion, therefore, that under the Wages and Fringe Benefits On State Projects Act, a contract for construction or remodeling of a school building authorized by a public school academy pursuant to bid, supported or financed in whole or in part by state funds, and using construction mechanics, must provide for the payment of prevailing wages.




JENNIFER M. GRANHOLM
Attorney General

1 It is noted that the board of directors of a public school academy is empowered to "acquire" school buildings. Code, section 503(9). There is authority that holds the grant of power to acquire buildings includes the power to construct them. Ronnow v City of Las Vegas, 57 Nev 332; 65 P2d 133, 139 (1937); Clark v City of Los Angeles, 160 Cal 30; 116 P 722, 729 (1911); King v Independent School Dist, 46 Idaho 800; 272 P 507 (1928); Verner v Muller, 89 SC 117; 71 SE 654, 655-656 (1911). The commonly understood meaning of "remodel" is to reconstruct. Webster's Third New International Dictionary Unabridged Edition (1964). Guadalupe County Bd of Comm'rs v State, 43 NM 409; 94 P 2d 515, 518 (1939). Thus, remodeling of a school building would be within the grant of authority to the public school academy board of directors.

2 The foundation allowance is set each year by the Legislature as part of the state aid payments each school district receives.

3 The board of directors of a public school academy is empowered to receive grants or gifts. Revised School Code, section 504a(b). If the board were to construct or remodel a school building entirely with a gift or grant monies not sponsored or financed by state funds, a different conclusion may be required. See Muskegon Building and Construction Trades v Muskegon Area Intermediate School Dist, 130 Mich App 420, 435-436; 343 NW2d 579 (1983), overruled in part by Western Michigan Univ, supra.