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137451 - MEA v Secretary of State

Michigan Education Association,
 
Katheen Corkin Boyle
 
Plaintiff-Appellant,
 
v
(Appeal from Ct of Appeals)
 
 
(Ingham – Brown, T.)
 
Secretary of State,
 
Heather S. Meingast
 
Defendant-Appellee.
 

Summary

​The Michigan Education Association is a voluntary labor organization that represents members employed by public schools, colleges, and universities; its political action committee is funded in part by MEA member payroll deductions. The MEA has collective bargaining agreements with various public school districts throughout Michigan; these agreements include a requirement that the school district employer administer a payroll deduction plan for contributions to the MEA’s PAC. In 2006, the MEA asked the Secretary of State to issue a declaratory ruling that the school districts’ administration of the payroll deduction program was not an “expenditure” under the Michigan Campaign Finance Act, and so did not violate the act. In a letter, the Secretary of State responded that the school districts could not continue to make and transmit the payroll deductions. She noted that Section 57(1) of the Campaign Finance Act prohibits the use of public funds to make “contributions” or “expenditures.” Without an express statutory provision permitting public bodies to administer such payroll deduction plans, the Secretary of State wrote, she was “constrained to conclude that the school district is prohibited from expending government resources for a payroll deduction plan that deducts wages from its employees on behalf of the MEA-PAC.” The Secretary of State also concluded that a violation of Section 57 could not be avoided by requiring the union to pay the anticipated costs of the payroll deduction system, because the act provided no such exception.

The MEA filed a petition in the circuit court for review of the Secretary of State’s decision. The circuit court concluded that the Secretary of State’s ruling was arbitrary, capricious, and an abuse of discretion. The circuit judge agreed that, under Section 57, the administration of payroll deductions to a union PAC constitutes an “expenditure” under the Campaign Finance Act. But he concluded that, where the costs of administering such a system are reimbursed, “no transfer of value to the union PAC occurs, and therefore, an ‘expenditure’ has not been made” within the meaning of the act.

In a split published opinion, the Court of Appeals reversed. The majority held that Section 57(1) prohibits a public body, such as a school district, from using public resources “to make a contribution or expenditure . . . .” MCL 169.257(1). The cost associated with a payroll deduction system for a PAC is an “expenditure,” the appellate court majority said. Advance reimbursement of the costs of the payroll deduction system does not alter that conclusion or prevent an expenditure from occurring, the majority said. The dissenting judge would have affirmed the circuit court’s ruling, but for a different reason – that the administrative costs of such a payroll deduction system do not constitute an “expenditure” at all, as the Campaign Finance Act defines that term. He would have asked the parties to address additional issues.

The MEA appeals. The Supreme Court heard oral argument on the application, and then granted leave to appeal, directing the parties to address the effect, if any, of the United States Supreme Court’s decision in Citizens United v Federal Election Commission, 558 US ___; 130 S Ct 876; 175 L Ed 2d 753 (2010), on this case.