No. 13069 INTHE SUPREME COURT OF THE STATE OF MONTANA 1975

BOARD OF REGENTS OF HIGHER EDUCATION OF THE STATE OFMONTANA, Plaintiff, 'VS' THOMAS L. JUDGE, Governor of the State of Montana, Defendant, and LEGISLATIVE FINANCE COMMITTEE OF THE MONTANA LEGISLATIVEASSEMBLY, Intervenors,

ORIGINAL PROCEEDING: Counsel of Record: For Plaintiff

### : Datsopoulos and MacDonald MiltonDatsopoulos argued, Missoula, Montana ForDefendant: Hon. Robert L, Woodahl, Attorney General, Helena, Montana John P, Atkins argued, Assistant Attorney General, Helena

## ,Montana Lon J, Maxwell, argued, Assistant Attorney General, Helena, Montana For Intervenors: JohnW. Northey argued, Helena, Montana For Intervenors Amicus Curiae: Berg, Angel, Andriolo and Morgan, Helena, Montana Gregory 0, Morgan argued, Bozeman, Montana

Submitted: September 10, 1975 Decided: 

## DEC19

## 19EMr. JusticeWesley Castles delivered the Opinion of the Court.

This is an originalproceeding for a declaratory judgment brought by the Board of Regents of Higher Education of the State of Montana against the Governor of the State. The Board of Regents seeks definitive rulings on the constitutionality of two bills passed during the 1975 legislative session and signed into lawby the Governor. House Bill 271 appropriates monies to the university system for the biennium. Senate Bill 401provides for a legislative finance committee to approve budget amendments. More will be said about these two bills later in this opinion. The Board of Regents, hereinafter referred to as the Regents, sought original jurisdiction in this Court. This Court set the matter for adversary hearing. Hearing was had. Defendant Governor,hereinafter referred to as Governor,moved to dismiss onprocedural grounds. Themotion was denied. The Legislative Finance Committee and the LegislativeAudit Committee of the Montana Legislative Assembly moved to intervene. Hereinafter these committees will be referred to in the singular as the Finance Committee. Such interventionwas granted, and no challenge ismade to the status of legislative committees as party litigants. TheAssociated Studentsof Montana State University and University of Montana were allowed to submit a brief and appear as amicus curiae. By order this Court accepted original jurisdiction on the basis of the emergency nature of the controversyand set a prehearing conference pursuant to Rule 28,M.R.App.Civ.P., to consider simplification of the issues. Thereafter the Court directed the Governor and his agents to refrain from withholding payments on claims and warrants by the university system until further order of this Court.Following the prehearing conference this Court ordered in part:"I. The Forty-FourthLegislature of the State of Montana passed House Bill 271which purports to appropriate money to the University System for the biennium. During the same session, the Legislaturepassed Senate Bill 401which provides for a legislative finance committee to approve budget amendments. Pursuant to House Bill 271, the budget director declared the appropriation to the University Systemvoid in the absence of a letter certifying compliance with the provisions of the bill. The Board of Regentsdeclined to certify and brought this action for disposition of the issues involved. "11. The issues to be resolved in this action are as follows: 1) whether Section l(3) of House Bill 271, in light of the provisions of Senate Bill 401 is an unconstitutional infringement on the powers and duties of the Board of Regents; 2) whether

(a)the certification requirementcontained in the origination clause of Section 12 of House Bill 271 isunconstitutional as an improper legislative infringementon themanagement authorityof the Board of Regents, and (b)whether Section 12(6) of House Bill 271 is unconstitutional as a direct invasion of themanagement prerogatives granted to the Board of Regents by Article X, Section 9 of theMontana Constitution." The pertinent parts of the two enactments are: HOUSE BILL "Section1. For the purposes of this act, unless otherwise stated:

"(3) 'Approvedbudget amendment'means approval by the board of regents unless otherwiseprovided by law, of a request to: "(a) obtain financing for new or expanded programs from funds which were not available for considerationby the legislature but which have become available from a source other than the state's general fund; or 

### " (b) transfer notmore than fifteenpercent (15%) of any single university systemunit's appropriations, including general fund appropriation between units and transfer appropriations between programs within a university system unit; or "(c) expend remaining balances of the first fiscal year of the biennial appropriations,including general fund appropriations,during the second fiscalyear of the biennium.

"Section 12. The provisions set forth in this sectionare limitations on the appropriations made in this act. It is the purpose of the legislature in enacting thisbill only to appropriate funds and to restrict and limit by its provisions the amount and conditionsunder which the appropriations can be expended. Except as otherwiseprovided in this act, the expenditures of appropriations are hereby contingent upon the board of regents certifying to the budget director that the university units shall comply completelywith the following general and specific provisions: 

## * * 

## * "(4) All moneys collected or received by university system units subject to this act from any source whatsoever, including federal grants for research and operations,and anymoneys received from a foundation shall be deposited in state treasury pursuant to the provisions of Title 79, R.C.M. 1947, except that the department of administrationmay, pursuant to section 79-603,R.C.M. 1947,permit any university system unit subject to this act to retain in its possession moneys thatwould otherwisebe deposited in the state treasury,provided that the anonymity of private foundation donors shallbe maintained and that private donations shall not be used as an offset to general fund appropriations.

"(6) Salary increases for presidents of units of the university system and for the commissioner of higher education shall not exceed fivepercent

(5%)each year of the biennium using the respective fiscalyear 74-75 salaries previously approved by the regents as the basis for determining such increases. "In the absence of such certification of compliance, the appropriations in this act are null and void. "The regents shall grant classified university employees salaries in accord with House Joint Resolution, 37, forty-fourth legislature." (Emphasis supplied.) House Bill 271was amended by the Forty-Fourth Legislature in its House Bill No. 1 (Special Session) by adding Section 13 to H.B. 271: "Section 13. In addition to the appropriationscontained in this act, all othermonies received from sources other than the general fund and which were not available for considerationby the legislature are hereby appropriated. Suchmonies may be made available for expenditure onlyby a budget amendment approved by the legislative finance committee."

SENATE BILL 401: "Section 1. 

## * * * Definitions. In this act: 

## * * * "(2) 'Budgetamendment' means a request submitted through the budget director to the committee for executive branch agencies to expend funds in excess of those appropriated by the legislature. "Section 2. 

## * * * Approval of budget amendments. All budget amendments for state agencies must be submitted through the budget director to the committee. No state agency shall expend in excess of the appropriation except under authority of a budget amendment approved by the committee. The committee shall approve,with or without modification, or disapprove, each proposed budget amendment of any state agency." The Governor does not oppose the Regentswith respect to the legislative budget process put forth in IssueNo. 1,but

see Governor's stand in companion case, Cause No. 13201,Governor

v. ~egislative Finance Committee). The Finance Committeedoes oppose the Regents with respect to the legislativebudget process in IssueNo. 1. Amicus Curiae support the Regents. Prior to discussing IssueNo. 1, itwill be helpful to give somebackground. House Bill 271 appropriatesmoney to the university system for the biennium by various line items from various state operating funds. The Commissionerof Higher Education, the University of Montana, Montana State University, and the various other college units are each appropriated certain funds. For example, the University of Montana is appropriated $17,782,106.00 for the year ending June 30, 1976, in ten line items: Instruction

# ...............................10,114,000 Research

# ..................................... 176,768 Public Service

# ...............................131,718



# ........................... Academic Support 1,737,215



# ............................. Student Services 886,183



# ...................... Institutional support 1,730,230 Operation & maintenance of plant

# ........... 1,941,316 ForestExperiment Station

# ....................241,591



# ................. Scholarshipsand fellowships 525,000 Malmstrom Air Force Base instruction

# .........298,085 Total 17,782,106From the general fund

# ..................... 9,808,239 From the earmarked revenue fund



# .......... 02106 Universitymillage ERA 3,041,786 02650 U.M. Student fee ERA................4,336,999 From the federal and private revenue fund 04308 UM interestand income FPRA

# ......... 75,000 04515UM federalprogram FPRA............ 346,944 Social Rehabilitation Services transfer..173,138 Total 17,782,106 H.B. 271 provides for budget amendment by the Regents whenever fundsbecome available from sources outside the general fund for new or expanded programs, or in transfers of notmore than 15%of any appropriationof a single unit of the university system to another unit, and expending balances remaining at the end of the first fiscal year during the second fiscal year. Additional monies are appropriated by section 3 of H.B. 1, (Special Session) Laws of 1975,which adds an additional section to H.B. 271, Section 13 as previously quoted. The contigency of additional appropriationsby budget amendments is taken from the Regents by definition in H.B. 271, Section 1 (3), "'Approved budget amendment'means approval by the board of regents unless otherwiseprovided by law

## * * 

## *." (Emphasissupplied.) S.B. 401provides that no state agency shall expend in

excess of an appropriation except under authority of a budget amendment approved by the legislative finance committee. Thus both by the section 13 amendment in the Special Session to H.B. 271 and by S.B. 401, the authority for budget amendments is in the legislative finance committee. Thus, the question and conflict arises between the Regents and the legislative finance committee. The Regents urge that line item appropriationsof general fund monies by the legislature to the Board of Regents infringe

on the authority of the Board granted by the Constitution of Montana1972. Their position is hinged on this language contained in Article X, Section 9, 1972Montana Constitution: "(2)(a) The government and control of the Montana university system is vested in a board of regents of higher educationwhich shall have full power, responsibility,and authority to supervise, coordinate,manage and control the Montana university system

## * * 

## *." (Emphasissupplied.) The Regents in part state their position: "Thisprovision [ArticleX, Section 9(2)(a) ] clearly indicates the broad scope of authority vested by the framers in the Board of Regents. The grant of power is clear and unambiguous.

## * * * Given their plain meaning, the words 

## * * * grant a high degree of autonomy to the Board of Regents." During oral argument, in response to a question from the bench, counsel went so far as to state that indeed the university system and its Board of Regents was a fourth branch of government. In support of that construction,the Regents note particular changes in the 1972 constitutional provision which, they insist, are indicative of the intent of the framers to vest complete control in the Regents to the exclusion of legislative and executive bodies. First, the 1889 Constitution vested control and supervision in the state board of education, but limited itspowers to those which "shallbe prescribed and regulated by law.", Art. XI, Sec. 11. Thus, the Regents urge that a board regulated by law is clearly under the control of the law-making body to some extent. The qualifying phrase is absent in the 1972Montana Constitution, indicating that the powers of the Regents are not to be prescribed by the legislature. Second, the language of the new provision is much stronger and more comprehensive than that of the old provision. Under the 1889 Constitution, the board of educationwas given "general control and supervisionnof the university system;under the 1972Montana Constitution, the Board of Regents was given "full power, responsibility and authority to supervise, coordinate, manage and control the Montana university system

## * * 

## *."At this point we observe that if Article X, Section 9, 1972Montana Constitution,was read literally without reference to the rest of the Constitution, the Regents argument and position would be correct; but, aswill be hereinafter developed, the Constitution is not so read. Article 111, Section 1, 1972Montana Constitution, reads: "Thepower of the government of this state is divided into three distinct branches 

### - legislative, executive,and judicial. No person or persons charged with the exercise of power properly belonging to one branch shall exercise any power properly belonging to either of the others, except as in this constitutionexpressly directed or permitted. (Emphasissupplied.) Article V, Section 1, 1972Montana Constitution,reads:

"The legislativepower is vested in a leqislature consisting of a senate and house of representatives. The people reserve to themselves the powers of initiative and referendum." (Emphasissupplied.) Article VIII, Section 12, 1972Montana Constitution, reads: "The legislature shall by law insure strict accountability of all revenue received and money spentby the state, and counties, cities, towns, and all other local government entities." (Emphasissupplied.) It is the opinion of this Court that these provisions of the 1972Montana Constitution and Article X, Section 9, should stand together. To be sure, that constitutional provision, like most, is couched in broad language,but it must not be read or construed in isolation. To aid our analysis of this sectionwe rely on several rules of construction used previously by this Court

# . First,Arps 

### v. State Highway Commission, 90Mont. 152, 160, 300 P. 549, provides: 

### " 

## * * * the Constitutionmust receive a broad and liberal interpretation consistent with the purpose of the framers and the people in adopting it, that itmay serve the needs of a growing state; 'theproper interpretation of any constitutional provision requiresus to remember that it is a part of the organic law--organicnot only in the sense that it is fundamental,but also in the sense that it is a living thing designed to meet the needs of a progressive society, amid all the detail changes to which a progressive society is subject.' (State ex rel. Fennerv. Keating, 53 Mont. 371, 163 Pac. 1156, 1158.)

### " Next, this rule stated in Cottingham v. State Board of Examiners, 134Mont. 1, 11, 17, 328 P.2d 907: "Ithas also frequentlybeen stated that the Montana Constitution,unlike the Constitution of our United States, is a prohibition upon legislativepower, rather than a grant of power. [Citingcases]

### " Also valuable are these rules from Cottingham:

"'A Constitution, or provisions thereof, should receive a reasonable and practical interpretation in accord with common sense.' 16 C.J.S. Constitutional Law, section 14,pp. 66, 69. 

## * * * "All of the provisions of the Constitution bearing upon the same subject matter are to receive a-mro- L L priate attention and be construed toqether.

### "

(Emphasissupplied.) Since our construction will determine the validity or invalidity of legislative acts, citing the presumption of constitutionalityand burden on the party seeking to overcome the presumption stated in State ex rel. Mills v. Dixon, 66Mont. 76, 84, 213 P. 227, is also appropriate: 

### " 

## * * 

## * the constitutionality of a legislative enactment isprima faciepresumed, and every intendment in its favor will be made unless its unconstitutionality appearsbeyond a reasonabledoubt." Our task then is to harmonize in a practical manner the constitutional power of the legislature to appropriate with the constitutional power of the Regents to supervise, coordinate, manage and control the university system. At the outsetwe note that there isnot always a clear distinctionbetween these powers and therefore limit our ruling here to these specific legislative enactments. It is also necessary when speaking to issues arisingout of the appropriation process to clarify our conceptionof the funds subject to that power. Previous rulings of this Court have limited the scope of appropriation to the general fund. State ex rel. Bonner v. Dixon, 59 Mont. 58, 76, 195 P. 841; StateAeronautics Commission v. Board of Examiners, 121 Mont. 402, 410, 194 P.2d 633,and cases cited therein. Statutory changes,as well as the 1972Montana Constitution,cause

us to reexamine that definition at this time. In 1963 the legislature enacted the "TreasuryFund StructureAct", section 79-409,R.C.M. 1947,with a purpose: 

### " 

## * * 

## * to make possible the full utilization of modern accountingmethods, to provide the legislative assembly with a qreatermeasure of control over public moneys, and to enable the financial recordsof the state to accurately reflect qovernmental costs and revenues." (Emphasisadded.) We note here that the structure of the 1972 Constitutional provisions have changed to a considerabie extent the connotation to be placed on the word "control"as used in section 79-409. Section 79-410 of theAct provides for these funds in the state treasury: 1) General fund. 2) Earmarked revenue fund. 3) Sinking fund. 4) Federal and private revenue fund. 5) Federal and private grant clearance fund. 6) Bond proceeds and insurance clearance fund. 7) Revolving fund. 8) Trust and legacy fund. 9) Agency fund. Then section 79-415 states in part: "(1)Moneys deposited in the general fund, the earmarked revenue fund, and the federaland private revenue fund, with the exception of trust income and refunds authorized in subsection (3)of this act, shall be paid out of the treasury only on appropriation made by law. 

## * 

## * *" (Emphasis supplied.) The 1972 Constitution also broadens the scope of the appropriation power. Article VI, Section 9,commands the governor to submit 

### a budget to the legislature "setting forth in detail for all operating funds the proposed expendituresand estimatedrevenue of the state". (Emphasissupplied.) Article VIII, Section 9, 1972Montana Constitution states: "Appropriationsby the legislature shallnot exceed anticipated revenue." Section 12 of the same Article provides: "The legislature shall by law insure strict accountability of all revenue received and money spentby the state,and counties, cities, towns, and all other local sovernmentalentities."

(Emphasisadded.) Thus the legislative appropriation power now extends beyond the general fund and encompasses all those public operating funds of state government. Prior to the 1972 Constitution, the Treasury Fund StructureAct, sections 79-409 through 79-416, R.C.M. 1947,provided for the nine fundsheretofore listed. However we emphasize that the power to appropriate does not extend to private funds received by state government which

are restricted by law, trust agreement or contract. Accordingly,

we limit subsection 

### (4)of section 79-410 which provides: 

### "(4) Federal and private revenue fund. The federal and private revenue fund consists of all expendablemoneys deposited in the state treasury from federal or private sources, includinq trust income, which are to be used for the operation of state government." (Emphasissupplied.) This provision, in view of our conception of the appropriation power, cannot be used as a basis for legislative control over expenditures of the types of privatemoneys enumerated above and is invalid to the extent itmay be so read. Similarly, the general appropriation contained in H.B. 1 (Special Session) is also limited to the public operating funds of state government. An example of such a fund outside the appropriation processwas the Montana Trust and Legacy Fund established by Article XXI, 1889Montana Constitution. Therefore, to the extent they

are inconsistentwith this discussion of the legislature's powerto appropriate, our earlier rulings in State ex rel. Bonner v. Dixon, supra,and StateAernautics Commission v. Board of Examiners, supra., are overruled. These funds--subject to the appropriation process--

concernus in the Regents' challenge to the approved budget amendment requirement of Section 1 (3)of H.B. 271. If the approval of budget amendmentsby the Finance Committee is a proper exercise of the legislative appropriation power, then the Regents

aspart of state government are subject to those requirements. But, as developed in this Court's opinion in the companion case, State ex rel. Thomas L. Judge v. Legislative Finance Committee, Cause #13201, also decided today, the power to approve budget amendments in S.B. 401 constitutesan unconstitutional delegation of legislativepower to the Finance Committee. Thus for the

reasons enumerated in that opinion, the Regents' challenge to the approved budget amendment requirement of H.B. 271 succeeds. To reach the Regents' constitutional challengeof the certification requirement in the origination clause of Section 12 of H.B. 271,we must consider the power of the legislature to make line item appropriations. We repeat the provision of H.B. 271:

"Section 12. The provisions set forth in this section are limitations on the appropriations made in this act. It is the Durnose of the

ts provisions the amount and conditionsunder

-- which the appropriationscan be expended. Except as otherwiseprovided in this act. the expenditures of appropriations are hereby contingentupon the board of regents certifying to the budget director that the university units shall comply completelywith the following general and specific provisions

## * * 

## *." (Emphasis supplied.) If the legislature cannot make line item appropriations for the university system, it does not have the authority to require certification by the Regents. The position of ~micus, whichwas adopted by the Regents in oral argument, is that the "autonomy" and "uniqueness"of the Regents precludes line item appropriations by the legislature. However,we find no constitutional limitations or judicial interpretation of this Court to bottom such

a conclusion. The Regents' assertion of autonomy based on an isolatedanalysis of one article of Montana's Constitution does not show a basic violation of fundamental law of this long standing legislativepractice. Even the Regents' cases from other jurisdictions cited in support of this principle, two of which

we discuss later,do not challenge the authority of the legislature to itemize appropriations. An early Michigan case,Sterling v. Regents of the University of Michigan, 110Mich. 369, 68 N.W. 253, 257, sets the precedent for regent autonomy according to the Regents, but this Court notes this discussion in the decision which illuminates the background of the constitutionalprovision giving the regents control over "expenditures from the university interest fund"

(similarto theMontana Trust and Legacy Fund,Article XXI, 1889 Constitution): "It is significant that, at the time of the adoption of the constitution, this fund constituted the sole support of the university, aside fromfeeswhich might be received from students. The state had made no appropriations for its support and there isnothinq to indicate that any such appropriationswere contemplated." (Emphasis supplied.) The present Michigan Constitution grants the regents control of "expendituresfrom the institution's funds." Based on this provision regent autonomy recently prevailed over these legislative appropriation bills described in Regents of University of Michigan v. The State of Michigan, 47 Mich.App. 23, 208 N.W.2d 871, 874-875: "Furthermorea careful reading of 1972P.A. 260 discloses that the Legislature has in no way abandonedits intention to substitute its judgment for that of the constitutionally created boards of control 

## * * ** "Whether it be under the guise of the police power or a reporting requirement, the simple fact remains that the legislature still is attenptinq through 1972 P.A. 260 to do the same thing it sought to do through 1971 P.A. 122 and prior acts: i.e., determine who shall teach and who shall not,who shall learn and who shall not." (Emphasissupplied.) Regent autonomy has not been asserted over the bare legislativepower to appropriate in the above instances. That power, by implication in these cases and expressly in others cited by the Regents, is secure even in Michigan with its strong constitutional provision and long judicial recognitionof autonomy of the regents. We recognizehere that while Montana's Constitution is not as explicit or broad as that of Michigan, the principle of regent independencewas definitely intended by the drafters of the 1972Montana Constitution. At the same time, just as in Michigan, legislative control of higher education through the appropriation process remains. The Regents are a constitutional body in Montana government subject to the power to appropriate and the public policy of this state. For a discussion of the impact of the 1972 constitutional provision see: Schaefer, The Legal Status of the Montana University System under the New Montana Constitution,35 Mont. Law Review 189. Going hand in hand with the power to appropriate has been legislative exercise of control over expenditures through itemization. Historically the English Parliamentduring the reign of William in the seventeenth century appropriated sums forparticular purposes with penalties fordisobedience. See 4 Thomson, A Constitutional History of England 

## - 1642-1801,p. 206. After two years of lump sum appropriationsthe United States Congress in 1793 began to itemize expenditures in its appropriation acts. Act of February 28, 1793,Ch. 18, 51, 1 Stat. 325. InMontana too,itemization of appropriations iswell established. Laws of Montana, Second Session 1891,pp. 129, 130. In addition to these historical bases, itemizationof appropriations isvital to the legislative decision-making process involved in providing

a balanced budget (ArticleVIII, Section 9), in providing a system of strictaccountability (ArticleVIII, Section 12), and in fulfilling the audit responsibility of ArticleV, Section 10. Also, Article X, Section 9(1) provides that: "It [stateboard of education] shall submitunified budget requests." These constitutional bases justify the legislature's use of line items in its appropriations. However, the legislature cannot do indirectly through themeans of line item appropriations and conditions what is impermissible for it to do directly. Line item appropriations become constitutionally impermissible when the authority of the Regents to supervise, coordinate,manage and control the university system is infringed by legislative control over expenditures. On their face, the budget items and corresponding line items of H.B. 271 are reasonably related to the purpose of providing funds for necessary services and the other responsibilitiesof the legislature enumerated above. Within these parameters we now consider the certification requirementsof Section 12,House Bill 271. That section, aspreviously quoted, requires the Regents to certify full compliance to certain conditions to the budget director. Without such certification of compliance the appropriations in the bill are null and void. At the same time the Regents concede that the conditioning of appropriations has been

a traditional and recognized legislativeprerogative. Despite this, the Regents contend that compliance with numerous conditions erodes their authority granted them by the Constitution. But,the Regents' argument sheds little light on specific intrusions; hence our ruling here is necessarily limited due to the facts presented us. We think this description adopted by Minnesota in State

ex rel. U. of Minnesota v. Chase, 175Minn. 259, 220N.W. 951, 955 to be a realistic approach to the issue of the propriety of legislative conditions to university system appropriations: 

### " 

## * 

## * * At the one extreme, the Legislaturehas no power to make effective, in the form of a law, a mere direction of academic policy or administration. At the other extreme ithas the undoubted right within reason to condition appropriations as it sees fit. 'Insuch case the regentsmay accept or reject such appropriation.

## * * 

## *

# v, the conditions are binding upon them.'" (Emphasis supplied.) As noted ab'ove, the Regents are notmentioned in either Article 111, Section 1,which creates the three branches of government, nor inArticle V,which limits the powers of the legislature. Similarly, the legislature is notmentioned in Article XISection 9(2), which entrusts the government and control of the university system to the Regents. By no rule of construction then can the powers of one be exercised or encroached upon by the other. In other words, the conditioning of university system appropriations by the 1975Montana legislature and the summary procedure for compliancewere proper exercises of its appropriation powers to the extent the conditions do not infringe on the constitutional powers granted the Regents. This means the conditionsmust be individually scrutinized to determine their propriety. The fact that there are numerous conditionsand a requirement of blanket compliance does not in itself infringe upon the Regents' constitutionalpowers. Neverthelesswe cannot neglect the fact that certain of the certification requirementsdo exceed the limits to the exercise of the appropriationpower which we have outlined above.We note particularly these provisions of Section 12,H.B. 271: "(4) All moneys collected or received by university system units subject to this act from any sourcewhatsoever, including federal grants for researchand operations,and any moneys received from a foundation sh-ed in the state treasury pursuant to the provisions of Title 79 R.C.M. 1947,except that the department of administrationmay, pursuant to section 79-60 R.C.M. 1947,permit any university system unit subject to this act to retain in its possession moneys thatwould otherwisebe deposited in the state treasury,provided that the anonymity of private foundationdonors shall be maintained and that private donations shall not be used as an offset to qeneral fund appropriations."

(Emphasissupplied.) Based on our earlier discussion of the legislative appropriation power, certification cannot be used as a bootstrapping device to gain legislative control over privatemoneys. As noted heretofore, privatemoneys restricted by law, trust agreement,or contract are beyond the appropriation power. To the extent then that the certification requirement of Section 12(4) attempts to exert any control over such privatemoneys or to grant any discretion over such funds to the department of administration,it is unconstitutional. The Regents' challenge to Section 12(6) of House Bill 271

on its face, in the final issuepresented to this Court, provides

us an opportunity to more fullydefine the limits within which the legislature may condition appropriations to the university system. That sectionprovides: "(6) Salary increases for presidentsof units of the university system and for the commissioner of higher education shall not exceed five percent (5%)each year of the biennium using the respective fiscal year 74-75 salariespreviously approved by the regents as the basis for determining such increases." (Emphasissupplied.) The question presented iswhether this condition is a direction of academic policy or administration by the legislature. The Regents argue this condition represents an effort to abrogatethe powers and prerogatives granted expressly and absolutely to them by the 1972Montana Constitution. The Governor and Finance Committee assert the condition is a proper exercise of the legislative appropriation power. The problem of delineating the area forbidden to the legislature in conditioning appropriationsof the university system is not easily resolved, as was noted by the Michigan Court ofAppeals in Regents of University of Michigan v. State, 47 Mich. App. 23, 208 N.W.2d 871, 877,quoting from 55Mich.

"'While itmust be recognized that the legislature's power to make appropriations to a constitutional university does not include and is separate from the power to control the affairs of such a university, the legislature can within reason attach conditions to its university appropriations. If a constitutional university accepts such conditioned funds, it is then bound by the conditions. There are notmany decisions in this area,however, so the linebetween conditions the leqislature can validly attach and those it cannot has notbeen drawn in a distinct fashion. Conditionswhich require the university to followprescribed business and accounting procedures have generally been found to be void. The courts have also sustained conditions which require,on penalty of losing part of the appropriation, annual reports to the governor, and fair and equitable distribution of an appropriation among the departmentsof the university or maintenance of university departments. It has also been held that the legislature can properlymake non-teaching employees subject to the state's workmen's compensation law, and can require loyalty oathsby the teachers. On the other side of the line, a condition that the universitymove a certain department of the school has been held to be invalidly attached, an attempt to limit the amount of funds that canbe spent for a given department is likewise an invalid condition. It is clear that limits should be placed on the use of the conditioned appropriation, forwithout such limits the legislature could use the conditioned appropriation to strip the university of its constitutional authority.'" (Emphasissupplied.) Clearly any decision with respect to appropriations affects the management of the university system to some degree. We assume the 1972 Constitutional Convention was aware of thisfact when itdrafted ArticleV. That Article, as was noted, does not limit the legislature'spower to appropriate funds for the university system. Therefore,we look to the impact of the appropriation condition on themanagement and control exercised by the Regents. Returning now to the restrictionscontained in Section 12, we note no legislative explanation of the breadth of the restrictions. Neither is there any provision for the Regents to object. The Regents either comply or forego the funds. Seemingly minor conditions could ultimately affect academic, administrative and financialmatters of substantial importance to the system. But, control over collegepresident salaries is not a "minor"matter. It does dictateuniversity personnel policy. That such effectwasmeant need only be found in the final sentence of the bill following Section 6 which states "The regents shall grant classified university employees salaries in accord with House Joint Resolution 37, forty-fourth legislature." Such

a limitation on significant expenditures indicates a complete disregard for the Regents' constitutional power. Inherent in the constitutional provision granting the Regents their power is the realization that the Board of Regents is the competent body for determining priorities in higher education. An important priority is the hiring and keeping of competent personnel. The limitation set forth in Section 12(6), H.B. 271, specificallydenies the Regents the power to function effectively by setting its own personnel policies and determining its own priorities. The condition is, therefore, unconstitutional. This opinion together with the companion opinion of State

ex rel. Thomas L. Judgev. Legislative Finance Committee, CauseNo. 13201, decided today, shallconstitute the declaratory judgment of thisCourt with regard toIssues 1)and 2) tobe resolved inthisaction as set out inthe order of thisCourt dated July 17, 1975. The order of thisCourt dated July 2, 1975, staying further actions orproceedings by any party hereto or his agent outside the scope of thisproceeding and the order dated July 7, 1975, directing the Governor and his agents, servants and employees todesist and refrain from withholding payment on warrants and claims submitted by theMontana university system,

arevacated. The Regents shallhave a reasonable time tocomplete their certification astothe other generalmatters contained in Section 12, H.B. 271.



# /'. dhief Justice Ju tice 

# L

Justices