No. 13069 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1975 

BOARD OF REGENTS OF HIGHER EDUCATION OF 

THE STATE OF MONTANA, 

Plaintiff, 

'VS' 

THOMAS L. JUDGE, Governor of the State 

of Montana, 

Defendant, 

and 

LEGISLATIVE FINANCE COMMITTEE OF THE 

MONTANA LEGISLATIVE ASSEMBLY, 

Intervenors, 

ORIGINAL PROCEEDING : 

Counsel of Record: 

For Plaintiff : 

Da tsopoulos and MacDonald 

Milton Datsopoulos argued, Missoula, Montana 

For Defendant: 

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: 

John W. 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: DEC 19 19E 
Mr. Justice Wesley Castles delivered the Opinion of the Court. 

This is an original proceeding 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 law by the Governor. House Bill 271 appropriates monies 

to the university system for the biennium. Senate Bill 401 provides 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 on procedural grounds. The motion was denied. The Legislative Finance Committee and the Legislative Audit Committee of 

the Montana Legislative Assembly moved to intervene. Hereinafter 

these committees will be referred to in the singular as the Finance Committee. Such intervention was granted, and no challenge 

is made to the status of legislative committees as party litigants. 

The Associated Students of 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 controversy and 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-Fourth Legislature of the State 

of Montana passed House Bill 271 which purports 

to appropriate money to the University System 

for the biennium. During the same session, the 

Legislature passed Senate Bill 401 which provides 

for a legislative finance committee to approve 

budget amendments. Pursuant to House Bill 271, 

the budget director declared the appropriation 

to the University System void in the absence of 

a letter certifying compliance with the provisions of the bill. The Board of Regents declined 

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 requirement contained in the 

origination clause of Section 12 of House Bill 271 

is unconstitutional as an improper legislative 

infringement on the management authority of the 

Board of Regents, and (b) whether Section 12(6) of 

House Bill 271 is unconstitutional as a direct 

invasion of the management prerogatives granted 

to the Board of Regents by Article X, Section 9 

of the Montana Constitution." 

The pertinent parts of the two enactments are: 

HOUSE BILL 

"Section 1. For the purposes of this act, unless 

otherwise stated: 

"(3) 'Approved budget amendment' means approval 

by the board of regents unless otherwise provided 

by law, of a request to: 

"(a) obtain financing for new or expanded programs 

from funds which were not available for consideration by the legislature but which have become available from a source other than the state's general 

fund; or 

" (b) transfer not more than fifteen percent (15%) 

of any single university system unit'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 fiscal 
year of the biennium. 

"Section 12. The provisions set forth in this 

section are limitations on the appropriations 

made in this act. It is the purpose of the 

legislature in enacting this bill only to 

appropriate funds and to restrict and limit by 

its provisions the amount and conditions under 

which the appropriations can be expended. Except as otherwise provided 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 

completely with 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 any moneys 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 administration may, pursuant to section 79-603, R.C.M. 

1947, permit any university system unit subject 

to this act to retain in its possession moneys 

that would otherwise be deposited in the state 

treasury, provided that the anonymity of private 

foundation donors shall be 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 five percent 

(5%) each year of the biennium using the respective 

fiscal year 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 271 was 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 appropriations contained 

in this act, all other monies received from sources other 

than the general fund and which were not available for 

consideration by the legislature are hereby appropriated. 

Such monies may be made available for expenditure only 
by a budget amendment approved by the legislative 

finance committee." 

SENATE BILL 401: 

"Section 1. * * * Definitions. In this act: * * * 

"(2) 'Budget amendment' 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 Regents with respect 

to the legislative budget process put forth in Issue No. 1, but 

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

v. ~egislative Finance Committee). The Finance Committee does 

oppose the Regents with respect to the legislative budget process 

in Issue No. 1. Amicus Curiae support the Regents. 

Prior to discussing Issue No. 1, it will be helpful to 

give some background. House Bill 271 appropriates money to the 

university system for the biennium by various line items from 

various state operating funds. The Commissioner of 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 

Forest Experiment Station .................... 241,591 

Scholarships and fellowships ................. 525,000 

Malmstrom Air Force Base instruction ......... 298,085 

Total 17,782,106 
From the general fund ..................... 9,808,239 

From the earmarked revenue fund 

02106 University millage ERA .......... 3,041,786 

02650 U.M. Student fee ERA................4,336,999 

From the federal and private revenue 

fund 

04308 UM interest and income FPRA ......... 75,000 

04515 UM federal program FP RA............ 346,944 

Social Rehabilitation Services transfer..173,138 

Total 17,782,106 

H.B. 271 provides for budget amendment by the Regents 

whenever funds become available from sources outside the general 

fund for new or expanded programs, or in transfers of not more 

than 15% of any appropriation of 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 appropriations by 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 

otherwise provided by law * * *." (Emphasis supplied.) 

S.B. 401 provides 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 appropriations of general 

fund monies by the legislature to the Board of Regents infringe 

on the authority of the Board granted by the Constitution of Montana 
1972. Their position is hinged on this language contained in 

Article X, Section 9, 1972 Montana Constitution: 

"(2) (a) The government and control of the Montana university system is vested in a board of 

regents of higher education which shall have full 

power, responsibility, and authority to supervise, 

coordinate, manage and control the Montana 

university system * * *. " (Emphasis supplied.) 

The Regents in part state their position: 

"This provision [Article X, 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 its powers to 

those which "shall be 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 1972 Montana 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 education was given 

"general control and supervisionn of the university system; under 

the 1972 Montana 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, 

1972 Montana Constitution, was read literally without reference to the rest of the Constitution, the Regents argument and 

position would be correct; but, as will be hereinafter developed, 

the Constitution is not so read. 

Article 111, Section 1, 1972 Montana Constitution, 

reads: 

"The power 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 constitution expressly 

directed or permitted. (Emphasis supplied.) 

Article V, Section 1, 1972 Montana Constitution, reads: 

"The legislative power is vested in a leqislature 

consisting of a senate and house of representatives. 

The people reserve to themselves the powers of 

initiative and referendum." (Emphasis supplied.) 

Article VIII, Section 12, 1972 Montana Constitution, 

reads : 

"The legislature shall by law insure strict accountability of all revenue received and money spent by 

the state, and counties, cities, towns, and all other 

local government entities." (Emphasis supplied.) 

It is the opinion of this Court that these provisions of 

the 1972 Montana 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 section we 

rely on several rules of construction used previously by this 

Court . 

First, Arps v. State Highway Commission, 90 Mont. 152, 

160, 300 P. 549, provides: 

" * * * the Constitution must receive a broad and 

liberal interpretation consistent with the purpose 

of the framers and the people in adopting it, that 

it may serve the needs of a growing state; 'the 
proper interpretation of any constitutional provision requires us to remember that it is a part 

of the organic law--organic not 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. Fenner v. Keating, 53 Mont. 371, 163 Pac. 

1156, 1158.) " 

Next, this rule stated in Cottingham v. State Board of 

Examiners, 134 Mont. 1, 11, 17, 328 P.2d 907: 

"It has also frequently been stated that the 

Montana Constitution, unlike the Constitution 

of our United States, is a prohibition upon legislative power, rather than a grant of power. 

[Citing cases] " 

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. " 

(Emphasis supplied.) 

Since our construction will determine the validity or 

invalidity of legislative acts, citing the presumption of constitutionality and burden on the party seeking to overcome the 

presumption stated in State ex rel. Mills v. Dixon, 66 Mont. 76, 

84, 213 P. 227, is also appropriate: 

" * * * the constitutionality of a legislative 

enactment is prima facie presumed, and every intendment in its favor will be made unless its unconstitutionality appears beyond a reasonable doubt." 

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 outset we note 

that there is not always a clear distinction between these powers 

and therefore limit our ruling here to these specific legislative enactments. 

It is also necessary when speaking to issues arising 
out of the appropriation process to clarify our conception of 

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; State Aeronautics Commission v. Board of Examiners, 121 

Mont. 402, 410, 194 P.2d 633, and cases cited therein. Statutory changes, as well as the 1972 Montana Constitution, cause 

us to reexamine that definition at this time. 

In 1963 the legislature enacted the "Treasury Fund 

Structure Act", section 79-409, R.C.M. 1947, with a purpose: 

" * * * to make possible the full utilization of 

modern accounting methods, to provide the legislative assembly with a qreater measure of control 

over public moneys, and to enable the financial 

records of the state to accurately reflect qovernmental costs and revenues." (Emphasis added.) 

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 the Act 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 federal and 

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 expenditures and estimated 
revenue of the state". (Emphasis supplied. ) 

Article VIII, Section 9, 1972 Montana Constitution 

states: 

"Appropriations by the legislature shall not 

exceed anticipated revenue." 

Section 12 of the same Article provides: 

"The legislature shall by law insure strict 

accountability of all revenue received and money 

spent by the state, and counties, cities, towns, 

and all other local sovernmental entities." 

(Emphasis added. ) 

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 Structure Act, sections 79-409 through 79-416, 

R.C.M. 1947, provided for the nine funds heretofore 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 

expendable moneys deposited in the state treasury 

from federal or private sources, includinq trust 

income, which are to be used for the operation 

of state government." (Emphasis supplied.) 

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 private moneys enumerated above and 

is invalid to the extent it may 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 process was the Montana Trust and Legacy Fund established by Article 

XXI, 1889 Montana Constitution. Therefore, to the extent they 

are inconsistent with this discussion of the legislature's power 
to appropriate, our earlier rulings in State ex rel. Bonner v. 

Dixon, supra, and State Aernautics Commission v. Board of 

Examiners, supra., are overruled. 

These funds--subject to the appropriation process-- 

concern us in the Regents' challenge to the approved budget 

amendment requirement of Section 1 (3) of H.B. 271. If the 

approval of budget amendments by the Finance Committee is a proper 

exercise of the legislative appropriation power, then the Regents 

as part 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 constitutes an unconstitutional delegation 

of legislative power 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 challenge of 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 conditions under -- 

which the appropriations can be expended. 

Except as otherwise provided 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 completely with 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, which 
was 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 

isolated analysis of one article of Montana's Constitution does 

not show a basic violation of fundamental law of this long standing legislative practice. 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, 110 Mich. 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 constitutional provision giving the regents 

control over "expenditures from the university interest fund" 

(similar to the Montana 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 

fromfees which might be received from students. 

The state had made no appropriations for its support and there is nothinq to indicate that any such 

appropriations were contemplated." (Emphasis 

supplied.) 

The present Michigan Constitution grants the regents control of "expenditures from 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: 

"Furthermore a careful reading of 1972 P.A. 260 

discloses that the Legislature has in no way abandoned 
its 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." (Emphasis supplied.) 

Regent autonomy has not been asserted over the bare 

legislative power 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 recognition of autonomy 

of the regents. We recognize here that while Montana's Constitution is not as explicit or broad as that of Michigan, the principle of regent independence was definitely intended by the drafters of the 1972 Montana 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 Parliament during the reign of 

William in the seventeenth century appropriated sums for particular purposes with penalties for disobedience. See 4 Thomson, A 

Constitutional History of England - 1642-1801, p. 206. After two 

years of lump sum appropriations the United States Congress in 

1793 began to itemize expenditures in its appropriation acts. Act 

of February 28, 1793, Ch. 18, 51, 1 Stat. 325. In Montana too, 
itemization of appropriations is well established. Laws of 

Montana, Second Session 1891, pp. 129, 130. In addition to 

these historical bases, itemization of appropriations is vital 

to the legislative decision-making process involved in providing 

a balanced budget (Article VIII, Section 9), in providing a system 

of strict accountability (Article VIII, Section 12), and in fulfilling the audit responsibility of Article V, Section 10. Also, 

Article X, Section 9(1) provides that: 

"It [state board of education] shall submit unified budget requests." 

These constitutional bases justify the legislature's use 

of line items in its appropriations. 

However, the legislature cannot do indirectly through 

the means 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 responsibilities of the legislature enumerated above. 

Within these parameters we now consider the certification 

requirements of Section 12, House Bill 271. 

That section, as previously 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 legislative prerogative. 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, 175 Minn. 259, 220 N.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 Legislature has no 

power to make effective, in the form of a law, a 

mere direction of academic policy or administration. 

At the other extreme it has the undoubted right 

within reason to condition appropriations as it 

sees fit. 'In such case the regents may accept or 

reject such 

the conditions are 

appropriation. 

binding upon 

* * * 

them.'" 

v, 

(Emphasis 

supplied.) 

As noted ab'ove, the Regents are not mentioned in either 

Article 111, Section 1, which creates the three branches of government, nor in Article V, which limits the powers of the legislature. 

Similarly, the legislature is not mentioned in Article XI Section 

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 1975 Montana legislature and the summary procedure for 

compliance were proper exercises of its appropriation powers to 

the extent the conditions do not infringe on the constitutional 

powers granted the Regents. This means the conditions must be 

individually scrutinized to determine their propriety. The fact 

that there are numerous conditions and a requirement of blanket 

compliance does not in itself infringe upon the Regents' constitutional powers. 

Nevertheless we cannot neglect the fact that certain of 

the certification requirements do exceed the limits to the exercise of the appropriation power 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 source whatsoever, including federal grants 

for research and 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 administration may, pursuant to section 79-60 

R.C.M. 1947, permit any university system unit 

subject to this act to retain in its possession 

moneys that would otherwise be deposited in the 

state treasury, provided that the anonymity of 

private foundation donors shall be maintained 

and that private donations shall not be used as 

an offset to qeneral fund appropriations." 

(Emphasis supplied.) 

Based on our earlier discussion of the legislative appropriation power, certification cannot be used as a bootstrapping 

device to gain legislative control over private moneys. As noted 

heretofore, private moneys 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 private moneys 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 issue presented to this Court, provides 

us an opportunity to more fully define the limits within which 

the legislature may condition appropriations to the university 

system. That section provides: 

"(6) Salary increases for presidents of 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 salaries previously 

approved by the regents as the basis for determining such increases." (Emphasis supplied.) 

The question presented is whether this condition is a 

direction of academic policy or administration by the legislature. 

The Regents argue this condition represents an effort to abrogate 
the powers and prerogatives granted expressly and absolutely 

to them by the 1972 Montana 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 appropriations of the university 

system is not easily resolved, as was noted by the Michigan 

Court of Appeals in Regents of University of Michigan v. State, 

47 Mich. App. 23, 208 N.W.2d 871, 877, quoting from 55 Mich. 

"'While it must 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 not many decisions 

in this area, however, so the line between conditions the leqislature can validly attach and 

those it cannot has not been drawn in a distinct 

fashion. Conditions which require the university 

to follow prescribed 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 departments of the university or 

maintenance of university departments. It has also 

been held that the legislature can properly make 

non-teaching employees subject to the state's 

workmen's compensation law, and can require loyalty 

oaths by the teachers. On the other side of the 

line, a condition that the university move a certain department of the school has been held to be 

invalidly attached, an attempt to limit the amount 

of funds that can be 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, for without such limits 

the legislature could use the conditioned appropriation to strip the university of its constitutional authority.'" (Emphasis supplied.) 

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 this 
fact when it drafted Article V. That Article, as was noted, 

does not limit the legislature's power to appropriate funds 

for the university system. Therefore, we look to the impact 

of the appropriation condition on the management and control 

exercised by the Regents. 

Returning now to the restrictions contained 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 financial matters of substantial importance 

to the system. 

But, control over college president salaries is not a 

"minor" matter. It does dictate university personnel policy. 

That such effect was meant 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, specifically denies 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. Judge v. Legislative Finance Committee, Cause 
No. 13201, decided today, shall constitute the declaratory 

judgment of this Court with regard to Issues 1) and 2) to be 

resolved in this action as set out in the order of this Court 

dated July 17, 1975. 

The order of this Court dated July 2, 1975, staying 

further actions or proceedings by any party hereto or his agent 

outside the scope of this proceeding and the order dated July 7, 

1975, directing the Governor and his agents, servants and 

employees to desist and refrain from withholding payment on 

warrants and claims submitted by the Montana university system, 

are vacated. The Regents shall have a reasonable time to complete 

their certification as to the other general matters contained in 

Section 12, H.B. 271. 

/ '. dhief Justice 

Ju L tice 

Justices