FILED JULY 14, 2010
S T A T E O F M I C H I G A N
SUPREME COURT
DANIEL ADAIR, a taxpayer of the FITZGERALD PU BLIC SCHOOLS, FITZGERALD PUBL IC SCHOOLS, a Michigan municipal corp oration, and others, Plaintiffs-Appellants,
v No. 137424 STATE OF MICHIGAN, DEPARTMENT OF EDUCATION, DEPARTMENT OF MANAGEMENT AND BUDGET, and TREASURER OF THE STATE OF MICHIGAN, Defendants-Appellees.

DANIEL ADAIR, a taxpayer of the FITZGERALD PU BLIC SCHOOLS, FITZGERALD PUBL IC SCHOOLS, a Michigan municipal corp oration, and others, Plaintiffs-Appellees,

v No. 137453 STATE OF MICHIGAN, DEPARTMENT OF EDUCATION, DEPARTMENT OF MANAGEMENT AND BUDGET, and Michigan Supreme Court Lansing, Michigan 

# Opinion Chief Justice: Marilyn Kelly Justices: Michael F. Cavanagh Elizabeth A. Weaver Maura D. Corrigan Robert P. Young, Jr. Stephen J. Markman Diane M. Hathaway2 TREASURER OF THE STATE OF MICHIGAN, Defendants-Appellants.

BEFORE THE ENTIRE BENCH
K ELLY , C.J. This case involves th e Headlee Amendment 1 and is before this Court for the third time. Most of the legal issues have been re solved and appear in the discussion of facts and procedural history below. The issues remaining are (1) whether plaintiffs must introduce evidence of a specific, quantified increase in cost s resulting from a violation of the Headlee Amendment prov ision prohibiting unfunded mandates to establish entitlement to a declaratory judgment and (2) whether plaintiffs’ suit has been “sustained” under Const 1963, art 9, § 32, enab ling plaintiffs to recover attorney fees. We answer the first question in the negative a nd the second question in the affirmative. Therefore, we affirm in part and reverse in part the judgment of the Court of Appeals.
I. FACTS AND PROCEDURAL HISTORY The Headlee Amendment is an initiative passed by Mi chigan voters in 1978. Among its provisions, Headlee added the follo wing section to the Mi chigan Constitution: The state is hereby prohibited fro m reducing the state financed proportion of the necessary costs of a ny existing activity or service required of units of Local Government by state law. A new activity or service or an increase in the level of any activity or service beyond that required by existing law shall not be required by th e legislature or an y state agency of

1 Const 1963, art 9, §§ 25 to 34.3 units of Local Government, unless a state appropriation is made and disbursed to pay the unit of Local Go vernment for any necessary increased costs. The provision of this section shall not apply to costs incurred pursuant to Article VI, Section 18. [2] Shortly after the Headlee Amendment was ratif ied, the Legislature enacted legislation designed to implement it. 3 The state has required Michigan public school districts to report certain information, including pupil counts and fina ncial data, for many years. However, in 2000, the Governor issued Ex ecutive Order No. 20 00-9, which established the Center for Educational Performance and Information (CEPI). EO 2000-9 became effective September 28, 2000. Along with later legislation, it required plaintiff school districts to actively participate in collecting, maintaini ng, and reporting various types of data. The state began warehousing this data in several discrete databases, the single record student database (SRSD), the financial information da tabase (FID), the registry of educational personnel (REP), and the school infrastruct ure database (SID). Under MCL 388.1752, 4 in order to receive yearly funding, school di stricts must furnish a ll data that the state considers necessary for the administration of the State School Aid Act. 5

2 Const 1963, art 9, § 29.

3 MCL 21.231 et seq.
4 Currently, MCL 388.1752 provid es, in part: “In order to receive funds under this act, each district and intermediate district shall also furnish to the center or the department, as applicable, the information the department considers necessary for the administration of this act . . . .”

5 MCL 388.1601 et seq. Part of the “necessary” inform ation is that needed for compliance with the CEPI re cordkeeping and reporting re quirements in MCL 388.1694a.4 The information collected by the CEPI facilitates comp liance with state reporting requirements and requirements impos ed by the federal government. 6 In order to meet some of these requirements, the state must report data on a student-by-student, teacherby-teacher, or building-by-buildi ng basis. This enables the st ate to receive federal funds under the No Child Left Behind Act. 7 On November 15, 2000, plaintiffs filed th e present suit in the Court of Appeals. Plaintiffs are 456 Michigan public school districts and a taxpayer from each district. 8 They alleged that the recordkeeping and re porting requirements in EO 2000-9 and MCL 388.1752 constituted an unfunded mandate and violated the provi sion of Const 1963, art 9, § 29 prohibiting unfunded mandates (the POUM provision). The parties stipulated midtrial that the database submissions listed in EO 2000-9 and the later legislation were not required until two years after the e ffective date of the executive order.

6 See Center for Educational Performance and Information, <http://www.michigan.gov/cepi> (accessed July 6, 2010) (“Our in itiatives in data collection and reporting facilitate school districts’ compliance with the federal No Child Left Behind Act of 2001 and the Michigan Department of Education’s accreditation plan, Education Yes! CEPI is an office located within the Office of the State Budget.”).

7 PL 107-110, 115 Stat 1425. We note our holding in Durant v Michigan , 456 Mich 175, 199; 566 NW2d 272 (1997), that “there is no excep tion in [Const 1963,] art 9, § 29 for federal mandates, as long as the ac tivity or service is mandated by state law.”

8 The parties stipulated that nine school districts would be “representative school districts” for purposes of discovery and tria l. Those nine distri cts were the Ann Arbor Public Schools, the Birmingham Public Schools, the East Gr and Rapids Public Schools, the Farmington Public Schools, the Forest Hills Public Schools, the Monroe Public Schools, the Oakland Sch ools, the School District of the C ity of Pontiac, and the Traverse City Area Public Schools.5 In its first adjudication of plaintiffs’ cl aims, the Court of Appeals concluded that the claims raised or that co uld have been raised in earlie r suits were barred by res judicata. It also held that plaintiffs’ othe r claims were barred be cause of releases the parties had executed or because the activities complained of did no t implicate the POUM provision. The Court granted summary disposition to defendants on all claims. 9 We granted leave to appeal and reversed in part the judgment of the Court of Appeals. 10 A majority of this Court agreed w ith the Court of Appeals that most of plaintiffs’ claims were barred by res judicata or release or did not implicate the Headlee Amendment’s POUM provision. However, we concluded that plaintiffs had sufficiently stated a claim on which relief could be gran ted in their recordkeeping claim. We remanded the case to the Court of Appeals fo r further proceedings on that claim. On remand, the Court of Appeals concl uded that plaintiffs had not provided documentary support for their claim that the CEPI requirements were an unfunded mandate. Consequently, it again grante d summary disposition to defendants. 11 Plaintiffs again appealed, and we vacated the Court of Appeals’ judgment and again remanded to that Court. 12 We directed the Court of Appeals to reevaluate plaintiffs ’ claim “under both

9 Adair v Michigan , 250 Mich App 691; 651 NW2d 393 (2002) ( Adair I ).

10 Adair v Michigan , 470 Mich 105; 68 0 NW2d 386 (2004) ( Adair II ).

11 Adair v Michigan (On Remand) , 267 Mich App 583; 705 NW2d 541 (2005) ( Adair III ).

12 Adair v Michigan , 474 Mich 1073 (2006) ( Adair IV ).6 the ‘new activity or service’ and the ‘increase in the [level ] of any activity or service’ prongs of Const 1963, art 9, § 29’s prohibition of unfunde d mandates . . . .” 13 On second remand, the Court of Appeals appointed a special master to conduct fact-finding. The special master was instructed to determine whether the record-keeping obligations imposed on plaintiff school districts by MCL 388.1752 and Ex ecutive Order 2000-9 constitute either a new activity or service or an increase in the level of a state-mandated activity or service within the meaning of Mich Const of 1963, art 9, § 29’s prohibition of unfunded mandates. [14] The special master heard testimony in this case in 2007. On January 27, 2008, she filed an opinion, concluding that the record keeping requirements di d present an increase in the level of activity required of plaintiff school districts beyond what was previously required. Therefore, she concluded that th e requirements violated the POUM provision. The Court of Appeals adopted the conclusi ons of law and factual findings of the special master with some modifications and entered a declaratory judgment in favor of plaintiffs. 15 The Court rejected plaintiffs’ request for attorney fees un der Const 1963, art 9, § 32, concluding that this suit “cannot be characterized has having been ‘sustained’

13 Id.

14 Adair v Michigan (On Second Remand) , unpublished order of the Court of Appeals, entered April 18, 2006 (Docket No. 230858).

15 Adair v Michigan (On Second Remand) , 279 Mich App 507; 760 NW2d 544 (2008) ( Adair V ).7 within the meaning of § 32.” 16 Both plaintiffs and defendants appealed, and we granted both applications for leave to appeal in part. 17
II. STANDARD OF REVIEW Questions involving the proper interpreta tion of a constitutiona l provision receive review de novo. 18 The proper interpretation and applica tion of a statute is also a question of law that we consider de novo. 19
III. ANALYSIS We have established that “[t]he primar y and fundamental rule of constitutional or statutory construction is that the Court’s duty is to ascertain the purpose and intent as expressed in the constitutional or le gislative provision in question.” 20 When interpreting constitutional provisions, we are mindful th at the interpretation given the provision should be “‘the sense most obvious to the common understandi ng’” and one that

16 Id. at 525.

17 Adair v Michigan , 483 Mich 922 (2009). We limited our grant of leave to appeal to the issues of (1) whether the prohibition of unf unded mandates in Const 1963, art 9, § 29 requires plaintiffs to prove speci fic costs, either thr ough the reallocation of funds or out-of-pocket expenses , to establish their entitlement to a declaratory judgment and (2) whether plaintiffs are entitled to recover the “costs incurred in maintaining” this suit, pursuant to Cons t 1963, art 9, § 32.

18 People v Jackson , 483 Mich 271, 277; 769 NW2d 630 (2009).

19 Eggleston v Bio-Med Applic ations of Detroit, Inc , 468 Mich 29, 32; 658 NW2d 139 (2003).

20 White v City of Ann Arbor , 406 Mich 554, 562; 281 NW2d 283 (1979).8 “‘reasonable minds, the great mass of th e people themselves, would give it.’” 21 “[T]he intent to be arrived at is that of the people , and it is not to be su pposed that they have looked for any dark or abstruse meaning in the words employed . . . .” 22 Article 9, § 29 of the Michigan Constitu tion prohibits the state from placing two related but independent burden s on local governmental entities. First, the state may not reduce the state-financed proportion of the necessary costs of any existing activity or service that state law requires of local units of government. S econd, no state agency, including the Legislature, may require a ne w activity or service by a local unit of government. It may not require an increase in the level of an activity or service beyond that required by existing law. If it imposes such a requireme nt, the state must appropriate and disburse funding to pay the local unit of governme nt for any necessary increased costs. This Court has described the first requirement as the “maintenance of support” (MOS) provision and the seco nd requirement as the “prohi bition on unfu nded mandates” or POUM provision. 23 These two requirements address different situations and involve

21 Traverse City Sch Dist v Attorney General , 384 Mich 390, 405; 185 NW2d 9 (1971), quoting Cooley, Constitutiona l Limitations (emphasis omitted).

22 Traverse City Sch Dist , 384 Mich at 405, quo ting Cooley, Constitutional Limitations (emphasis omitted).

23 Adair II , 470 Mich at 111, citing Judicial Attorneys Ass’n v Michigan , 460 Mich 590, 595; 597 NW2d 113 (1999).9 different harms. 24 Therefore, the analysis applicable to each differs. 25 Only the POUM provision is applicable in this case.
A. HEADLEE VIOLATIONS A majority of this Court has held that to establish a violation of the POUM provision, a plaintiff must show that “the state-mandated local ac tivity was originated without sufficient state funding after the H eadlee Amendment was adop ted or, if properly funded initially, that the mandated local role was incr eased by the state without state

24 Durant v State Bd of Ed , 424 Mich 364, 379; 381 NW 2d 662 (1985) (“The first sentence [of Const 1963, art 9, § 29] is aimed at existing services or activities already required of local government. Th e second sentence addresses future services or activities.”).

25 The dissent is correct that we have pr eviously concluded th at the MOS and the POUM provisions are subject to similar requirements. Post at 7-8, quoting Adair II , 470 Mich at 120 n 13. However, in Adair II , a majority of this Court also specifically outlined the differences in th e standards for claims arisi ng under the two provisions: [T]o establish a Headlee viola tion under the MO S clause, the plaintiffs must show “(1) that there is a continuing state mandate, (2) that the state actually funded the mandated activity at a certain proportion of necessary costs in the base year of 197 8-1979, and (3) that the state funding of necessary costs has dipped below that proportion in a succeeding year.” Oakland Co v Michigan , 456 Mich 144, 151; 566 NW2d 616 (1997) (opinion by K ELLY , J.). Under the POUM clause , they must show that the state-mandated local activity was origin ated without sufficient state funding after the Headlee Amendment was adopt ed or, if properl y funded initially, that the mandated local role was in creased by the state without state funding for the necessary increased costs. [ Adair II , 470 Mich at 111.]10 funding for the necessa ry increased costs.” 26 Also, as the dissent correctly notes, the state “need only fund mandates that will result in ‘nec essary increased costs.’” 27 Const 1963, art 9, § 29 is a clear prohibi tion of state action: before the state imposes a new or increased activity or se rvice on a local unit of government, it must appropriate funds to cover any necessary incr eased costs. Left una nswered is who bears the burden of showing that the new or increa sed activity or service resulted in necessary increased costs. 28
We conclude that to establish a violation of the POUM provision, a plaintiff must show that the state required a new activity or service or an increase in the level of activities or services. If no state appropriati on was made to cover the increased burden on local government, the plaintiff need not show the amount of increased costs. It is then the state’s burden to dem onstrate that no state fundi ng was required because the requirement did not actually increase costs or the increased costs were not necessary. 29

26 Id. at 111.

27 Post at 8.

28 Our Headlee caselaw does not answer this question. The dissent asserts that it is a foregone conclusion that “it is the plaintiff’s burden to show an increase in necessary costs.” Post at 15 (emphasis omitted). The dissent cites nothing definitive in support of this proposition.

29 However, if the state did appropriate f unds for the new or in creased activity or service, the plaintiff would likely have a higher burden in order to show a POUM violation. Under those circumstances, th e state would not have violated the POUM provision per se by failing to provide funding. Because those circumstances are not presented in the instant case, we need not address this issue.11 In this case we agree with the Court of Appeals that plaintiffs established a violation of the POUM provisi on. The recordkeeping requir ements of EO 2000-9 and the later legislation mandate more activities than the law required before, which Const 1963, art 9, § 29 forbids, and the state did not fund them, 30 as the POUM provision requires. 31 Moreover, defendants did not show that pl aintiff school districts’ costs were not increased or that such cost s were not “necessary” under MCL 21.233(6). Therefore, we affirm the Court of Appeals’ judgment gr anting plaintiffs a declaratory judgment.
1. INCREASE IN THE LEVEL OF ANY ACTIVITY OR SERVICE The special master concluded that, be ginning in 2002, the recordkeeping requirements imposed for the CEPI constituted an increase in the leve l of activity beyond that previously required. It is undisputed th at the state required plaintiff school districts to report some student information and financ ial data before the CEPI was established.

30 It is undisputed that the state did provi de a one-time appropriation to plaintiff school districts in 2002 for implementation of changes to the SRSD. We did not give the parties an opportunity to brie f the issue of the relevancy of this appropriation. However, it is also undisputed that the state made no ex plicit appropriation for the increased activity involved in comply ing with the requirements for the SID, FID, or REP. Therefore, the 2002 appropriation is irrelevant to our analysis.

31 We reiterate that this conclusion is entir ely consistent with a majority of this Court’s requirement in Adair II that plaintiffs “must show that the state-mandated local activity was originated without sufficient st ate funding after the Headlee Amendment was adopted . . . .” Adair II , 470 Mich at 111. Plaintiffs established that a state-mandated local activity, namely new and increased leve ls of data collection, originated from EO 2000-9. Plaintiffs further de monstrated that no state fundi ng was appropriated to cover the new activity involved in implementing the SID, which ha d no predecessor before the issuance of EO 2000-9. The st ate also failed to appropriat e any funding for the increased activity required to provide data for the FID and REP.12 Therefore, the pertinent testimony on this i ssue involved the chan ges in the volume and specificity of information that the state required to be re ported after implementation of the CEPI requirements. Defendants assert that Const 1963, art 9, § 29 was not violated because the recordkeeping requireme nts did not constitute a state-manda ted increase in the level of activities or services. However, the testimony adduced before the sp ecial master belies this argument. Ample testimony establis hed that both the amount of information collected and the manner in which the information had to be reported after CEPI was significantly greater and more intensive than before. For example, Deborah Piesz, the financ e manager at the Birmingham Public Schools, testified that the re porting required for the FID was much more involved than it had been in the past. She stated further that the district was now required to “keep much more detailed information” than previously . Both Ms. Piesz and Daniel Behm, the superintendent of the Forest Hills Public Schools, testified that the school district collected the additional info rmation solely to comply with the heightened state requirements imposed by the CEPI. They also stated that the districts would not have collected the information for their own purposes. Testimony from other personnel employed in the nine representative districts was substantially similar to that of Mr. Behm and Ms. Piesz. Collecting “a large amount of data” or “m uch more detailed info rmation” than was previously required constitutes an increase in the level of an activity under Const 1963, art 9, § 29; namely, the state-mandated collecti on, maintenance, and reporting of data to13 the state. Defendants identify no evidence that rebuts this simple fact or undercuts the veracity of any of the testimony ta ken before the special master.
2. NO STATE APPROPRIATION The evidence taken before the special master demonstrated that no state appropriation was made to fund plaintiff scho ol districts’ implementation of the reporting requirements of the REP, SID, or FID. No r was any appropriation made to provide for the school districts’ ongoing duty to comply with the reporting requirements for all four databases. Rather, the districts were expected to take monies from discretionary funds to cover the costs associated w ith their data-collection and reporting obligations. The evidence established that each school district did that. Hence, plaintiffs met their initial burden of showing a POUM violation by demonstrating an increase in the level of reco rdkeeping required of the school districts. Moreover, they demonstrated that the state appropriate d no funds to cover the implementation of these incr eased requirements. Thus, plaintiffs are entitled to a declaratory judgment unless defendants demonstrat e that plaintiff school districts’ costs were not increased as a result of the requir ements or that the costs incurred were not
necessary. 3. INCREASED COSTS The next question is whether the increa se in the recordk eeping requirements resulted in increased costs to plaintiff scho ol districts. Again, a vast amount of unchallenged testimony in the record establishe s that plaintiff school districts incurred increased costs as a result of the CEPI requ irements. These incr eased costs involved14 hiring additional personnel, reassigning existing staff to help meet the CEPI requirements, and purchasing computer soft ware to enable co mpliance with them. Testimony from administrative personnel wo rking for the representative school districts established that pers onnel were required to work overtime to comply with the CEPI requirements. One of them, Sandy Kopelman, a secretary in the Birmingham Public Schools, stated that she worked overtime sp ecifically to comply with the CEPI’s additional reporting requirements. She stated th at she had “never got overtime before.” Randall Monday, an assistan t superintendent for the Monroe Public Schools, claimed that since the implementation of the CEPI requirements, he had to take more time to meet with the principal of each school within his di strict. He stated that the meetings required additional time because he and the principals had to sort out distinctions between the info rmation required for the CEPI and the district’s own reporting requirements. This di version of manpower required so that the school districts could comply with the CEPI requirements constituted increased costs to the districts. 32

32 By way of illustration, consider a staf f member who before implementation of the CEPI requirements needed to spend 20 ho urs a week collecting, maintaining, and reporting data required by the state. Assume that after th e establishment of the CEPI, that staff member needed to spend 30 hours a week for the distri ct to comply with the new requirements (presuming no contemporaneous cost savings elsewhere). The district incurred an increased “net cost” of 10 ho urs a week of that employee’s wages. The Headlee Amendment does no t require the district to show that its actual expenditures increased. MCL 21.233(6) defines “necessary cost” as the “actual cost to the state if the state were to provide the activity or service . . . .” In this example, plaintiffs could show that the state would incur the cost of paying a qualified person for 10 hours to collect, maintain, and report the new data. Even without such a showing,15 Mary Reynolds, the executiv e director of business serv ices for the Farmington Public Schools, testified that her office lost staff after the CEPI requirements were implemented. Nevertheless, she testified that, becaus e compliance with the CEPI requirements was state-mandated and needed for the district to receive other state funding, the district was forced to give prior ity to that work. As a result, she testified, “there are many other things that don’ t get done, don’t get accomplished.” Therefore, the evidentiary record shows that the stat e forced plaintiff school districts to allocate staff time in order to co mply with the CEPI re quirements. The fact that MCL 388.1752 requires school districts to comply with the CE PI requirements to receive other funding further s upports our conclusion. Defendants offere d no evidence to rebut this conclusion. 33

however, plaintiffs here demonstrated that the school districts’ actual expenditures increased as a result of their efforts to comply with the CEPI requirements. This hypothetical example is a simplified version of th e stipulated testimony of administrative personnel from the various dist ricts. For example, Francine Mershman, a secretary in the Birmingham Public Schools, te stified that in June and August, she spent about 95 percent of her time on data entry for the CEPI. During the time for student count reports, she devoted 75 to 80 percent of her time to CEPI recordkeeping. Throughout the rest of the year, CEPI reco rdkeeping took approximately 30 to 40 percent of her time. When asked what percentage of her time would have been spent on data collection 10 years earlier, Ms. Me rshman replied “probably 10%.” She also stated that, although data collection previ ously increased at the end and beginning of th e year, it still did not take “that much time.” During most of the school year, therefore, Ms. Mershman spent 30 to 40 precent of her time on data collection post-CEPI, as compared to 10 percent pre-CEPI.

33 Moreover, defendants concede that plai ntiff school districts incurred at least some actual increased costs. They argue, however, that the increased costs were not16 4. “NECESSARY” CO STS AND “NET COST” Defendants claim that, even if the CEPI requirements mandated an increase in activities or services that increased plaintiff school districts’ costs, those costs are not necessary increased costs. Defendants assert th at plaintiffs failed to demonstrate that any additional costs incurred to comply with the requirements met the definition of “necessary cost” under MCL 21.233(6) and were not de minimis under MCL 21.232(4). 34

necessary increased costs, asserting that “i n those few instances where [plaintiffs] can actually point to an actual cost incurred, the costs were either de minimis or unnecessary.”

34 MCL 21.233 provides, in part: (6) “Necessary cost” means the net cost of an activity or service provided by a local unit of government. The ne t cost shall be the actual cost to the state if the state were to provide the activity or service mandated as a state requirement, unless otherwis e determined by the legislature when making a state requirement. Necessary cost does not include the cost of a state requirement if the state require ment satisfies 1 or more of the following conditions: (a) The state requirement cost does not exceed a de minimus [sic] cost. (b) The state requirement will result in an offsetting savings to an extent that, if the duties of a local unit which existed be fore the effective date of the state requirement are considered, the re quirement will not exceed a de minimu s [sic] cost. (c) The state requirement imposes a dditional duties on a local unit of government which can be performed by that local unit of government at a cost not to exceed a de minimus [sic] cost. (d) The state requirement impose s a cost on a local unit of government that is recoverable from a federal or state categorical aid program, or other external financial aid. A necessary cost excluded by this subdivision shall be excl uded only to the extent that it is recoverable.17 Finally, defendants and the dissent argue that plaintiffs cannot prevail because even if the school districts incurred necessary increased costs, they did not qu antify the exact amount of those costs. We reject defendants’ argument because it w ould hold plaintiffs to an evidentiary burden that they need not meet. The language of Const 1963, art 9, § 29 provides a clear limitation on state action: an in crease in the level of any activ ity or service beyond that required by existing law must not be required by the Legislature or any state agency. The only exception is if the state appropriates and disburses funds ad equate to pay for necessary increased costs. Neither Const 1963, art 9, § 29 nor MCL 21.2 33 suggests that plaintiffs bear the burden of proving precisely how much the school districts’ costs increased as a result of the mandate. In fact, the la nguage of MCL 21.233 implies the oppos ite. That section defines “necessary cost” as the “net cost of an activity or service provided by a local unit

(7) “New activity or service or incr ease in the level of an existing activity or service” does not include a state law, or administrative rule promulgated under existing law, which provides only clarifying nonsubstantive changes in an earlier, existing law or state law; or the recodification of an existing law or state law, or administrative rules promulgated under a recodification, wh ich does not require a new activity or service or does not require an incr ease in the level of an activity or service above the level required before the existing law or state law was recodified. MCL 21.232(4) defines “de minimus [sic] co st” as “a net cost to a local unit of government resulting from a state require ment which does not exceed $300.00 per claim.”18 of government.” The “net cost” is defined as “t he actual cost to the state if the state were to provide the activity or service mandate d as a state requirement . . . .” Nothing in the POUM provision expressly re quires a plaintiff to establish that the increase in activities or services resulted in in creased costs. Rather, a plaintiff need only establish that the state imposed on it a ne w or increased level of activity without providing any funding to pay for it. The burden th en shifts to the state to show (1) that it is not required to pay for it becau se the new or increased level of activity did not result in increased costs or (2) that those costs we re not “necessary” u nder MCL 21.233(6). In evaluating whether the additional cost s stemming from the increased level of activity were necessary, the questio n is this: Would there be a co st to the state if it, rather than the school districts, paid for the increased activity? MC L 21.232(4) defines a de
minimis cost as a “net cost” to a local governmental unit resulting from a state requirement that is less than $300 a claim. Notably, this $300 requirement has no te mporal limitation. The special master specifically found that “it is clear that the increase in th e shear [sic] amount of data initially overwhelmed the resources . . . .” It is implicit in this c onclusion and supported by copious testimony, such as th at discussed previously, that the additional costs incurred by each school district to comply wi th the CEPI requirements exceeded $300. 35

35 Reference to our previous example ag ain provides a good illustration of the point. See note 32 of this opinion. Suppose a district must pay a qualified person for an additional 10 hours of work each week collec ting, maintaining, and reporting the data required for CEPI compliance. Assuming an h ourly wage as low as $8, the “actual cost” to the state would exceed $300 within a month’s time.19 Defendants cannot demonstrate any basis for concluding othe rwise, nor did they offer evidence that the state’s actual costs, were it to provide the activity, would be lower than were the school districts’. 5. PROOF OF SPECIFIC INCREASED COSTS Another necessary inquiry related to the pr eceding issue is whether plaintiffs must produce evidence of specific dollar-amount incr eases in the costs incurred in order to comply with the CEPI requ irements. We conclude th at, when no legislative appropriation was made, a plain tiff does not have the burden to make such a showing to establish entitlement to a declaratory judg ment under the POUM provision. This conclusion is axiomatic from th e language of Const 1963, ar t 9, § 29, previous caselaw involving the Headlee Amendmen t, and the underlying purpose for seeking a declaratory judgment. The terms “net cost” and “actual cost” suggest a quantifiable dollar amount. However, nothing in MCL 21.233 suggests that it was intended to change the burden of proof in Const 1963, art 9, § 29. The specif ic costs that would be incurred are defined by reference to what costs the stat e would incur if it had to pay for the increased costs itself. Thus, it is the Legislature’s burden to demons trate that those costs were not “necessary” under one or more of the exceptions in MCL 21.233(6)(a) to (d). Otherwise, the Legislature must determine what dollar am ount is necessary, then appropriate that amount to the school districts. This is so because MCL 21.233(6) defines “net cost ” as “the actual cost to the state” if the state were to pr ovide the activity or service requi red. Clearly, the Legislature20 is in a position far superior to plaintiffs’ to determine what the actual cost to itself would be if it performed the increas ed recordkeeping and reporting duties. Proofs on this point are easily accessible to the st ate because it could ascertain th e costs it would incur if it provided the new activity . The dispositive issue is the co st to the state if it were to provide the new or increased activity or se rvice, not the cost incurred by the local governmental unit. 36 To impose such a requirement on plainti ffs would be illogical and inconsistent with the purposes of the POUM provision of the Headlee Amendmen t. We have noted that the POUM provision is intended to address future services and activities. 37 Plaintiffs in this case filed suit fewer than two months after EO 2000-9 took effect. The parties stipulated at trial that plaintiff school dist ricts were not required to begin complying with the order’s recordkeeping require ments until two years later. Therefore, had this case been resolved in a timely fashion, EO 2000-9 would not have required plaintiffs to demonstrate sp ecific amounts of necessary costs incurred.

36 Thus, the dissent is mistaken in asserti ng that we require the state to prove what a local unit of government’s increased cost s were, making its appr opriation obligations under the Headlee Amendment unclear. Th is is a recurring theme throughout the dissenting opinion. See post at 9 n 9 (“[T]he state will be required to audit every POUM plaintiff’s books and . . . exte nsive and intrusive discovery of local budgetary information may have to occur.”); post at 12 (“[T]he state is afforded no notice of what it must do to comply with the He adlee Amendment and is left only to guess at the size of the financial adjustment, and of the magnitude of the appropriation required . . . .”); post at 19 (“[E]stimated levels of a ccompanying appropriations will entail nothing more than speculation.”).

37 Durant , 424 Mich at 379.21 Moreover, it would have been di fficult for them to do so. Yet this Court specifically endorsed a prompt resolution of Headlee Amendment claims in Durant : As arduous as the proceedings in this case have been, we have succeeded in deciding many points of law that will guide future decisions. Thus, there is every reason to hope th at future cases will be much more straightforward. We anticipate that taxpayer cases filed in the Court of Appeals will proceed to ra pid decision on the issue whether the state has an obligation under art 9, § 29 to fund an activity or service

. [38] Finally, plaintiffs in this case seek a decl aratory judgment, not monetary damages. An action for a declaratory judgment is typi cally equitable in nature and subject to different rules than other causes of action. 39 “The declaratory judgment rule was intended and has been liberally construed to provide a broad, flexible remedy with a view to making the courts more accessible to the people.” 40 We have also consistently held that “a court is not precluded from reaching i ssues before actual injuries or losses have occurred.” 41

38 Durant , 456 Mich at 205-206 (emphasis added).

39 MCR 2.605 contains specific provisions governing actions for a declaratory judgment. MCR 2.605(A) empowers a cour t to “declare the rights and other legal relations of an interested party seeking a de claratory judgment, whether or not other relief is or could be sought or grante d.” MCR 2.605(C) states that “[t]he existence of another adequate remedy does not preclude a judgment for declaratory relief in an appropriate case.”

40 Shavers v Attorney General , 402 Mich 554, 588; 26 7 NW2d 72 (1978), citing 2 Honigman & Hawkins, Michigan Court Ru les Annotated (2d ed), committee comment, p 683; see also Revenue Comm’r v Grand Trunk W R Co , 326 Mich 371, 375; 40 NW2d 188 (1949).

41 Shavers , 402 Mich at 589; see also Merkel v Long , 368 Mich 1, 11-14; 117 NW2d 130 (1962).22 Defendants claim that a finding of necessa ry increased costs cannot be established without a comparison between th e specific net costs before and after the required change in activities. For the reasons st ated previously, we reject th is argument. Had this action proceeded to a prompt resolutio n, plaintiffs could not have demonstrat ed such a side-byside comparison of the “before and after” costs incurred to meet the recordkeeping requirements. It would be nonsensical to impose this additional evidentiary requirement on plaintiffs here when, in another case, it wo uld be impossible for the plaintiffs to make such a showing. That this litigation was delayed long enough for plaintiff school districts to incur ascertainable increased costs is insufficient justification fo r holding plaintiffs to an evidentiary requirement they otherwise ne ed not bear. Requiri ng plaintiffs to demonstrate specific costs is contrary to the purposes of an ac tion for declaratory judgment under the POUM provision in Co nst 1963, art 9, § 29 and the language authorizing it. 42 The parade of potentially negativ e “consequences” of our holding to which the dissent refers does not alter these simple facts. 43

42 Defendants also argued in the lower c ourts that (1) their one-time $3.4 million appropriation in 2002 sufficiently covered the increased costs plaintiff school districts incurred to comply with the CEPI requirements and (2) th e mandate was fully funded by the state’s $3.5 billion appropria tion of discretionary funds. Our order granting leave to appeal did not include these issues. Th us, we decline to address them here.

43 Post at 18-20.23 B. ATTORNEY FEES In their cross-appeal, plaintiffs argue that they are entitled to attorney fees under Const 1963, art 9, § 32 because they have been granted a declaratory judgment on their claim concerning the recordkeeping requirement s. The Court of Appeals rejected this argument: Although plaintiffs have sustained their claim with regard to the data-collection and reporting requirements, it must be noted that this claim is but one of many plainti ffs initially raised in this action. Plaintiffs’ other claims were rejected by this Court. Adair , 250 Mich App 691. This Court’s decision with regard to those claims was sustained by our Supreme Court. Adair , 470 Mich 105. Unde r these circumstances, plaintiffs’ suit cannot be characterized has having been “sustained” within the meaning of [Const 1963, art 9,] § 32 . Accordingly, we decline plaintiffs’ request for attorney fees. [44] Plaintiffs’ entitlement to atto rney fees is evaluated unde r Const 1963, art 9, § 32. That section states: Any taxpayer of the state shall ha ve standing to bring suit in the Michigan State Court of Appeals to en force the provisions of Sections 25 through 31, inclusive, of this Article and, if the suit is sustained, shall receive from the applicable unit of government his costs incurred in maintaining such suit. We previously held that the word “cos ts” in Const 1963, ar t 9, § 32 includes attorney fees incurred in litigating clai ms alleging a violat ion of the Headlee Amendment. 45 Therefore, if their “suit” has been “sustained,” plaintiffs are entitled to attorney fees in addition to other cost s incurred in maintaining the suit.

44 Adair V , 279 Mich App at 525.

45 Macomb Co Taxpayers Ass’n v L’Anse Creuse Pub Sch , 455 Mich 1, 10; 564 NW2d 457 (1997).24 The word “suit” an d the word “sustained” are not defined in the applicable provisions of the Michigan Constitution or in the Headlee implementing legislation. Thus, we again apply the rule of common un derstanding to ascertain the purpose and intent of Const 1963, art 9, § 32. Black’s Law Dictionary defines “suit” as “[a]ny proc eeding by a party or parties against another in a court of law[.]” 46 A lay dictionary de fines “suit” as “4. Law. a. an act or instance of suing in a court of law; lawsuit. b. a petition or appeal.” 47 “Sustain” is defined as “to uphold as valid, just, or correct” 48 and “4. ([o]f a court) to uphold or rule in favor of . . . . 5. To substantiate or corroborate . . . .” 49 Applying the definitions to this case, we disagree with the Court of Appeals that plaintiffs’ suit has not been sustained. “A ny proceeding” and “a petition or appeal” is broad language that encompasses a cause of action such as this one, in which 20 of plaintiffs’ 21 original claims were dismissed. Therefore, although most of plaintiffs’ claims were dismissed, plaintiffs’ recordke eping claim, standing alone, constituted a “suit” under Const 1963, art 9, § 32. The recordkeeping claim has been the only claim

46 Black’s Law Dictionary (8th ed).

47 Random House Webster’s College Dictionary (2001).

48 Id

. 49 Black’s Law Dictionary (8th ed).25 litigated during the past six years. 50 It would defy the co mmon understanding of the word “lawsuit” to conclude that such prol onged litigation does not constitute a “suit” within the meaning of Const 1963, art 9, § 32. Moreover, plaintiffs’ record keeping claim, itself a suit as noted previously, has clearly been sustained. The Court of Appeals granted plain tiffs the entirety of the relief sought on their claim—a declaratory judgmen t—which we affirm. Consequently, this Court has upheld, ruled in favor of, validated , substantiated, or corroborated plaintiffs’ suit. We therefore reverse the judgment of the Court of Appeals on this issue. Plaintiffs may recover attorney fees incurred during the litigation related to the recordkeeping claim only.
IV. CONCLUSION We affirm in part and reverse in part th e judgment of the Court of Appeals. The recordkeeping requirements of MCL 388.1752 and EO 2000-9 re quired an increase in the level of activities or services by plainti ff school districts over what was previously required. Moreover, the increase resulted in increased costs that are more than de
minimis . In order to prevail, plaintiffs were not required to show a quantified dollaramount increase in costs in excess of a de minimis amount. Therefore, the recordkeeping requirements violate the POUM provision of th e Michigan Constitution of 1963, at article 9, § 29. The declaratory judgment in favor of plaintiffs is affirmed.

50 In Adair II , a majority of this Court affirmed the Court of Appeals’ dismissal of all of plaintiffs’ claims except for the recordkeeping claim, ending litigation on those claims. Adair II , 470 Mich at 133.26 Finally, we conclude that plaintiffs’ suit has been sustained w ithin the meaning of Const 1963, art 9, § 32. Therefore, we reve rse the Court of Appeals’ judgment and hold that plaintiffs are entitled to the costs incurred in maintaining this action. Those costs include an award of reasonable attorney fees incurre d in litigating the recordkeeping claim only. We remand this case to the Cour t of Appeals for a determination of costs and attorney fees to be awarded, and we do not retain jurisdiction.

C AVANAGH , W EAVER , and H ATHAWAY , JJ., concurred with K ELLY , C.J.S T A T E O F M I C H I G A N
SUPREME COURT DANIEL ADAIR, a taxpayer of the FITZGERALD PU BLIC SCHOOLS, FITZGERALD PUBL IC SCHOOLS, a Michigan municipal corp oration, and others, Plaintiffs-Appellants,
v No. 137424 STATE OF MICHIGAN, DEPARTMENT OF EDUCATION, DEPARTMENT OF MANAGEMENT AND BUDGET, and TREASURER OF THE STATE OF MICHIGAN, Defendants-Appellees.

DANIEL ADAIR, a taxpayer of the FITZGERALD PU BLIC SCHOOLS, FITZGERALD PUBL IC SCHOOLS, a Michigan municipal corp oration, and others, Plaintiffs-Appellees,

v No. 137453 STATE OF MICHIGAN, DEPARTMENT OF EDUCATION, DEPARTMENT OF MANAGEMENT AND BUDGET, and TREASURER OF THE STATE OF MICHIGAN, Defendants-Appellants.2 M ARKMAN , J. ( dissenting ). I respectfully dissent from the majority’s conclusion that plaintiff school districts are entitled to a declaratory judgment holding th at that the recordkeeping requirements of MCL 388.1752 and Ex ecutive Order No. 2 000-9 violate the pr ohibition of unfunded mandates (POUM) provision of Const 1963, art 9, § 29. I dissent because the majority has erroneously interpreted the burden of proof necessary to establish a violation of the POUM provision. The majority errs by holding that a POUM plainti ff need only show a new or increased level of activity for which there is no funding. It further errs by stating that if a plaintiff makes such a showi ng, the plaintiff is entitled to prevail unless the state proves that costs were not incr eased or that such increased costs were not “necessary.” Finally, the majority errs by holding that a POUM plaintiff need not submit proof of specific costs. As explained hereafter, the burden of proof remains on a POUM plaintiff at all times and requires the pl aintiff to prove with specific ity an increase in necessary projected or actual costs. I would reverse the judgment of the C ourt of Appeals and remand for entry of summary disposition for defendants on the grou nd that plaintiffs failed to establish a POUM violation because they failed to subm it proof of specific “necessary increased costs” through the reallocation of funds or out-of-pocket expenses required by the new recordkeeping requirements. 1 There are significant practical consequences to the

1 The majority also holds that plainti ffs are entitled to recover their costs, including attorney fees, as prevailing parties because one of their 21 claims was3 majority’s interpretation that over time w ill transform the Head lee Amendment from a provision limiting public expend itures into a provision facilita ting such expe nditures.
I. FACTS AND HISTORY Plaintiffs are 456 local Michigan school districts in their corporate capacity, together with one individual ta xpayer from each district. Th is appeal is the culmination of plaintiffs’ Headlee Amendm ent claim that the state has imposed new data collection and reporting requirements on local school districts without providing the necessary funding for the increased costs of those mandates. 2 Plaintiffs filed an original declaratory judgment action in the Court of Appeals on November 15, 2000, alleging 21 separate violations of the Headlee Amendment, specifi cally Const 1963, art 9, § 29, which, in its second sentence, contains a pr ohibition of unfunded mandates. 3 This Court eventually determined that only one of plaintiffs’ claimed violations was potentially viable, and we remanded the case to the Court of Appeals, directing it to reevaluate plaintiffs’ recordkeeping claim under Const 1963, art 9, § 29. Adair v Michigan , 470 Mich 105; 680 NW2d 386 (2004); Adair v Michigan , 474 Mich 10 73 (2006).

sustained. Because I find that plaintiffs shou ld not prevail on the merits, I do not join this part of the majority’s opinion either.

2 EO 2000-9 established th e Center for Educational Performance and Information (CEPI) and required plaintiff school distri cts to actively participate in collecting, maintaining, and reporting va rious types of related data.

3 The Headlee Amendment vest s original jurisdiction in the Court of Appeals for claims arising under its provisions. Co nst 1963, art 9, § 32. Special pleading requirements for such actions are found in MCR 2.112(M).4 The Court of Appeals subsequently ap pointed a special master who heard testimony in 2007, some five years after the recordkeeping requiremen ts took effect. The special master determined that plaintiffs ha d proved their POUM cl aim-- even though she also determined that plaintiffs had addu ced “little evidence of local districts or [intermediate school districts] incurring ac tual additional costs or expenditures as a result” of these requirements. The Court of Appeals adopted most of the special master’s factual findings and conclusions of law and entered a declar atory judgment in favor of plaintiffs. Adair v Michigan (O n Second Remand) , 279 Mich App 5 07; 760 NW2d 544 (2008). In particular, the Court of Appeals he ld that to demonstrate a POUM violation, plaintiffs only needed to establish (1) an increase in the leve l of activity or services mandated by the state and (2) a complete failure on the part of the state to provide any funding to offset the necessary costs to be incurred by the dist ricts in the provision of the increased level of se rvices or activities. [ Id . at 515.] Defendants appealed in this Court, argui ng that plaintiffs had not proved the specific dollar amount of any actual costs or expenses resulting from the recordkeeping requirements and that the Court of Appeals had erred by concluding that a plaintiff need not demonstrate particularized increased cost s in order to sustain a POUM claim. We granted leave to appeal, asking the parties to brief “whether the prohibition of unfunded mandates in Const 1963, art 9, § 29, requires th e plaintiffs to prove specific costs, either through the reallocation of funds or out-of- pocket expenses, in orde r to establish their entitlement to a declaratory judgment . . . .” Adair v Michigan , 483 Mich 922 (2009).5 II. HEADLEE AMENDMENT The Headlee Amendment is an initiative pa ssed by Michigan vot ers in 1978. The first sentence of Const 1963, art 9, § 29 states: The state is hereby prohibited fro m reducing the state financed proportion of the necessary costs of a ny existing activity or service required of units of Local Government by state law. The second sentence of Const 1963, art 9, § 29 adds: A new activity or service or an incr ease in the level of any activity or service beyond that required by existi ng law shall not be required by the legislature or any state ag ency of units of Local Government, unless a state appropriation is made and disbursed to pay the un it of Local Government for any necessary in creased costs. The first sentence addresses existing services or activities required of local units of government, and the second sentence addresse s future services or activities. Claims under the first sentence are known as “mai ntenance of support” or “MOS” claims. Claims under the second sentence are known as “prohibition of unfunded mandates” or “POUM” claims. This appeal involves only a POUM claim. Unde r the language of the second sentence, a POUM plaintiff must show “increased costs” that are “necessary” to fulfill a state mandate for a new or increased activity or service. 4 Thus, in the case at bar, one must assess (1) whether the recordkeeping requirements resulted in increased costs to

4 We did not grant defendants’ applica tion for leave to appeal the Court of Appeals’ determination that the recordkeep ing requirements amounted to both new and increased levels of activities and services. We also did not grant leave to appeal to consider defendants’ argument that this ca se should not be view ed as a POUM case because of a 20 02 appropriation.6 plaintiff school districts and, if so, (2 ) whether the incurrence of these costs was necessary to comply with the recordkeeping requirements.
III. HEADLEE STATUTE The Headlee implementing act, 1979 PA 101, MCL 21.231 et seq ., defines “necessary cost” as “the net cost of an activity or service provi ded” and “net cost” as “the actual cost to the state if the state were to provide the activ ity or service mandated as a state requirement . . . .” MCL 21.233(6). 5 The Headlee implementing act also provides that a necessary cost does not incl ude a cost that does not exceed a de minimis amount, which is defined as a cost th at does not exceed $300 a claim. MCL 21.233(6)(c); MCL

5 MCL 21.233(6) provides, in part: “Necessary cost” means the net co st of an activity or service provided by a local unit of government. The ne t cost shall be the actual cost to the state if the state were to provide the activity or service mandated as a state requirement, unless otherwis e determined by the legislature when making a state requirement. Necessary cost does not include the cost of a state requirement if the state require ment satisfies 1 or more of the following conditions: (a) The state requirement cost does not exceed a de minimus [sic] cost. (b) The state requirement will result in an offsetting savings to an extent that, if the duties of a local unit which existed be fore the effective date of the state requirement are considered, the re quirement will not exceed a de minimus [sic] cost. (c) The state requirement imposes a dditional duties on a local unit of government which can be performed by that local unit of government at a cost not to exceed a de minimus [sic] cost.7 21.232(4). 6 Therefore, considering the Headlee implementing act in evaluating whether plaintiff school districts’ additional costs we re necessary, the releva nt question is whether there would be an increase in the actual cost to the state if it were to provide the activity or service itself. Also, a cost incurred by a local unit of government because of a state mandate does not become a necessary cost if it is de minimis

. IV. ANALYSIS
A. MOS VERSUS POUM CLAIMS This Court held in Durant v State Bd of Ed , 424 Mich 364, 379; 381 NW2d 662 (1985), and Oakland Co v Michigan , 456 Mich 144; 566 NW 2d 616 (1997), that a plaintiff bringing a claim under the MOS provi sion must demonstrate the actual costs of the mandated services. However, following the lead of the Court of Appeals, the majority holds here that POUM plaintiffs, in contrast with MOS plaintiffs, need not demonstrate either projected or actual costs. The majority’s only explanation for why POUM plaintiffs should have a lower burden of proof comes in its assertion that the two sentences of Const 1963, art 9, § 29 address di fferent situations and, therefore, that a different analysis applies to each. I disagree. In Durant , 424 Mich at 379, we explained that the two sentences of Const 1963, art 9, § 29 must be read together “[b]ecause they were aimed at alleviation

6 MCL 21.232(4) provides: “De minimus [sic] cost ” means a net cost to a local unit of government resulting from a state re quirement which does not exceed $300.00 per claim.8 of two possible manifestations of the same voter concern . . . .” We specifically reiterated this point in Schmidt v Dep’t of Ed , 441 Mich 236, 250-251; 490 NW2d 584 (1992), and Judicial Attorneys Ass’n v Michigan , 460 Mich 590, 598 n 2; 597 NW2d 11 3 (1999). Indeed, in the very case at bar, we have stated: Although Oakland Co dealt with MOS claims, as we noted in Judicial Attorneys Ass’n, supra at 598 n 2, that does not make it “inapplicable to an analysis of the second sentence of § 29.” Thus, the requirements of POUM claims are, in this respect, similar to MOS claims. [ Adair , 470 Mich at 120 n 13.] While MOS claims are aimed at existing servi ces or activities already required of a local unit of government and POUM claims address future services or activities, both provisions require a claimant to quantify the nece ssary costs of state-mandated activities. The fact that this case is one for a decl aratory judgment and not a claim for money damages 7 does not and cannot change the constitutional requireme nt that the state need only fund mandates that will result in “necessary increased costs.” 8 If plaintiffs are not

7 In this regard, I note that when this Court remanded this case to the Court of Appeals in 2006, Chief Justice K ELLY included a separate statement indicating that she would remand so that the Court of Appeals “can rule on the merits and find damages , if any.” Adair , 474 Mich at 1074 (K ELLY , J., concurring) (emphasi s added). Plaintiffs, however, are not seeking damages.

8 Const 1963, art 9, § 29. Pursuant to MCR 2.605(A), a court may issue a declaratory judgment, and a court “is not prec luded from reaching issues before actual injuries or losses have occurred.” Shavers v Attorney General , 402 Mich 554, 589; 267 NW2d 72 (1978). But this a llowance cannot be used to reduce a plaintiff’s burden of proof for the cause of action for which it is seeking a declaration. As we stated in Associated Builders & Contractors v De p’t of Consumer & Indus Servs Dir , 472 Mich 117, 126; 693 NW2d 374 (2005), the “actual controversy” and the “interested party” requirements of MCR 2.605(A)(1) mean that a party seeking a declaratory judgment must have a concrete and particularized actual inju ry in fact. The “particularized” requirement9 required to demonstrate that a state requirement will, in fact, result in the actual reallocation of funds or out-of-pocket expenses , then there has been no showing of any necessary increased costs th at will be incurred.
B. THE MAJORITY’S ANALYSIS The Court of Appeals held that plaintiffs only had to show a complete failure to provide funding for an increased or new level of services or activities in order to prevail as POUM plaintiffs. Adair , 279 Mich App at 514-515. The majority itself seems to agree, stating: [A] plaintiff need only establish th at the state imposed on it a new or increased level of activity without prov iding any funding to pay for it. The burden then shifts to the st ate to show (1) that it is not required to pay for it because the new or increased level of activity did not re sult in increased costs or (2) that those costs were not “necessary” under MCL 21.233(6). This formulation, however, is inconsistent with Const 1963, art 9, § 29. A POUM plaintiff must establish more th an the state’s failure to fund an increase or new level of service or activity. Under th e majority’s standard, the s tate will be required to prove that a POUM plaintiff’s new or increased level of activity did not result in increased costs or that the increased cost s were not necessary. 9 There is no basis for shifting this burden of

surely reinforces the idea that Headlee plaintiffs are require d to quantify their “necessary increased costs.”

9 One has to wonder how the state will ever be able to “prove” what a local unit of government’s costs were. It would appear th at the state will be required to audit every POUM plaintiff’s books and th at extensive and intrusive di scovery of local budgetary information may have to occu r. The majority disputes th e notion that its holding will require the state to prove what a local unit of government’s increased costs are. This disavowal seems misplaced since the majority specifically states that once a POUM10 proof onto the state. 10 The prohibitory language in C onst 1963, art 9, § 29 in no way indicates that a plaintiff merely has to sh ow an unfunded new or increased level of activity and the burden will then shift to the state to pr ove that no increase in costs occurred or that any increased costs were not necessary. On ce again, nothing in Const 1963, art 9, § 29 supports the majority’s conclusion that the burden ever shifts away from the plaintiff onto the state. In addition, if plaintiffs are not required to establish a net increase in costs, this could result in litig ation every time the st ate requires reporting, technology, or format changes. The majo rity’s holding fails to recognize that a POUM plaintiff must show that its necessary costs increased . The majority’s formulation never inquires whether a plaintiff ha s shown an increase in costs. Rather, it only inquires whether a POUM plaintiff has shown an unfunde d new or increased leve l in an activity or service. 11 The majority’s standard also fails to require a POUM plaintiff to prove that increased costs were necessary. It simply assumes the existence of necessary increased plaintiff meets its initial burden, it is en titled to a declaratory judgment “unless defendants demonstrate that plaintiff school districts’ costs were not increased as a result of the requirements” and that one of the ques tions before us is “whether the increase in the recordkeeping requirements resulted in increased costs to plaintiff school districts. ” Ante at 13 (emphasis added).

10 Indeed, HB 5800, which is pending in the Michigan House of Representatives, includes language that would shift the burden of proof onto the stat e to prove compliance with §§ 25 to 31 of article 9 of the state constitution. See proposed MCL 600.308e(2).

11 To be clear, my point is that the majority’s formula tion fails to require a POUM plaintiff to show an increase in necessary costs. The fact th at the majority believes there were, in fact, proofs of increase d costs in this case does not ch ange the fact that its legal formulation relieves future POUM plaintiffs of having to establish an increase in necessary costs. This Court is attempting to formulate the law , and not to merely resolve the instant case.11 costs whenever there has been a mandated in crease in an activity or service absent funding (unless the state can prove otherwise). In order to show an “increase” in costs, there must be some determination of a ba seline level and a comparison of before-andafter numbers-- whether real or projected. 12 This is the only wa y a POUM plaintiff can show whether an increase has actually occurre d. Finally, the majority’s standard also fails to take into account that some increased costs that ar e necessary may nonetheless be de minimis under MCL 21.232(4). This is directly contrary to Oakland Co , 456 Mich at 165 (“[T]he trial court must decide what cost s are necessary . . . costs, including whether any fall within the de mi nimus [sic] exclusion.”). When this case was before us in 2004, we cited with approval the following language: “[F]uture plaintiffs must allege th e type and extent of the harm so that the court may determine if a § 29 violation occurred for purposes of making a declaratory judgment. In that way, the state will be aware of the financial adjustment necessary to allow for future compliance.” [ Adair , 470 Mich at 119-120 (citation omitted).] [13] Notwithstanding our earlier stat ement that a POUM plaintiff must allege both the “type” and “extent” of harm, and under MCR 2.112( M) must do so with “particularity,” the majority today inconsistently adopts a standa rd that relieves a POUM plaintiff of having

12 Surely this is “‘the sense most obvious to the common understanding’” and one that “‘reasonable minds, the great mass of th e people themselves, would give it.’” Traverse City Sch Dist v Attorney General , 384 Mich 390, 405; 185 NW2d 9 (1971), quoting Cooley, Constitutional Limitations (em phasis omitted).

13 Indeed, in 2007 we placed this ve ry language into MCR 2.112(M), which provides, in relevant part: “In an action invol ving Const 1963, art 9, § 29, the plaintiff must state with particularity the type and extent of the harm and whether there has been a violation of either the first or second sent ence of that section.” (Emphasis added.)12 to make any such showings. As we indicated in 2004, this deprives the state of threshold information on the basis of which to make ne cessary financial adjustments. Under the formulation the majority adopts today, the state is afforded no notice of what it must do to comply with the Headlee Amendment a nd is left only to guess at the size of the financial adjustment, and of the magnitude of the appropriation required, in order to comply with an advers e declaratory judgment. 14
C. “INCREASED COSTS” Notwithstanding the majority’s holding that a POUM plaintiff need only prove an increase in an activity or service in conjunction with an absence of funding, the majority does acknowledge the paucity of evidence of increased costs to which the special master referred. 15 However, in the vacuum left by plai ntiffs themselves in failing to offer evidence of increased costs, th e majority has apparently scou red the voluminous record in this case and has uncovered the following exampl es of increased cost s: (1) the need to hire additional personnel, (2) the need to rea ssign staff or pay them overtime to help meet the recordkeeping requirements, and (3) th e need to purchase and update computer software.

14 Indeed, when we remanded this case to the Court of Appeals in 2006, we instructed it to “apply th e provisions of MCL 21.231 et seq . and the definitions contained therein.” Adair , 474 Mich at 1074. Notwithstanding, the Court of Appeals failed altogether to discuss the de minimis exception of MCL 21.232(4).

15 Once again, the special ma ster specifically stated that plaintiffs had adduced “little evidence” of local districts’ “incurring actual additional costs or expenditures as a result” of the new recordkeeping requirements.13 When examined, this “evidence” falls sh ort of establishing a net increase in necessary costs. First, plaintiffs did not submit actual evidence of the costs allegedly spent for additional staff. Indeed, there was no testimony whatsoever establishing a baseline against which one could compare the alleged increase in staff costs. 16 Second, while there was testimony about purchasing ne w software and updati ng software, nothing in the record established that plaintiff school districts were , in fact, required to purchase or update that software. As the specia l master said, “some local districts and [intermediate school districts] incurred actual costs for programming changes, but most did not . . . .” (Emphasis added.) Therefore, it is difficult to conclude that those schools that did incur such costs did so necessarily . Finally, concerning evidence of increased overtime time costs, only a single witness testif ied about the receipt of less than $100 for such overtime, a clearly de minimis amount. The majority asserts that the increase in costs on the part of plaintiff school districts exceeded the de minimis threshold of $300. While there was indeed testimony to that effect, the majority’s formulation improperly relieves future plaintiffs of having to prove that their net increas e in costs was more than de minimis , notwithstanding the Headlee implementing act’s provi sion that a “necessary cost” does not include a cost that does not exceed $300 a claim. MCL 21.232( 4); MCL 21.233(6).

16 There was no evidence comparing costs incurred to report data before the creation of the CEPI with costs in curred to report data afterward.14 D. “NET COSTS” The majority correctly observes that MCL 21.233(6) provides that the “net cost” shall be the “actual cost to the state if the state were to provide the activity or service . . . .” 17 Yet it fails to note that plaintiffs ma de no effort to show what the costs to the state would have been if the state itse lf had provided the increased recordkeeping. 18 Thus, plaintiffs’ claim should also be de nied for failure to present any evidence establishing a net increase in costs. The majority concedes that the statut ory terms “net cost ” and “actual cost” “suggest a quantifiable dollar amount.” Yet, inexplicably, it proceeds to dispense with this concession and holds that a POUM plain tiff need not quantify th e plaintiff’s actual necessary increased costs. Th e majority even goes so far as to state that “it is the

17 A question was asked at oral argument re garding whether the definition of “net cost” in MCL 21.233 (6) is consistent with Const 1963, art 9, § 29, which contemplates an increase in cost to a local unit of government as opposed to the cost the state would incur. Plaintiffs’ counsel responded by stating that this issue had not even b een indirectly raised in this case. He also declined the opportunity to argue that the statutory definition of “net cost” is compatible with the constitution. Under these circ umstances, I will not further address the issue other than to observe that it might well be argued that the statute defines “net cost” by reference to hypothetical costs to the state only as a proxy for determining whether the required ne w or increased activ ity or service will impose actual necessary increased costs on the local unit of government. In any event, subdivisions (a) to (c) of MCL 21.233(6) require us to look at the “actual” costs to th e local unit of government to determine whether they are de minimis or are offset by other sa vings. See note 5 of this opinion.

18 The transcript from oral argument indicates the following exchange: [ Question to plaintiffs’ counsel ]: [D]id you put in proofs of what it would cost the state to do the CEPI reporting? [ Answer ]: No, we did not your honor.15 Legislature’s burden to demonstrate that t hose costs were not ‘necessary’ under one or more of the exceptions in MCL 21 .233(6)(a) to (d).” But under Const 1963, art 9, § 29, it is the plaintiff’s burden to show an increase in necessary costs. For th e majority to relieve a POUM plaintiff of the obligation to show increased costs, and that such increased costs were necessary, is contrary to Const 1963, art 9, § 29. The majority has no authority to reduce plainti ffs’ burden of proof or to place the burden on the state to prove that costs did not increa se or that any increased cost s were unnecessary. By its reallocation of these burdens, the majority effectively elimin ates the requirement that a POUM plaintiff prove that the increased co sts were necessary. This is in direct contravention of the la nguage of our constitu tion, which only requires reimbursement of “any necessary increased costs.” Const 1963 , article 9, § 29. That provision makes clear that the ratifiers of the Headlee Amendment did not intend that the state be required to enact an appropriation when a local unit of government ha s not proved specific necessary increased costs associated with a new or in creased level of activity or service. E. QUANTIFYING COSTS Despite 10 days of testimony from at least 17 witnesses, plaintiffs made no effort to quantify the school districts’ necessary increased costs. Th is is not surprising in view of the fact that plaintiffs believed, incorrec tly in my judgment, that they were under no obligation to make such a showing. The ma jority overlooks this failure of proofs and holds that a POUM plaintiff is not required to quantify its nece ssary increased costs because a POUM claim for declaratory judgmen t is designed only to challenge a mandate before it takes effect. The majo rity further suggests that if this case had proceeded to a16 prompt resolution, plaintiffs could not have provided costs incurred before and after implementation of the recordkeeping requiremen ts. That is, plaintiffs should not be required to show the school districts’ befo re-and-after costs when it would have been impossible at a sufficiently early juncture to do so, even though plaintiffs could have shown before-and-after costs following the several-year delay that occurred before presenting evidence to th e special master. The majority’s suggestion that it might be “impossi ble” for a litigant in a declaratory judgment action to show an an ticipated increase in necessary costs is mistaken. 19 Civil plaintiffs routinely prove entitlement to future economic damages, 20
and schools routinel y adopt budgets that pr oject future costs and expenses. The Uniform Budgeting and Accountin g Act, MCL 141.421 et seq ., mandates a budgeting system for various local governmental units in Michig an, which include public schools. MCL 141.422d(4); MCL 141.434. MCL 141.435(1) provides: The recommended budget shall in clude at least the following: (a) Expenditure data for the most recently completed fiscal year and estimated expenditures for the current fiscal year.

19 See, e.g., Durant v Dep’t of Ed (On Third Remand) , 203 Mich App 507, 514; 513 NW2d 195 (1994), in which the Court of Appeals said that “actual costs would be satisfactory as a prima facie indicator of ‘nec essary costs,’” “whether based on realized costs or theoretical costs . . . .”

20 See, e.g., M Civ JI 50.06 (future damages); M Civ JI 53.03 (future damages— non-personal-injury action); Patek, McLain, Granzotto & Stockmeyer, 1 Michigan Law of Damages and Other Remedies (ICLE), § 4.10, pp 4-7 to 4-10 (d iscussing of futureearning-capacity claims); id. , § 10.10, p 10-9 (discu ssing future damages).17 (b) An estimate of the expenditure amounts required to conduct, in the ensuing fiscal year, the governmen t of the local unit, including its budgetary centers. MCL 141.422a(4) further provides: “‘Budget ’ means a plan of financial operation for a given period of time, including an estimat e of all proposed expenditures from the funds of a local unit and the proposed means of fina ncing the expenditures.” Thus, in the case of a mandated increased activity or services, a POUM pl aintiff that has its claim heard before actual increased expenses have been incurred need simply present evidence explaining how much it is currently spending to perform the service or activity and how much extra, i.e., the projected amount of “inc rease,” it anticipates it will have to spend carrying out the increased level of service or activity. And in the case of mandated new activities or services, a plaintiff need only present evidence that it currently spends no money on the service or activ ity, but anticipates incurring specific necessary costs that

are not de minimis once the mandate becomes effectiv e. Given that estimates of increased expenses are ordinarily quantified in budgets, it is reasonable to conclude that a witness can summarize and provide a reasonable estimate of an antic ipated increase in necessary costs. 21 Ideally, a POUM claim will be deci ded before the projected necessary cost increases become actual increases. But in situations such as the case at bar, where plaintiff school districts had been complyi ng with the mandates for several years before

21 Although plaintiffs were not require d to show the exact dollar amount of underfunding for school districts statewide, they were required to show a quantified projected increase in necessary costs beyond those that were de minimis , i.e., the particularized extent of the ha rm suffered, and they did not.18 trial, actual necessary increased costs, if th ey exist, should not be difficult, much less insurmountable, to establish. In any event, proof of specif ic necessary increased costs, projected or actual, is essential in order to verify the legitim acy of a POUM claim. 22
V. CONSEQUENCES Apart from the fact that the majority’s interpretation is contrary to the law and the Michigan Constitution, there are significant pr actical consequences to their interpretation that will transform the Head lee Amendment over time from a provision limiting public expenditures into a provision facilitating su ch expenditures. As we stated in Durant , 424 Mich at 378, the Headlee Amen dment “was proposed as part of a nationwide ‘taxpayer revolt’ in which taxpayers were attempting to limit” state spending. The “voters . . . were striving to gain more control over their own level of taxing and ov er the expenditures of the state.” Id. at 383. “Headlee is fundamentally a taxpayers’ amendment, enacted for the primary purpose of relieving the el ectorate from overwhe lming and overreaching taxation.” Durant v Michigan , 456 Mich 175, 214; 566 NW2d 272 (1997). First, under the majority’s reduced burd en of proof, a POUM plaintiff will be entitled to prevail in a declaratory judgment action whenever the state has mandated an

22 To be sure, plaintiffs may have es tablished that the new requirements are burdensome and require additional staff time. However, th is is not the equivalent of the considerably more specific, and rigorous, re quirements of our constitution. The majority is mistaken when it asserts th at Const 1963, art 9, § 29 does not suggest that POUM plaintiffs must prove how much their costs increased. To reiterate, the word “increase” clearly implies the necessity of before-and-af ter numbers. By providing such numbers, a POUM plaintiff can satisfy the constitutional requirement that it show how much its necessary costs have increased.19 unfunded increase in the level of an activity or service and th e state cannot establish that costs did not increase or that any increase was not necessary. Yet under the actual language of Const 1963, art 9, § 29, a POUM plainti ff is entitled to prev ail only if it can show that some increase in the level of an activity or service was necessary and that it

was not de minimis . As a result, the Legislature will effectively be required to enact an accompanying appropriation to every statute that mandates an increase in the level of an activity or service-- even if th ere are no necessarily increased costs, and even if any such increased costs are merely de minimis -- unless it is willing to un dertake the risk that the state will eventually be able to sustain in court its burden of proof that a POUM plaintiff’s costs did not increase or that a ny such increased costs were not necessary. Second, under the majority’s new standard s, the Legislature in future Headlee Amendment situations will be likely to overestimate the necessary levels of accompanying appropriations when it has mandated an increas ed level of activity or service. This is because, in the absence of proofs by a local unit of government that it has incurred quantifiable costs, estimated levels of accompanying appropr iations will entail nothing more than speculation. The cost of an underestim ated appropriation by the state will be to invite litigation and to risk paying a POUM plaintiff’s attorney fees if that litigation is lost. Better, then, to overestim ate and thereby avoid litigation and attorney fees. That is, the guesswork introduced into the Headlee Amendment process by the majority, and the attendant budgetary uncerta inties on the state’s part, can only have an adverse fiscal impact on the very persons th at the amendment was designed to protect-- the taxpayers.20 Third, local units of gove rnment, which in the past may have simply absorbed reasonable expenses stemming from mandate s by either working harder or more efficiently, are now incentivized to maintain the status quo and file lawsuits in response to all new mandates on the grounds that each such mandate has imposed additional obligations or costs. The majority’s sta ndards create an incentiv e for local units of government to litigate Headlee Amendment clai ms on the theory that every new mandate has unconstitutionally burde ned that local unit, rather than incentivizing th e local unit to make do with existing resources by working in a harder or more efficient manner to absorb such burdens. Finally, litigation expenses will only increas e as a consequence of the majority’s Headlee Amendment process. The dismantlement of the quan tification requirement, the erosion of the “necessary” and “ de minimis ” conditions for a Headlee claim, the distortion of burden-of-proof obligations, and the general se nse of uncertainty caused by the elimination of traditional obl igations of POUM plaintiffs to prove their claims will all lead inevitably to increased litig ation between the state and lo cal units of government. I need not dwell at great length on the obviou s fact that in such litigation, public entities are involved on both sides, and the taxpayers are responsib le for the costs of litigation and attorney fees on both sides.
VI. CONCLUSION Consistently with article 9, § 29 of the Michigan Constitu tion and the Headlee implementing act, I would hold that POUM pl aintiffs must prove specific necessary increased costs, projected or actual, that are more than de minimis in order to establish21 their entitlement to declaratory judgment under the POUM provision. For all the reasons set forth above, I would reverse the judgme nt of the Court of Appeals and remand for entry of summary disposition for defendants on the ground that plaintiffs failed to establish a POUM violation because they fa iled to submit proof of specific necessary increased costs through the reallocation of funds or out-of-pocket expenses required by the state’s new recordkeeping requirements.

C ORRIGAN and Y OUNG , JJ., concurred with M ARKMAN , J.