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### STATE OF MICHIGAN

COURT OF APPEALS

PORT HURON EDUCATION ASSOCIATION,

Charging Party-Appellant, UNPUBLISHED February 16, 2016

v No. 325022 MERC PORT HURON AREA SCHOOL DISTRICT, LC No. 10-000255

Respondent-Appellee.

Before: H OEKSTRA , P.J., and M ETER and M. J. K ELLY , JJ.

P ER C URIAM

. The Port Huron Education Association (PHEA) appeals as of righ t from a November 19, 2014, order of the Michigan Employment Relations Commission (ME RC). MERC concluded, among other things, that the Port Huron Area School District (t he District) did not have a duty of collective bargaining with regard to the restructuring of the p rovision of psyc hological services to students. We affirm.

As a cost-saving measure, the District elected to contract wit h its local intermediate school district (ISD), Regional Educational Service Agency of S t. Clair County (RESA), for school psychologists to service i ts special education students, resulting in the layoff of six school psychologists. RESA used outside contractors for the psycholog ical work. PHEA filed an unfair labor practice charge with regard to the layoffs. The administ rative law judge (ALJ) recommended a dismissal of the charge; MERC agreed, adopted the ALJ’s recommended order, and dismissed the charge.

PHEA first argues that MERC e rred in determining that the Dist rict did not have a duty to bargain the alleged “subcontra cting” of the work in question.

The Public Employment Relations Act (PERA), MCL 423.201 et seq. , is “the dominant law regulating public employee labor relations.” Rockwell v Bd of Ed of School Distr of Crestwood , 393 Mich 616, 629; 227 NW2d 736 (1975). “It imposes a duty o f collective bargaining on public employers, unions, and their agents . . . .” St Clair Intermediate School Distr v Intermediate Ed Ass’n/Michigan Ed Ass’n , 458 Mich 540, 550; 581 NW2d 707 (1998). MERC has exclusive jurisdicti on over unfair labor practices. Id

.-2- “We review a decision of . . . MERC to determine whether it is authorized by law and whether the findings on which the decision is based are support ed by competent, material, and substantial evidence on the whole record.” Bay City Ed Ass’n v Bay City Public Schools , 430 Mich 370, 382 n 15; 442 NW2d 504 (1988). A r eviewing court mus t not “invade the province of exclusive administrative fact-finding by displacing an agency’s choice between two reasonably differing views.” Michigan Employment Relations Comm’n v Detroit Symphony Orchestra
, Inc
, 393 Mich 116, 124; 223 NW2d 383 (1974). “MERC’s legal determin ations may not be disturbed unless they violate a constitutional or statutory pro vision or they are based on a substantial and material e rror of law. In contrast to . . . ME RC’s factual findings, its legal rulings are afforded a lesser degree of deference because review of leg al questions remains de novo . . . .” Pontiac School Distr v Pontiac Ed Ass’n , 295 Mich App 147, 152; 811 NW2d 64 (2012) (citations and quotation marks omitted).

Here, MERC concluded that the District

had no duty to bargain over its decision to use its RESA to pro vide psychological evaluations and testing. Under § 1751 of the School Code, MCL § 380.1751(1), a local school district may either operate special education prog rams directly, “contract” with its ISD for the delivery of special education p rograms and services or utilize a combination of these alternatives. Per t hat section of the School Code, once a local board transfers responsibility to its ISD, the ISD controls the manner in whi ch the work is performed.

MCL 380.1751 states:

(1) The board of a local school district shall provide special education programs and services designed to develop the maximum potential of each student with a disability in its district on record under secti on 1711 for whom an appropriate educational or training program can be provided in accordance with the intermediate school district special education plan, in eit her of the following ways or a combination thereof:

(a) Operate the special e ducation program or service.

(b) Contract with its intermedi ate school board, another inter mediate school board, another local school district board, an adjacent school district board in a bordering state, the Michigan schools for the deaf and bli nd, the department of community health, the department of human services, or any c ombination thereof, for delivery of the special education programs or serv ices, or with an agency approved by the superinten dent of public instruction for delivery of an ancillary professional special e ducation service. The intermed iate school district of which the local school distri ct is constituent shall be a pa rty to each contract even if the intermediate school district does not participate i n the delivery of the program or services.

(2) A local school district cont ract for the provision of a sp ecial education program or service shall p rovide specifically for:-3- (a) Special education buildings, equipment, and personnel nece ssary for the operation of the subject program or service.

(b) Transportation or room and board, or both, for persons par ticipating in the programs or services as required under sections 1756 and 17 57.

(c) The contribution to be made by the sending local school di strict if the program or service is to be opera ted by another party to the co ntract. The contribution shall be in accordance with rules promulgated by t he superintendent of public instruction.

(d) Other matters the part ies consider appropriate.

(3) Each program or service operated or contracted for by a lo cal school district shall be in accordance with the intermediate school di strict’s plan established pursu ant to section 1711.

(4) A local school district ma y provide additional special edu cation programs and services not incl uded in, or required by, the inte rmediate school district plan.

(5) This section shall be construed to allow operation of prog rams by departments of state government without local school district c ontribution.

PHEA contends that “[a]lthough Section 1751 appears to empower school boards to unilaterally contract part or all of their special education se rvices, the PERA requires that employers bargain over the subc ontracting of instructional barg aining unit work.” PHEA cites MCL 423.215, which states, in part:

(1) A public employer shall barg ain collectively with the repr esentatives of its employees as described in section 11 and may make and en ter into collective bargaining agreements with those representatives. E xcept as otherwise provided in this section, for the purposes of this section, to bargain collectively is to perform the mutual obligation of the employer and the repres entative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms a nd conditions of employment, or to negotiate an agreement, or any question arising under the agreement, and to execute a written contract, ordinance, or resolution incorporating any agreement reached if requested by either party, but this obligation does not compel either party to agree to a proposal or make a concession.

PHEA contends that the school psy chologists were “included in t he instructional bargaining unit under the collective bargaining agreement” because they were pr ofessional staff members who worked closely with certified teachers. PHEA contends that the District was required to bargain before transferring work to RES A and that PERA prevails over MC L 380.1751.

MERC, as well as the ALJ, found the Michigan Supreme Court’s o pinion in Bay City
, supra , to be dispositive on this issue. In Bay City , 430 Mich at 372, unions “brought unfair labor-4- charges against Bay City Public Schools after the school board decided to terminate its operation of a special education center a nd to transfer the responsibilit y for the programs conducted there to the Bay-Arenac Intermediate School District . . . .” The un ions “requested to bargain over the decision, arguing that the . . . ‘transfer’ of . . . the specia l education programs to the ISD constituted an implied subcontract giving rise to a mandatory d uty to bargain.” Id . at 373. The Supreme Court stated:

It is within the scope of a local school board’s management pre rogative to determine its role in the deliver y of educational services. Th e disputed decision at issue here was a cooperative one made in recognition of the int errelationship and funding concerns of all the const ituent districts and their int ermediate school district. The school district’ s transfer of special education center programs to the ISD was a fundamental management policy decision anticipated an d authorized by the Legislature. As was the MERC, we are persuaded that the board’s decision is analogous to a partial closing of a business. [ Id . at 381-382.]

The Court also concluded that the purpose of PERA “would not be served by requiring negotiations over this subject” because it was “not the type of situation where labor concessions may have alleviated the employe r’s economic considerations . . . .” Id . at 382. The Court concluded:

Therefore, we hold that the board’s decision to terminate its o peration of the special education center programs was an educational policy dec ision within its managerial discretion and was not a “term and condition of empl oyment” subject to the duty to bargain under § 15 of the PERA. To hold otherwi se would unduly restrict local school boards from making decisions that are spe cifically authorized by the Legislature and that, although based on economic concern s, also advance the best interests of their s pecial education students. [ Id . at 384.]

In the present case, there was a financial crisis in the Distri ct, and it was decided that RESA would take responsibility for providing some of the legally man dated services; the director of legal services and human resources for RESA pointed out that RE SA could get more funding than the District could on its own. The Bay City case is persuasive under the circumstances and renders PHEA’s argument unavailing.

PHEA argues that MERC erred in finding that the District did n ot violate PERA when it “agreed to disregard the emplo yment protections provided by sec tion 1742 of the Revised School Code.” In Bay City , the Court emphasized the e xistence of MCL 380.1742, which sta tes, in part:

(1) When employing additional personnel to implement a special education program or service, the intermediate school board sha ll employ first an employee of a constituent distri ct whose employment is disconti nued because the constituent district is discontinuing a special education progr am or service for which the person was employed.-5- The Bay City Court stated:

Plaintiffs’ employment security, however, was protected by stat ute which directed the ISD to give hiring priority to the employees of the constit uent district whose employment was discontinued. MCL 380.1742; MSA 15.41742. Plai ntiffs have not suggested that this statutory mandate is inapplicable or th at it has been violated, and the local district remains ready to bargain regar ding the implementation of its decision. [ Bay City , 430 Mich at 383.]

PHEA argues that there was a cons piracy to avoid the protection s of MCL 380.1742 and notes that the school psychologists w hose positions were terminated w ere not hired by RESA. With regard to this issue, MERC concluded: “The Commission . . . ag rees with the ALJ’s conclusion that PERA does not provide a cause of action for conspiracy or for conspiracy to violate another statute.” PHEA makes no attempt to demonstrate that PERA does in fact provide a cause of action for conspiracy. “It is not sufficient for a party simpl y to announce a position or assert an error and then leave it up to thi s Court to discover and ration alize the basis for his claims, or unravel and elaborate for him his arguments, and then search fo r authority either to sustain or reject his position.” Wilson v Taylor , 457 Mich 232, 243; 577 NW2d 100 (1998) (citation and quotation marks omitted). The remaining gist of PHEA’s argumen t appears to be that, because the psychologists whose positions were terminated were not hire d by RESA, 1 the Bay City case is inapplicable to the present case and bargaining was required . PHEA also emphasizes that the District did not transfer total control of services to PERA but retained oversight, thus further distinguishing the present case from Bay City . However, we agree with the ALJ that the import of the Bay City decision is its emphasis on the fact that RESA had certain stat utory obligations to fulfill in cooperation with the District. See Bay City , 430 Mich at 377. The Bay City Court stated:

The Legislature crafted a statut ory scheme that contemplates co operative decision making and shared responsibility for providing programs and ser vices designed to develop the maximum potential a nd address the special needs of each handicapped child in this state. In recognition of this compre hensive statutory scheme, we decline to consider this arrangement a subcontract . . . . [ Id . at 378- 379.]

As noted by the ALJ, “under the School Code, the decision as to what kind of psychological or any other type of services would be offered to Respondent’s spe cial education students, and how

1 MCL 380.1711(1) indicates that an ISD may “[e]mploy or engage special education personnel” or may “[c]ontract for the delivery of a special education prog ram or service . . . .” Here, RESA used contractors, not “employees,” for the work. The psycholog ists whose employment was terminated were given an opportun ity to bid for contracts. (5/ 23/12 transcript, p 15.)-6- they would be delivered, was u ltimately not Respondent’s alone, but rather a decision to be made cooperatively with the RESA.” 2 The ALJ continued:

2 MCL 380.1711 states: (1) The intermediate school boa rd shall do all of the followin g: (a) Develop, establish, and continually evaluate and modify in cooperation with its constituent districts, a plan for special education that provid es for the delivery of special education programs and services designed to develop the maximum potential of each student with a disability of whom the intermediate school board is requ ired to maintain a record under subdivision (f). The plan shall coordinate the special educati on programs and services operated or contracted for by the constitu ent districts and shall be sub mitted to the superintendent of public instruction for approval. (b) Contract for the delivery of a special education program o r service, in accordance with the intermediate school dis trict plan in compliance with s ection 1701. Under the contract the intermediate school board may operate special education pro grams or services and furnish transportation services and room and board. (c) Employ or engage special education personnel in accordance with the intermediate school district plan, and appoint a director of special educati on meeting the qualifications and requirements of the rules prom ulgated by the superintendent of public instruction. (d) Accept and use available funds or contributions from gover nmental or private sources for the purpose of providing speci al education programs and ser vices consistent with this article. (e) Lease, purchase, or otherwise acquire vehicles, sites, bui ldings, or portions thereof, and equip them for its special education staff, programs, and s ervices. (f) Maintain a record of each student with a disability under 26 years of age, who is a resident of 1 of its constituent districts and who has not grad uated from high school, and the special education programs or services in which the student wit h a disability is participating on the fourth Friday after Labor day and Friday before Memorial da y. The sole basis for determining the local school district in which a student with a disability is a resident shall be the rules promulgated by the superi ntendent of public instruction n otwithstanding the provisions of section 1148. The records shall be maintained in accordance wi th rules promulgated by the superintendent of public instruction. (g) Have the authority to place in appropriate special educati on programs or services a student with a disability for who m a constituent district is re quired to provide special education programs or services under section 1751. (h) Investigate special education programs and services operat ed or contracted for by the intermediate school board or cons tituent district boards and re port in writing failures to comply with the provisions of a contract , statute, or rule governing t he special education programs and services or with the intermediat e school district plan, to the local school district board and to the superintendent of public instruction.-7- Requiring Respondent to bargain w ith Charging Party over its de cision to enter into an arrangement with the RESA would, I conclude, not only c onflict with Respondent’s inherent right to ma ke decisions about educational policy, but also interfere with the RESA’s ability to satisfy its own statutory responsibilities. I conclude that under the Court decision in Bay City , Respondent did not have an obligation under PERA to bargain with Charging Party over the d ecision to enter into an arrangement with the RESA to provide psychological eval uations and testing for Respondent’s sp ecial education students.

MERC concurred with the reasoni ng of the ALJ. We do as well. Despite the differences between the factual scenarios in Bay City and the present case, we nonetheless find the reasoning in Bay City sufficiently persuasive t o uphold the decision of MERC.

PHEA next argues that MERC erred in finding that PHEA failed t o make a timely demand to bargain and thus waived any right to bargain. Given our decision, this issue is moot. Nevertheless, we find no error with respect to MERC’s decision. PHEA’s executive director, Kathleen Trongo, testified that by February 2010 she was aware that school psychologists may be laid off but that she did not demand to bargain over the iss ue. In addition, the District’s assistant superintendent testified that Trongo told him “they d idn’t plan on bargaining or, you know, submitting a proposal becau se they had a contract.” MERC ’s decision is supported by competent, material, and substantial evidence on the whole reco rd. Bay City , 430 Mich at 382 n 15.

( i ) Operate the special education programs or services or contrac t for the delivery of special education programs or ser vices by local school district boards, in accordance with section 1702, as if a local school district under section 1751. The co ntract shall provide for items stated in section 1751 and shall be approved by the superintendent of public instruction. The intermediate school board shall contract for the transportation , or room and board, or both, or persons participating in the program or service as if a local s chool district board under sections 1756 and 1757. (j) Receive the report of a parent or guardian or, with the co nsent of a parent or guardian, receive the report of a license d physician, registered nurse, s ocial worker, or school or other appropriate professional personnel whose training and relations hip to students with a disability provide competence to judge t hem and who in good faith believes that a person under 26 years of age examined by the professional is or may be a student with a disability, and immediately evaluate the person pursuant to rules promulgated by the superi ntendent of public instruction. A person making or filing this report or a local school district board shall not incur liability to a person by reason of filing the re port or seeking the evaluation , unless lack of good faith is
proven. (k) Evaluate pupils in ac cordance with section 1311. (2) The intermediate school board may expend up to 10% of the annual budget but not to exceed $12,500.00, for special education programs approved by t he intermediate school board without having to secure the approv al of the superintendent of public instruction.-8- PHEA next argues that MERC erred in finding that the District did not fail to provide PHEA with requested documents in response to letters on April 2 9, 2010, June 16, 2010, and August 25, 2010. Essentially, PHEA contends that the District was hiding its intent to terminate the psychologist positions. However, Trongo admitted that the responses to both earlier letters were truthful because there was no evidence at the time of a “t ransfer” of positions. Trongo further admitted that in respons e to the third letter, she rece ived “all the information [she] requested[.]” MERC’s decision th us was supported by competent, material, and substantial evidence on the whole record. Id

. PHEA lastly argues that MERC erred “in failing to draw an adve rse inference regarding [the District’s] awareness of [P HEA’s] knowledge of its discuss ions with RESA.” PHEA states that the District “went to great lengths to keep [PHEA] from fi nding out about its agreement to subcontract bargaining work to RESA.” PHEA relies on second-ha nd information that (1) the District’s Director of Special Education met with the school ps ychologists toward the end of the 2009/2010 school year and told them they would be transferred t o work with RESA and (2) the District’s Human Resources Direc tor told psychologists that the District was in the process of looking at “a deal” with RESA for the positions and more inform ation was being sought. PHEA states that “[t]here is no explan ation for [the District’s] fai lure to call witnesses with knowledge of [the District’s] true intentions” and that MERC should have drawn an adverse inference regarding the absence of these witnesses. See Isagholian v Transamerica Ins Corp , 208 Mich App 9, 15-16; 527 NW2d 13 (1994) ( discussing missing witnesses and adverse inferences). MERC concluded that PHEA “has not specified any relevant facts that might properly be inferred from [the District’s] failure to call” the witnesses. MERC further noted that PHEA had offered insufficient evidence to establish a violation of PERA and that the District “was not obligated to offer additional testimony . . . .” Finally, MERC noted that PHEA could have subpoenaed the witnesses.

We find no error with regard to MERC’s decision. We cannot di scern how the calling of these witnesses would have affect ed the outcome of this case, a nd nothing prevented PHEA from itself calling the witnesses.

Affirmed.

/s/ Joel P. Hoekstra /s/ Patrick M. Meter /s/ Michael J. Kelly