Court Opinion

ID: 2794180
Source: CourtListenerOpinion
Date Created: 2015-04-16 07:04:24.303438+00
Date Added: 2024-06-11T11:02:47.881236
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

GALIEN TOWNSHIP SCHOOL DISTRICT and                                FOR PUBLICATION
DELTON-KELLOGG SCHOOLS,                                            April 14, 2015
                                                                   9:00 a.m.
               Plaintiffs-Appellees,

v                                                                  No. 317739
                                                                   Ingham Circuit Court
DEPARTMENT OF EDUCATION and                                        LC No. 13-000367-AA
SUPERINTENDENT OF PUBLIC
INSTRUCTION,

               Defendants-Appellants.

                                         ON REMAND

Before: SAAD, P.J., and OWENS and K.F. KELLY, JJ.

PER CURIAM.

        In lieu of granting leave to appeal our decision in Galien Twp Sch Dist v Dep’t of Ed, 306
Mich. App. 410; 857 NW2d 659 (2014), the Supreme Court vacated our remand of the case to the
Ingham Circuit Court for reinstatement of the Superintendent of Public Instruction’s March 14,
2013 final decision and remanded the case for us “to expressly address plaintiff Galien Township
School District’s alternative arguments for overturning the Superintendent’s decision,” which we
did not address during our initial review of the case. Galien Twp Sch Dist v Dep’t of Ed, 497
Mich. 951; 858 NW2d 438 (2015). Our Supreme Court denied leave to appeal in all other
respects. Id. For the reasons discussed below, we reject Galien’s alternative arguments for
overturning the Superintendent’s decision, and we remand this matter to the circuit court for
reinstatement of the Superintendent’s March 14, 2013 final decision.

        Initially, we take this opportunity to correct a factual error in our previous opinion, in
which we stated, “After plaintiffs admitted teacher misconduct in reporting student attendance,
defendants claimed authority under the State School Aid Act (SSAA), MCL 388.1601 et seq.,
and audited prior years’ attendance records.” Galien Twp Sch Dist, 306 Mich. App. at 414. While
plaintiff Delton-Kellogg Schools admitted staff misconduct in altering pupil membership counts,
which led to its audit, Galien was audited following an anonymous tip to the Michigan
Department of Education (MDE) alleging that Galien intentionally overstated its pupil
membership counts of alternative education students for September 2010 and February 2011.

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Galien did not acknowledge teacher misconduct in its reporting. Contrary to Galien’s assertion,
however, this factual error had no bearing on our analysis of the MDE’s statutory authority to
conduct a retroactive audit.

       We now turn to Galien’s alternative arguments for overturning the Superintendent’s
decision. First, Galien asserts due process violations, arguing that Kathleen Weller, in her
capacity as the Director of the MDE Office of Audits, failed to provide Galien with notice and an
opportunity to be heard before deducting state aid, and was not an unbiased decisionmaker.

       Procedural due process requirements have been extended to administrative decisions.
See, e.g., Bundo v Walled Lake, 395 Mich. 679, 688, 695-696; 238 NW2d 154 (1976); Hinky
Dinky Supermarket, Inc v Dep’t of Community Health, 261 Mich. App. 604, 605-606; 683 NW2d
759 (2004). As discussed by this Court in Hinky Dinky Supermarket,

              The United States and Michigan constitutions preclude the government
       from depriving a person of life, liberty, or property without due process of law.
       US Const, Am XIV; Const 1963, art 1, § 17. “A procedural due process analysis
       requires a dual inquiry: (1) whether a liberty or property interest exists which the
       state has interfered with, and (2) whether the procedures attendant upon the
       deprivation were constitutionally sufficient.” Jordan v Jarvis, 200 Mich. App. 445,
       448, 505 NW2d 279 (1993). [Hinky Dinky Supermarket, 261 Mich. App. at 605-
       606.]

        Thus, procedural due process requirements apply only if there is a liberty or property
interest at stake. Id. at 606. See also Livonia v Dep’t of Social Servs, 423 Mich. 466, 507; 378
NW2d 402 (1985). MCL 388.1613 directs the MDE to pay school districts the apportioned state
aid upon submission of certified and audited attendance data in accordance with MCL 388.1701.
Although state aid is conditioned upon these eligibility requirements, a school district can
reasonably assume that once the requirements are met, there is a great likelihood that they will
receive the apportioned state aid each year, thereby creating a property interest. See Bundo, 395
Mich. at 693, 695 (finding that “[a] holder of a liquor license in Michigan can reasonably
assume . . . that there was a great likelihood that his license would be renewed” each year,
thereby creating a property interest and entitling him to procedural due process protections).
Indeed, history would seem to indicate that, upon submission of certified and audited attendance
data, school districts legitimately rely on the apportioned state aid in determining their yearly
budgets. See id. at 690, 693 (discussing Perry v Sindermann, 408 U.S. 593; 92 S. Ct. 2694; 33 L
Ed 570 (1972), and noting that the United States Supreme Court found that the teachers in
Sindermann had a property interest in re-employment because a quasi-tenure system had been
created in practice on which the teachers had legitimately relied).

        In this case, the parties stipulated to certain facts, which included the fact that Galien
submitted certified attendance data for the years in issue, and following an audit by the Berrien
Regional Education Service Agency (Berrien RESA), the MDE appropriated funds to Galien.
Therefore, because Galien met the eligibility requirements for the years in issue and received the
apportioned state aid, it is reasonable to assume that it legitimately relied on this state aid,
thereby creating a property interest. Thus, the question turns on whether Galien received
constitutionally sufficient procedures. Galien contends it did not.

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        What constitutes “constitutionally sufficient” procedures has been defined by this Court
as “notice of the nature of the proceedings, an opportunity to be heard in a meaningful time and
manner, and an impartial decisionmaker. The opportunity to be heard does not mean a full trial-
like proceeding, but it does require a hearing to allow a party the chance to know and respond to
the evidence.” Cummings v Wayne Co, 210 Mich. App. 249, 253; 533 NW2d 13 (1995) (internal
citation omitted). See also Hinky Dinky Supermarket, 261 Mich. App. at 606. Galien specifically
contends that it did not receive notice of the charges brought against it by the anonymous tipster
and that Weller accepted those charges as true in deducting Galien’s state aid without first
providing Galien an opportunity to rebut those charges.

        First, as the Superintendent determined, there were no “charges” in this case. Rather, the
MDE took “reasonable action” and ordered Berrien RESA to conduct a field audit after it
received a seemingly reliable anonymous tip alleging that Galien had intentionally overstated its
pupil membership counts. The anonymous tip appeared to be premised on firsthand knowledge
as it specifically identified students that should not have been included in Galien’s September
2010 and February 2011 pupil membership counts. Galien was unable to provide the auditor
with contemporaneously signed attendance records to support its claimed pupil membership
counts for those periods, which led to additional audits for the 2008 to 2009 and 2009 to 2010
pupil membership counts and to the subsequent FTE deductions.

        Further, Galien’s contention that Weller accepted the allegations in the anonymous tip as
true in deducting state aid is refuted by the fact that Weller first ordered a field audit. Had
Weller simply accepted the allegations as true, she could have forgone the initial field audit and
deducted the FTEs. The FTE deductions did not result from the allegations of the anonymous
tipster but rather from Galien’s inability to provide contemporaneously signed attendance
records to support its claimed pupil membership counts. Although Galien might not have been
aware of the specifics of the anonymous tip, initially, there is no indication that it lacked notice
of the audits.

       Galien also asserts as part of its due process argument, that it was never permitted to
confront the anonymous tipster, who it claims was an adverse material witness. However, this
argument is without merit, as “[t]he Confrontation Clause does not apply to civil proceedings.”
Hinky Dinky Supermarket, 261 Mich. App. at 607, citing In re Brock, 442 Mich. 101, 108; 499
NW2d 752 (1993).

        Galien further contends that it was denied procedural due process because Weller was not
an unbiased decisionmaker. Due process requires an impartial decisionmaker. Hinky Dinky
Supermarket, 261 Mich. App. at 606; Cummings, 210 Mich. App. at 253. However, a showing of
actual bias is not required. Livonia, 423 Mich. at 509. Rather, “If the situation is one in which
‘experience teaches that the probability of actual bias on the part of a decisionmaker is too high
to be constitutionally tolerable,’ the decisionmaker must be disqualified.” Id., quoting Withrow v
Larkin, 421 U.S. 35, 47; 95 S. Ct. 1456; 43 L. Ed. 2d 712 (1975). Although Galien does not
expound on its argument, it appears to assert that Weller was biased because she served as the
investigator, prosecutor, and decisionmaker. Our Supreme Court has recognized that a risk of
bias may be presented where the decisionmaker “might have prejudiced the case because of prior
participation as an accuser, investigator, fact finder or initial decisionmaker.” Crampton v

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Michigan Dep’t of State, 395 Mich. 347, 351; 235 NW2d 352 (1975) (citation omitted). See also
Livonia, 423 Mich. at 509.

        Weller was not the initial investigator or fact finder, as she did not personally conduct the
audits. Rather, it was Sonya Schultz with the Berrien RESA. Weller acted on a seemingly
reliable tip when ordering Schultz to conduct the initial field audit for the September 2010 and
February 2011 pupil membership counts.                  When Galien could not produce the
contemporaneously signed attendance records for those counts, Weller ordered Schultz to
conduct an audit of the 2008 to 2009 and 2009 to 2010 pupil membership counts. During her
audits, Schultz determined that a significant number of FTEs should be deducted. However, in
her first level review, Weller actually reinstated some of the FTEs deducted by Schultz.
Additionally, Weller did not preside as the factfinder or decisionmaker during the review hearing
with the Superintendent.

        In sum, we conclude that Galien was not denied procedural due process. Any alleged
deficiencies occurring during the first level of review would have been cured on appeal to the
Superintendent, where Galien was fully apprised of the details of the anonymous tip and the
nature of the challenges to its claimed pupil membership counts and was given an ample
opportunity to present its arguments and supporting documentation. See Livonia, 423 Mich. at
505 (noting that “this Court must determine whether the parties had adequate notice, opportunity
to be heard, and review of an adverse decision”).

        For its other alternative argument, Galien argues that the Superintendent’s refusal to
consider electronic attendance records violated the best evidence requirement of MCL 388.1614.
We review a decision of an administrative agency to determine “ ‘whether the decision was
contrary to law, was supported by competent, material, and substantial evidence on the whole
record, was arbitrary or capricious, was clearly an abuse of discretion, or was otherwise affected
by a substantial and material error of law.’ ” Mackey v Dep’t of Human Servs, 289 Mich. App.
688, 696-697; 808 NW2d 484 (2010), quoting Dignan v Mich Pub Sch Employees Retirement
Bd, 253 Mich. App. 571, 576; 659 NW2d 629 (2002). MCL 388.1614 provides,

              If the data from an intermediate district or district upon which a statement
       of the amount to be disbursed or paid are determined to be defective or
       incomplete, making it impracticable to ascertain the apportionment to be
       disbursed or paid, the department shall withhold the amount of the apportionment
       that cannot be ascertained until the department is able to ascertain by the best
       evidence available the facts upon which the ratio and amount of the
       apportionment depend, and then shall make the apportionment accordingly.

        The Berrien RESA produced the proffered electronic records at the end of each school
year. The Superintendent noted that “[t]he records were not created on the attendance days in
question, they were not signed by the teachers, and the data upon which they were based was not
proven and could have been altered between the attendance dates in question and their creation.”
Acknowledging that electronic records could be considered if they were “sufficiently reliable,”
the Superintendent determined that the proffered electronic records “were inherently unreliable”
due to the “delay in creation . . . and the opportunities for alteration of data at the district level
prior to their creation at Berrien RESA.” Therefore, the Superintendent concluded that the lack

                                                 -4-
of reliability precluded the proffered electronic records from being considered the best evidence
available.

        We conclude that the Superintendent did not err in determining that the electronic
attendance records provided by Galien were not best evidence available. Our Supreme Court has
recognized that the common purpose of exclusionary rules, such as the best evidence rule, is “the
elucidation of the truth, a purpose which these rules seek to effect by operating to exclude
evidence which is unreliable or which is calculated to prejudice or mislead.” Howe v Detroit
Free Press, Inc, 440 Mich. 203, 210; 487 NW2d 374 (1992), quoting McCormick, Evidence (3d
ed), § 72, pp 170-171.

         In this case, the electronic records proffered by Galien were not authenticated and were
not contemporaneous with the events they purported to evidence, which calls into question their
reliability. Further, the Superintendent’s refusal to consider the proffered electronic records did
not preclude Galien from substantiating its claimed pupil membership counts. Galien was able
to provide other documentation, including disciplinary records, report cards, scholastic records,
food service records, course work, course records, and transcripts. The Superintendent
concluded that the verifiability of these records and the contemporaneous nature of their creation
rendered them the best evidence available. Based on the questionable nature of the electronic
records, as explained by the Superintendent, Galien has not demonstrated that the proffered
electronic records were the best evidence available or that the alternative records submitted by
Galien were not an appropriate substitute.

       Accordingly, we reject Galien’s alternative arguments for overturning the
Superintendent’s decision, and we remand this matter to the circuit court for reinstatement of the
Superintendent’s March 14, 2013 final decision.

                                                            /s/ Henry William Saad
                                                            /s/ Donald S. Owens
                                                            /s/ Kirsten Frank Kelly

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