NO PAC
PAYROLL DEDUCTIONS BY PUBLIC AGENCIES
By Marshall W. Grate and Joseph B. Urban
On August 28,
2008, in a majority opinion, the Michigan Court of Appeals prohibited
public agencies from making payroll deductions for political
action committees ("PACs") by holding that a public
agency's payroll deductions for PACs, even pursuant to a collective
bargaining agreement, violate Michigan's Campaign Finance Reform
Act, MCL 169.201 et seq. ("MCFA"). Michigan Education Association v Secretary of State, Mich
App (August 28, 2008, for publication).
The case originated from a request by the Michigan Education
Association ("MEA") for an opinion from the Secretary of
State on whether PAC payroll deductions by a public school district
were permissible under the MFCA. The
MEA local had negotiated a collective bargaining agreement with Gull
Lake Public Schools that required the school district to make payroll
deductions for the MEA_-PAC. The MEA proposed that it would
reimburse in advance all of the anticipated costs attributable to
administering the payroll deductions for the PAC.
The Secretary of State declared that the MFCA
prohibited a public body from collecting and remitting contributions
to a PAC through the public body's administration of a payroll
deduction plan. The MEA petitioned the Ingham County Circuit
Court for review of the Secretary of State's decision. The
Circuit Court set aside the Secretary of State's ruling.
The Court of Appeals reversed. The Court of Appeals found that
PAC payroll deductions are expenditures under the MCFA.
Section 57 of the MFCA, MCL
169.257(1), prohibits a public body from making expenditures for
political purposes.
The Court of Appeals rejected MEA's
argument that the reimbursement plan negates the illegality of the
payroll deduction expenditure. It found the MEA's
position to be incompatible with the plain language of the
statute. Also, the Court of Appeals found that the MEA's reimbursement proposal did not adequately
compensate the school district for the time spent by employees in
administering the payroll deduction (performing such tasks as
distributing, receiving, and processing deduction forms). Thus
the Court of Appeals ruled that an agreement for a public body to
make PAC payroll deductions is illegal under the MFCA.
School districts and municipalities should consult with their counsel
to ascertain how to most effectively desist from making payroll deductions
for PACs and to determine the impact of this decision on extant
collective bargaining agreements.
(This decision applies only to payroll deductions for PACs and
not to regular union dues deduction
provisions.)
