No. 13069
I N THE SUPREME COURT OF THE STATE OF MONTANA
1975
BOARD OF REGENTS OF HIGHER EDUCATION OF
THE STATE OF MONTANA,
Plaintiff,
'VS'
THOMAS L. JUDGE, Governor o f t h e S t a t e
of Montana,
Defendant,
and
LEGISLATIVE FINANCE COMMITTEE O THE
F
M N A A LEGISLATIVE ASSEMBLY,
OTN
Intervenors,
ORIGINAL PROCEEDING :
Counsel o f Record:
For P l a i n t i f f :
Da t s o p o u l o s and MacDonald
M i l t o n Datsopoulos a r g u e d , Missoula, Montana
For Defendant:
Hon. Robert L, Woodahl, A t t o r n e y G e n e r a l , Helena,
Montana
John P, A t k i n s a r g u e d , A s s i s t a n t A t t o r n e y G e n e r a l ,
Helena , Montana
Lon J , Maxwell, a r g u e d , A s s i s t a n t A t t o r n e y G e n e r a l ,
Helena, Montana
For I n t e r v e n o r s :
John W. Northey a r g u e d , Helena, Montana
For I n t e r v e n o r s Amicus Curiae:
Berg, Angel, A n d r i o l o and Morgan, Helena, Montana
Gregory 0, Morgan a r g u e d , Bozeman, Montana
Submitted: September 10, 1975
Decided: DEC 19 1 E
9
Mr. Justice Wesley Castles delivered the Opinion of the Court.
This is an original proceeding for a declaratory judg-
ment brought by the Board of Regents of Higher Education of the
State of Montana against the Governor of the State. The Board
of Regents seeks definitive rulings on the constitutionality of
two bills passed during the 1975 legislative session and signed
into law by the Governor. House Bill 271 appropriates monies
to the university system for the biennium. Senate Bill 401 pro-
vides for a legislative finance committee to approve budget
amendments. More will be said about these two bills later in
this opinion.
The Board of Regents, hereinafter referred to as the
Regents, sought original jurisdiction in this Court. This Court
set the matter for adversary hearing. Hearing was had. Defend-
ant Governor, hereinafter referred to as Governor, moved to dis-
miss on procedural grounds. The motion was denied. The Legis-
lative Finance Committee and the Legislative Audit Committee of
the Montana Legislative Assembly moved to intervene. Hereinafter
these committees will be referred to in the singular as the Fin-
ance Committee. Such intervention was granted, and no challenge
is made to the status of legislative committees as party litigants.
The Associated Students of Montana State University and University
of Montana were allowed to submit a brief and appear as amicus
curiae.
By order this Court accepted original jurisdiction on the
basis of the emergency nature of the controversy and set a pre-
hearing conference pursuant to Rule 28, M.R.App.Civ.P., to con-
sider simplification of the issues. Thereafter the Court direct-
ed the Governor and his agents to refrain from withholding pay-
ments on claims and warrants by the university system until further
order of this Court.
Following the prehearing conference this Court ordered
in part:
"I. The Forty-Fourth Legislature of the State
of Montana passed House Bill 271 which purports
to appropriate money to the University System
for the biennium. During the same session, the
Legislature passed Senate Bill 401 which provides
for a legislative finance committee to approve
budget amendments. Pursuant to House Bill 271,
the budget director declared the appropriation
to the University System void in the absence of
a letter certifying compliance with the provi-
sions of the bill. The Board of Regents declined
to certify and brought this action for disposition
of the issues involved.
"11. The issues to be resolved in this action are
as follows: 1) whether Section l(3) of House Bill
271, in light of the provisions of Senate Bill 401
is an unconstitutional infringement on the powers
and duties of the Board of Regents; 2) whether
(a) the certification requirement contained in the
origination clause of Section 12 of House Bill 271
is unconstitutional as an improper legislative
infringement on the management authority of the
Board of Regents, and (b) whether Section 12(6) of
House Bill 271 is unconstitutional as a direct
invasion of the management prerogatives granted
to the Board of Regents by Article X, Section 9
of the Montana Constitution."
The pertinent parts of the two enactments are:
HOUSE BILL
"Section 1. For the purposes of this act, unless
otherwise stated:
"(3) 'Approved budget amendment' means approval
by the board of regents unless otherwise provided
by law, of a request to:
"(a) obtain financing for new or expanded programs
from funds which were not available for consider-
ation by the legislature but which have become avail-
able from a source other than the state's general
fund; or
" (b) transfer not more than fifteen percent (15%)
of any single university system unit's appropriations,
including general fund appropriation between units
and transfer appropriations between programs within
a university system unit; or
"(c) expend remaining balances of the first fiscal
year of the biennial appropriations, including
general fund appropriations, during the second fiscal
year of the biennium.
"Section 12. The provisions set forth in this
section are limitations on the appropriations
made in this act. It is the purpose of the
legislature in enacting this bill only to
appropriate funds and to restrict and limit by
its provisions the amount and conditions under
which the appropriations can be expended. Ex-
cept as otherwise provided in this act, the ex-
penditures of appropriations are hereby contingent
upon the board of regents certifying to the budget
director that the university units shall comply
completely with the following general and specific
provisions: * * *
"(4) All moneys collected or received by univer-
sity system units subject to this act from any
source whatsoever, including federal grants for
research and operations, and any moneys received
from a foundation shall be deposited in state
treasury pursuant to the provisions of Title 79,
R.C.M. 1947, except that the department of admin-
istration may, pursuant to section 79-603, R.C.M.
1947, permit any university system unit subject
to this act to retain in its possession moneys
that would otherwise be deposited in the state
treasury, provided that the anonymity of private
foundation donors shall be maintained and that
private donations shall not be used as an offset
to general fund appropriations.
"(6) Salary increases for presidents of units of
the university system and for the commissioner
of higher education shall not exceed five percent
(5%) each year of the biennium using the respective
fiscal year 74-75 salaries previously approved by
the regents as the basis for determining such in-
creases.
"In the absence of such certification of compliance,
the appropriations in this act are null and void.
"The regents shall grant classified university
employees salaries in accord with House Joint Res-
olution, 37, forty-fourth legislature." (Emphasis
supplied.)
House Bill 271 was amended by the Forty-Fourth Legislature in its
House Bill No. 1 (Special Session) by adding Section 13 to H.B. 271:
"Section 13. In addition to the appropriations contained
in this act, all other monies received from sources other
than the general fund and which were not available for
consideration by the legislature are hereby appropriated.
Such monies may be made available for expenditure only
by a budget amendment approved by the legislative
finance committee."
SENATE BILL 401:
"Section 1. * * * Definitions. In this act: * * *
"(2) 'Budget amendment' means a request submitted
through the budget director to the committee for
executive branch agencies to expend funds in excess
of those appropriated by the legislature.
"Section 2. * * * Approval of budget amendments.
All budget amendments for state agencies must be
submitted through the budget director to the com-
mittee. No state agency shall expend in excess
of the appropriation except under authority of a
budget amendment approved by the committee. The
committee shall approve, with or without modifi-
cation, or disapprove, each proposed budget amend-
ment of any state agency."
The Governor does not oppose the Regents with respect
to the legislative budget process put forth in Issue No. 1, but
see Governor's stand in companion case, Cause No. 13201, Governor
v. ~egislativeFinance Committee). The Finance Committee does
oppose the Regents with respect to the legislative budget process
in Issue No. 1. Amicus Curiae support the Regents.
Prior to discussing Issue No. 1, it will be helpful to
give some background. House Bill 271 appropriates money to the
university system for the biennium by various line items from
various state operating funds. The Commissioner of Higher Education,
the University of Montana, Montana State University, and the various
other college units are each appropriated certain funds.
For example, the University of Montana is appropriated
$17,782,106.00 for the year ending June 30, 1976, in ten line
items:
Instruction ...............................10,114,000
Research ..................................... 176,768
Public Service ...............................131,718
Academic Support ...........................1,737,215
Student Services .............................886,183
Institutional support ......................1,730,230
Operation & maintenance of plant ...........1,941,316
Forest Experiment Station ....................241,591
Scholarships and fellowships .................525,000
Malmstrom Air Force Base instruction .........298,085
Total 17,782,106
From the general fund .....................9,808,239
From the earmarked revenue fund
02106 University millage ERA .......... 3,041,786
02650 U.M. Student fee ERA................4,336,999
From the federal and private revenue
fund
04308 UM interest and income FPRA .........
75,000
04515 UM federal program FPRA............ 346,944
Social Rehabilitation Services transfer..173,138
Total 17,782,106
H.B. 271 provides for budget amendment by the Regents
whenever funds become available from sources outside the general
fund for new or expanded programs, or in transfers of not more
than 15% of any appropriation of a single unit of the university
system to another unit, and expending balances remaining at the
end of the first fiscal year during the second fiscal year.
Additional monies are appropriated by section 3 of H.B.
1, (Special Session) Laws of 1975, which adds an additional sec-
tion to H.B. 271, Section 13 as previously quoted. The contigency
of additional appropriations by budget amendments is taken from
the Regents by definition in H.B. 271, Section 1 (3), "'Approved
budget amendment' means approval by the board of regents unless
otherwise provided by law * * *." (Emphasis supplied.)
S.B. 401 provides that no state agency shall expend in
excess of an appropriation except under authority of a budget
amendment approved by the legislative finance committee. Thus
both by the section 13 amendment in the Special Session to H.B.
271 and by S.B. 401, the authority for budget amendments is in
the legislative finance committee.
Thus, the question and conflict arises between the Regents
and the legislative finance committee.
The Regents urge that line item appropriations of general
fund monies by the legislature to the Board of Regents infringe
on the authority of the Board granted by the Constitution of Montana
1972. Their position is hinged on this language contained in
Article X, Section 9, 1972 Montana Constitution:
"(2) (a) The government and control of the Mon-
tana university system is vested in a board of
regents of higher education which shall have full
power, responsibility, and authority to supervise,
coordinate, manage and control the Montana
university system * * *. " (Emphasis supplied.)
The Regents in part state their position:
"This provision [Article X, Section 9 (2)(a)]
clearly indicates the broad scope of authority
vested by the framers in the Board of Regents.
The grant of power is clear and unambiguous. * * *
Given their plain meaning, the words * * * grant
a high degree of autonomy to the Board of Regents."
During oral argument, in response to a question from the bench,
counsel went so far as to state that indeed the university system
and its Board of Regents was a fourth branch of government. In
support of that construction, the Regents note particular changes
in the 1972 constitutional provision which, they insist, are
indicative of the intent of the framers to vest complete control
in the Regents to the exclusion of legislative and executive bodies.
First, the 1889 Constitution vested control and super-
vision in the state board of education, but limited its powers to
those which "shall be prescribed and regulated by law.", Art. XI,
Sec. 11. Thus, the Regents urge that a board regulated by law
is clearly under the control of the law-making body to some extent.
The qualifying phrase is absent in the 1972 Montana Constitution,
indicating that the powers of the Regents are not to be prescribed
by the legislature. Second, the language of the new provision is
much stronger and more comprehensive than that of the old provision.
Under the 1889 Constitution, the board of education was given
"general control and supervisionn of the university system; under
the 1972 Montana Constitution, the Board of Regents was given "full
power, responsibility and authority to supervise, coordinate,
manage and control the Montana university system * * *."
At this point we observe that if Article X, Section 9,
1972 Montana Constitution, was read literally without refer-
ence to the rest of the Constitution, the Regents argument and
position would be correct; but, as will be hereinafter developed,
the Constitution is not so read.
Article 111, Section 1, 1972 Montana Constitution,
reads:
"The power of the government of this state is
divided into three distinct branches - legis-
lative, executive, and judicial. No person
or persons charged with the exercise of power
properly belonging to one branch shall exercise
any power properly belonging to either of the
others, except as in this constitution expressly
directed or permitted. (Emphasis supplied.)
Article V, Section 1, 1972 Montana Constitution, reads:
"The legislative power is vested in a leqislature
consisting of a senate and house of representatives.
The people reserve to themselves the powers of
initiative and referendum." (Emphasis supplied.)
Article VIII, Section 12, 1972 Montana Constitution,
reads :
"The legislature shall by law insure strict account-
ability of all revenue received and money spent by
the state, and counties, cities, towns, and all other
local government entities." (Emphasis supplied.)
It is the opinion of this Court that these provisions of
the 1972 Montana Constitution and Article X, Section 9, should
stand together. To be sure, that constitutional provision, like
most, is couched in broad language, but it must not be read or
construed in isolation. To aid our analysis of this section we
rely on several rules of construction used previously by this
Court .
First, Arps v. State Highway Commission, 90 Mont. 152,
160, 300 P . 549, provides:
" * * * the Constitution must receive a broad and
liberal interpretation consistent with the purpose
of the framers and the people in adopting it, that
it may serve the needs of a growing state; 'the
proper interpretation of any constitutional pro-
vision requires us to remember that it is a part
of the organic law--organic not only in the sense
that it is fundamental, but also in the sense that
it is a living thing designed to meet the needs of
a progressive society, amid all the detail changes
to which a progressive society is subject.' (State
ex rel. Fenner v. Keating, 53 Mont. 371, 163 Pac.
1156, 1158.) "
Next, this rule stated in Cottingham v. State Board of
Examiners, 134 Mont. 1, 11, 17, 328 P.2d 907:
"It has also frequently been stated that the
Montana Constitution, unlike the Constitution
of our United States, is a prohibition upon legis-
lative power, rather than a grant of power.
[Citing cases] "
Also valuable are these rules from Cottingham:
"'A Constitution, or provisions thereof, should
receive a reasonable and practical interpretation
in accord with common sense.' 16 C.J.S. Consti-
tutional Law, section 14, pp. 66, 69. * * *
"All of the provisions of the Constitution bearing
upon the same subject matter are to receive a-mro-
L L
priate attention and be construed toqether. "
(Emphasis supplied.)
Since our construction will determine the validity or
invalidity of legislative acts, citing the presumption of con-
stitutionality and burden on the party seeking to overcome the
presumption stated in State ex rel. Mills v. Dixon, 66 Mont. 76,
84, 213 P. 227, is also appropriate:
" * * * the constitutionality of a legislative
enactment is prima facie presumed, and every intend-
ment in its favor will be made unless its unconstitu-
tionality appears beyond a reasonable doubt."
Our task then is to harmonize in a practical manner the
constitutional power of the legislature to appropriate with the
constitutional power of the Regents to supervise, coordinate,
manage and control the university system. At the outset we note
that there is not always a clear distinction between these powers
and therefore limit our ruling here to these specific legis-
lative enactments.
It is also necessary when speaking to issues arising
out of the appropriation process to clarify our conception of
the funds subject to that power. Previous rulings of this
Court have limited the scope of appropriation to the general
fund. State ex rel. Bonner v. Dixon, 59 Mont. 58, 76, 195 P.
841; State Aeronautics Commission v. Board of Examiners, 121
Mont. 402, 410, 194 P.2d 633, and cases cited therein. Stat-
utory changes, as well as the 1972 Montana Constitution, cause
us to reexamine that definition at this time.
In 1963 the legislature enacted the "Treasury Fund
Structure Act", section 79-409, R.C.M. 1947, with a purpose:
" * * * to make possible the full utilization of
modern accounting methods, to provide the legis-
lative assembly with a qreater measure of control
over public moneys, and to enable the financial
records of the state to accurately reflect qovern-
mental costs and revenues." (Emphasis added.)
We note here that the structure of the 1972 Constitutional
provisions have changed to a considerabie extent the connotation
to be placed on the word "control" as used in section 79-409.
Section 79-410 of the Act provides for these funds in
the state treasury: 1) General fund. 2) Earmarked revenue fund.
3) Sinking fund. 4) Federal and private revenue fund. 5) Fed-
eral and private grant clearance fund. 6) Bond proceeds and in-
surance clearance fund. 7) Revolving fund. 8) Trust and legacy
fund. 9) Agency fund.
Then section 79-415 states in part:
"(1) Moneys deposited in the general fund, the
earmarked revenue fund, and the federal and
private revenue fund, with the exception of
trust income and refunds authorized in subsection
(3) of this act, shall be paid out of the treasury
only on appropriation made by law. * * * " (Emphasis
supplied.)
The 1972 Constitution also broadens the scope of the
appropriation power. Article VI, Section 9, commands the governor
to submit a budget to the legislature "setting forth in detail
for all operating funds the proposed expenditures and estimated
revenue of the state". (Emphasis supplied. )
Article VIII, Section 9, 1972 Montana Constitution
states:
"Appropriations by the legislature shall not
exceed anticipated revenue."
Section 12 of the same Article provides:
"The legislature shall by law insure strict
accountability of all revenue received and money
spent by the state, and counties, cities, towns,
and all other local sovernmental entities."
(Emphasis added. )
Thus the legislative appropriation power now extends
beyond the general fund and encompasses all those public operating
funds of state government. Prior to the 1972 Constitution, the
Treasury Fund Structure Act, sections 79-409 through 79-416,
R.C.M. 1947, provided for the nine funds heretofore listed.
However we emphasize that the power to appropriate does
not extend to private funds received by state government which
are restricted by law, trust agreement or contract. Accordingly,
we limit subsection (4) of section 79-410 which provides:
"(4) Federal and private revenue fund. The
federal and private revenue fund consists of all
expendable moneys deposited in the state treasury
from federal or private sources, includinq trust
income, which are to be used for the operation
of state government." (Emphasis supplied.)
This provision, in view of our conception of the appropriation
power, cannot be used as a basis for legislative control over
expenditures of the types of private moneys enumerated above and
is invalid to the extent it may be so read. Similarly, the gen-
eral appropriation contained in H.B. 1 (Special Session) is also
limited to the public operating funds of state government.
An example of such a fund outside the appropriation pro-
cess was the Montana Trust and Legacy Fund established by Article
XXI, 1889 Montana Constitution. Therefore, to the extent they
are inconsistent with this discussion of the legislature's power
to appropriate, our earlier rulings in State ex rel. Bonner v.
Dixon, supra, and State Aernautics Commission v. Board of
Examiners, supra., are overruled.
These funds--subject to the appropriation process--
concern us in the Regents' challenge to the approved budget
amendment requirement of Section 1 (3) of H.B. 271. If the
approval of budget amendments by the Finance Committee is a proper
exercise of the legislative appropriation power, then the Regents
as part of state government are subject to those requirements.
But, as developed in this Court's opinion in the companion case,
State ex rel. Thomas L. Judge v. Legislative Finance Committee,
Cause #13201, also decided today, the power to approve budget
amendments in S.B. 401 constitutes an unconstitutional delegation
of legislative power to the Finance Committee. Thus for the
reasons enumerated in that opinion, the Regents' challenge to
the approved budget amendment requirement of H.B. 271 succeeds.
To reach the Regents' constitutional challenge of the
certification requirement in the origination clause of Section
12 of H.B. 271, we must consider the power of the legislature to
make line item appropriations.
We repeat the provision of H.B. 271:
"Section 12. The provisions set forth in this
section are limitations on the appropriations
made in this act. It is the Durnose of the
ts provisions the amount and conditions under
--
which the appropriations can be expended.
Except as otherwise provided in this act. the
expenditures of appropriations are hereby
contingent upon the board of regents certifying
to the budget director that the university units
shall comply completely with the following general
and specific provisions * * *." (Emphasis
supplied. )
If the legislature cannot make line item appropriations
for the university system, it does not have the authority to re-
quire certification by the Regents. The position of ~micus,which
was adopted by the Regents in oral argument, is that the "autonomy"
and "uniqueness" of the Regents precludes line item appropriations
by the legislature. However, we find no constitutional limi-
tations or judicial interpretation of this Court to bottom such
a conclusion. The Regents' assertion of autonomy based on an
isolated analysis of one article of Montana's Constitution does
not show a basic violation of fundamental law of this long stand-
ing legislative practice. Even the Regents' cases from other
jurisdictions cited in support of this principle, two of which
we discuss later, do not challenge the authority of the legisla-
ture to itemize appropriations.
An early Michigan case, Sterling v. Regents of the Uni-
versity of Michigan, 110 Mich. 369, 68 N.W. 253, 257, sets the
precedent for regent autonomy according to the Regents, but this
Court notes this discussion in the decision which illuminates the
background of the constitutional provision giving the regents
control over "expenditures from the university interest fund"
(similar to the Montana Trust and Legacy Fund, Article XXI, 1889
Constitution) :
"It is significant that, at the time of the
adoption of the constitution, this fund con-
stituted the sole support of the university, aside
fromfees which might be received from students.
The state had made no appropriations for its sup-
port and there is nothinq to indicate that any such
appropriations were contemplated." (Emphasis
supplied.)
The present Michigan Constitution grants the regents con-
trol of "expenditures from the institution's funds." Based on
this provision regent autonomy recently prevailed over these
legislative appropriation bills described in Regents of University
of Michigan v. The State of Michigan, 47 Mich.App. 23, 208 N.W.2d
871, 874-875:
"Furthermore a careful reading of 1972 P.A. 260
discloses that the Legislature has in no way abandoned
its intention to substitute its judgment for that
of the constitutionally created boards of control
* * **
"Whether it be under the guise of the police power
or a reporting requirement, the simple fact remains
that the legislature still is attenptinq through
1972 P.A. 260 to do the same thing it sought to do
through 1971 P.A. 122 and prior acts: i.e., deter-
mine who shall teach and who shall not, who shall
learn and who shall not." (Emphasis supplied.)
Regent autonomy has not been asserted over the bare
legislative power to appropriate in the above instances. That
power, by implication in these cases and expressly in others
cited by the Regents, is secure even in Michigan with its strong
constitutional provision and long judicial recognition of autonomy
of the regents. We recognize here that while Montana's Consti-
tution is not as explicit or broad as that of Michigan, the prin-
ciple of regent independence was definitely intended by the draft-
ers of the 1972 Montana Constitution. At the same time, just as
in Michigan, legislative control of higher education through the
appropriation process remains. The Regents are a constitutional
body in Montana government subject to the power to appropriate
and the public policy of this state. For a discussion of the
impact of the 1972 constitutional provision see: Schaefer, The
Legal Status of the Montana University System under the New
Montana Constitution, 3 5 Mont. Law Review 189.
Going hand in hand with the power to appropriate has been
legislative exercise of control over expenditures through item-
ization. Historically the English Parliament during the reign of
William in the seventeenth century appropriated sums for partic-
ular purposes with penalties for disobedience. See 4 Thomson, A
Constitutional History of England - 1642-1801, p. 206. After two
years of lump sum appropriations the United States Congress in
1793 began to itemize expenditures in its appropriation acts. Act
of February 28, 1793, Ch. 18, 51, 1 Stat. 325. In Montana too,
itemization of appropriations is well established. Laws of
Montana, Second Session 1891, pp. 129, 130. In addition to
these historical bases, itemization of appropriations is vital
to the legislative decision-making process involved in providing
a balanced budget (Article VIII, Section 9 ) , in providing a system
of strict accountability (Article VIII, Section 12), and in ful-
filling the audit responsibility of Article V, Section 10. Also,
Article X, Section 9(1) provides that:
"It [state board of education] shall submit uni-
fied budget requests."
These constitutional bases justify the legislature's use
of line items in its appropriations.
However, the legislature cannot do indirectly through
the means of line item appropriations and conditions what is
impermissible for it to do directly. Line item appropriations
become constitutionally impermissible when the authority of the
Regents to supervise, coordinate, manage and control the univer-
sity system is infringed by legislative control over expenditures.
On their face, the budget items and corresponding line items of
H.B. 271 are reasonably related to the purpose of providing funds
for necessary services and the other responsibilities of the legis-
lature enumerated above.
Within these parameters we now consider the certification
requirements of Section 12, House Bill 271.
That section, as previously quoted, requires the Regents
to certify full compliance to certain conditions to the budget
director. Without such certification of compliance the appro-
priations in the bill are null and void. At the same time the
Regents concede that the conditioning of appropriations has been
a traditional and recognized legislative prerogative. Despite
this, the Regents contend that compliance with numerous conditions
erodes their authority granted them by the Constitution. But,
the Regents' argument sheds little light on specific intrusions;
hence our ruling here is necessarily limited due to the facts
presented us.
We think this description adopted by Minnesota in State
ex rel. U. of Minnesota v. Chase, 175 Minn. 259, 220 N.W. 951,
955 to be a realistic approach to the issue of the propriety of
legislative conditions to university system appropriations:
" * * * At the one extreme, the Legislature has no
power to make effective, in the form of a law, a
mere direction of academic policy or administration.
At the other extreme it has the undoubted right
within reason to condition appropriations as it
sees fit. 'In such case the regents may accept or
reject such appropriation. * * * v ,
the conditions are binding upon them.'" (Emphasis
supplied.)
As noted ab'ove, the Regents are not mentioned in either
Article 111, Section 1, which creates the three branches of govern-
ment, nor in Article V, which limits the powers of the legislature.
Similarly, the legislature is not mentioned in Article X I Section
9(2), which entrusts the government and control of the university
system to the Regents. By no rule of construction then can the
powers of one be exercised or encroached upon by the other. In
other words, the conditioning of university system appropriations
by the 1975 Montana legislature and the summary procedure for
compliance were proper exercises of its appropriation powers to
the extent the conditions do not infringe on the constitutional
powers granted the Regents. This means the conditions must be
individually scrutinized to determine their propriety. The fact
that there are numerous conditions and a requirement of blanket
compliance does not in itself infringe upon the Regents' con-
stitutional powers.
Nevertheless we cannot neglect the fact that certain of
the certification requirements do exceed the limits to the exer-
cise of the appropriation power which we have outlined above.
We note particularly these provisions of Section 12, H.B. 271:
"(4) All moneys collected or received by uni-
versity system units subject to this act from
any source whatsoever, including federal grants
for research and operations, and any moneys
received from a foundation-s
dh
e in
the state treasury pursuant to the provisions of
Title 79 R.C.M. 1947, except that the department
of administration may, pursuant to section 79-60
R.C.M. 1947, permit any university system unit
subject to this act to retain in its possession
moneys that would otherwise be deposited in the
state treasury, provided that the anonymity of
private foundation donors shall be maintained
and that private donations shall not be used as
an offset to qeneral fund appropriations."
(Emphasis supplied.)
Based on our earlier discussion of the legislative appro-
priation power, certification cannot be used as a bootstrapping
device to gain legislative control over private moneys. As noted
heretofore, private moneys restricted by law, trust agreement, or
contract are beyond the appropriation power. To the extent then
that the certification requirement of Section 12(4) attempts to
exert any control over such private moneys or to grant any dis-
cretion over such funds to the department of administration, it
is unconstitutional.
The Regents' challenge to Section 12(6) of House Bill 271
on its face, in the final issue presented to this Court, provides
us an opportunity to more fully define the limits within which
the legislature may condition appropriations to the university
system. That section provides:
"(6) Salary increases for presidents of units
of the university system and for the commis-
sioner of higher education shall not exceed five
percent (5%) each year of the biennium using the
respective fiscal year 74-75 salaries previously
approved by the regents as the basis for deter-
mining such increases." (Emphasis supplied.)
The question presented is whether this condition is a
direction of academic policy or administration by the legislature.
The Regents argue this condition represents an effort to abrogate
the powers and prerogatives granted expressly and absolutely
to them by the 1972 Montana Constitution. The Governor and
Finance Committee assert the condition is a proper exercise of
the legislative appropriation power.
The problem of delineating the area forbidden to the
legislature in conditioning appropriations of the university
system is not easily resolved, as was noted by the Michigan
Court of Appeals in Regents of University of Michigan v. State,
47 Mich. App. 23, 208 N.W.2d 871, 877, quoting from 55 Mich.
"'While it must be recognized that the legis-
lature's power to make appropriations to a con-
stitutional university does not include and is
separate from the power to control the affairs
of such a university, the legislature can within
reason attach conditions to its university appro-
priations. If a constitutional university
accepts such conditioned funds, it is then bound
by the conditions. There are not many decisions
in this area, however, so the line between condi-
tions the leqislature can validly attach and
those it cannot has not been drawn in a distinct
fashion. Conditions which require the university
to follow prescribed business and accounting
procedures have generally been found to be void.
The courts have also sustained conditions which
require, on penalty of losing part of the appro-
priation, annual reports to the governor, and
fair and equitable distribution of an appropri-
ation among the departments of the university or
maintenance of university departments. It has also
been held that the legislature can properly make
non-teaching employees subject to the state's
workmen's compensation law, and can require loyalty
oaths by the teachers. On the other side of the
line, a condition that the university move a cer-
tain department of the school has been held to be
invalidly attached, an attempt to limit the amount
of funds that can be spent for a given department
is likewise an invalid condition. It is clear
that limits should be placed on the use of the
conditioned appropriation, for without such limits
the legislature could use the conditioned appro-
priation to strip the university of its constitu-
tional authority.'" (Emphasis supplied.)
Clearly any decision with respect to appropriations
affects the management of the university system to some degree.
We assume the 1972 Constitutional Convention was aware of this
fact when it drafted Article V. That Article, as was noted,
does not limit the legislature's power to appropriate funds
for the university system. Therefore, we look to the impact
of the appropriation condition on the management and control
exercised by the Regents.
Returning now to the restrictions contained in Section
12, we note no legislative explanation of the breadth of the
restrictions. Neither is there any provision for the Regents
to object. The Regents either comply or forego the funds.
Seemingly minor conditions could ultimately affect academic,
administrative and financial matters of substantial importance
to the system.
But, control over college president salaries is not a
"minor" matter. It does dictate university personnel policy.
That such effect was meant need only be found in the final sen-
tence of the bill following Section 6 which states "The regents
shall grant classified university employees salaries in accord
with House Joint Resolution 37, forty-fourth legislature." Such
a limitation on significant expenditures indicates a complete
disregard for the Regents' constitutional power.
Inherent in the constitutional provision granting the
Regents their power is the realization that the Board of Regents
is the competent body for determining priorities in higher edu-
cation. An important priority is the hiring and keeping of com-
petent personnel. The limitation set forth in Section 12(6),
H.B. 271, specifically denies the Regents the power to function
effectively by setting its own personnel policies and determin-
ing its own priorities. The condition is, therefore, unconsti-
tutional.
This opinion together with the companion opinion of State
ex rel. Thomas L. Judge v. Legislative Finance Committee, Cause
No. 13201, d e c i d e d t o d a y , s h a l l c o n s t i t u t e t h e d e c l a r a t o r y
judgment o f t h i s Court w i t h r e g a r d t o I s s u e s 1) and 2) t o be
resolved i n t h i s a c t i o n as set o u t i n t h e o r d e r of t h i s Court
d a t e d J u l y 1 7 , 1975.
The o r d e r of t h i s C o u r t d a t e d J u l y 2 , 1975, s t a y i n g
f u r t h e r a c t i o n s o r p r o c e e d i n g s by any p a r t y h e r e t o o r h i s a g e n t
o u t s i d e t h e scope o f t h i s p r o c e e d i n g and t h e o r d e r d a t e d J u l y 7 ,
1975, d i r e c t i n g t h e Governor and h i s a g e n t s , s e r v a n t s and
employees t o d e s i s t and r e f r a i n from w i t h h o l d i n g payment on
w a r r a n t s and c l a i m s s u b m i t t e d by t h e Montana u n i v e r s i t y system,
a r e vacated. The Regents s h a l l have a r e a s o n a b l e t i m e t o c o m p l e t e
t h e i r c e r t i f i c a t i o n a s t o t h e o t h e r general matters contained i n
S e c t i o n 1 2 , H.B. 271.
L
Ju t i c e
/ '. dhief J u s t i c e
Justices