[wiaattorneys] Re: WIB as public instrumentality

  • From: "Sante Perrelli" <perrellis@xxxxxxxxxxxx>
  • To: <wiaattorneys@xxxxxxxxxxxxx>, "Jane Pomerantz" <jpomerantz@xxxxxxxxxxx>
  • Date: Thu, 23 Jun 2005 11:41:18 -0400

Jane
 
Interesting question.  I presume you are asking whether the WIBs are public or 
private entities.
 
I am more inclined to believe that a local WIB is a public board (like many 
other public boards in our state) or an instrumentality of a public agency 
(local unit of government under the authority of a chief elected official, 
etc).  Consider the following:
 
1.  29 USCS § 2832(e) (WIA Sunshine provision) requires WIBs to have open 
meetings. I read this provision to also require compliance with state freedom 
of information (FOIA) laws. In Michigan, the FOIA applies to "public bodies."  
Public bodies includes a board or "any other body...primarily funded by or 
through state or local authority."  MCL 15.242(b).  
 
2. Although local public officials in Michigan may have a seat on the board of 
a private non-profit corporation (provided that there is no conflict of 
interest),  public bodies and public officials in their official capacity 
(including those who serve on WIBs), do not have state statutory or 
constitutional authority to join in the formation of a private corporation, nor 
delegate/share their public functions to/with a private entity. OAG, 1989-90, 
No 6563, p 28 (January 26, 1989).
 
3.  Private entities can lend their credit; public entities in Michigan cannot 
except as authorized by law, Mich Const 1963, art 9 Section 18. If a WIB were 
viewed as a private entity, it would be free to contract for debt obligations.  
Because WIA provides that local CEOs are liable for misspent funds, and because 
CEOs and the government instrumentalities that they represent can only contract 
for statutorily or constitutionally authorized debt, an incorporated WIB could 
not oblige the CEO beyond that permitted by law.  I am not clear how an 
incorporated WIB would be able to separate its public vs private functions, 
and, account for those functions (Note:  I believe there are different OMB 
fiscal standards applicable to public entities vs private corporations).
 
4.  Receipt of WIA funding is conditioned on on the creation of WIBs.  However, 
I don't see anything in WIA that requires local CEOs to outsource the function 
of a WIB to a private entity, or, more significantly, to create a private 
entity to act as the WIB.  On the contrary, CEOs select members of the WIB 
within WIA parameters, and WIBs can only operate within the parameters of the 
local plan.  The fact that a majority of WIB members must be from the private 
sector does not transform the board into a private sector entity.  By law, we 
have many boards in Michigan that have private sector members on them (i.e. are 
not employees of a public agency).  They are still public boards.
 
5.  If a WIB were to be sued for negligence in Michigan, at this point I 
believe our state governmental immunity protections would extend to the WIB 
board members serving on a "public board."  Governmental immunity in Michigan 
is not extended to a private entity or its staff.  (On the contrary, Texas has 
extended immunity to an incorporated JTPA workforce investment board employee.  
See Alamo Workforce Development, Inc et al v Van, 21 SW 3d 428 (March 15, 
2000)).
 
6.  WIBs can become decertified by the governor for failure to comply with WIA 
requirements.  However, whether the governor (or the attorney general) could 
revoke the charter of a private nonprofit corporation for failure to meet WIA 
requirements is a wholly different question.  
 
7. We have numerous state AG opinions that indicate that, in the absence of 
staturoy authorization, a county may not join with another county to form a 
private, non-profit corporation.  Rather, public entities that desire to 
jointly engage in performing a statutorily permitted function can do so through 
what we call our Urban Cooperation Act, MCL 124.531 et seq.  OAG, 1979-1980, 
No. 5750, p. 899 (July 29,1980), provides:
 
"Nonprofit corporations are private legal entities which operate in the 
non-governmental, private sector.  While nonprofit corporations often provide a 
variety of servies to government and the public, the rendering of such services 
does not convert a nonprofit corporation into a public entity....The 
legislature has authorized the formation of certain public legal entitiies and 
the utilization of various intergovernmental contracts to facilitate joint 
governmental efforts for the furnishing of various services....The enumeration 
of powers to counties to enter into interlocal agreements [under the Urban 
Cooperation Act] must be deemed to exclude all others of a similar nature in 
that same field.  Thus the legislature did not intend to authorize such 
intergovernmental undertakings through nonprofit corporations."
 
Notwithstanding, I believe that the WIBs and CEOs could contract with a private 
entity to provide administrative services in accord with the WIB's policy 
decisions and the approved local plan.  
 
This email is, of course, not the formal opinion of the Attorney General in 
Michigan.
 
Sante Perrelli
Assistant Attorney General
State Operations Division
 

>>> "Pomerantz, Jane C.  (GC-LI)" <jpomerantz@xxxxxxxxxxx> 6/21/2005 1:18:07 PM 
>>> >>>


Has anyone reviewed the issue of whether the local WIBs are public 
instrumentalities?  I don't think they are but I wondered if anyone has 
explored the issue.
Thanks JP 
Jane C. Pomerantz 
Deputy Chief Counsel 
Department of Labor & Industry 
Phone: 717-787-4186 
Fax:     717-787-1303 
Wisdom is knowing the right road to take. 
Integrity is taking it. 

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