Somerset County v. Department of Corrections , 133 A.3d 1006 ( 2016 )

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2016 ME 33
Docket: Som-14-101
Argued: November 6, 2014
Decided: February 18, 2016
Panel: SAUFLEY, C.J., and MEAD, GORMAN, JABAR, and HJELM, JJ.*
Majority: SAUFLEY, C.J., and GORMAN, JABAR, and HJELM, JJ.
Dissent: MEAD, J.
SOMERSET COUNTY
v.
DEPARTMENT OF CORRECTIONS
HJELM, J.
[¶1] This case calls for us to construe legislation that bears on a financial
dispute between Somerset County and the former State of Maine Board of
Corrections. The County receives income generated by boarding federal prisoners
at the Somerset County Jail (SCJ), and that income is used to support the jail
budget. When the County received more federal boarding revenue than anticipated
during fiscal year (FY) 2013, it then—without consulting with or receiving
approval from the Board—applied a portion of that surplus income to debt service
for the cost to construct the SCJ facility. In response, the Board, which had
statutory authority to establish and amend most aspects of the counties’
correctional services budgets, correspondingly reduced the amount of the County’s
*
Silver, J., sat at oral argument and participated in the initial conference but retired before this
opinion was adopted.
2
corrections funding from other sources. The County appealed that agency action to
the Superior Court (Somerset County, Alexander, J.), which concluded that
controlling legislation did not authorize the Board to adjust payments to the
County as a result of the County’s unauthorized use of surplus federal boarding
income. On this appeal filed by the Board, we vacate the Superior Court’s
judgment and remand for entry of judgment in favor of the Department of
Corrections (DOC) as the party substituted for the Board.
I. SUBSTITUTION OF PARTIES
[¶2] We first address the justiciability of this action. During the pendency
of this appeal, the State of Maine Board of Corrections was abolished.
See P.L. 2015, ch. 335 (emergency, effective July 12, 2015) (codified in scattered
sections of 1 M.R.S., 4 M.R.S., 5 M.R.S., 14 M.R.S., 30-A M.R.S., and
34-A M.R.S.). At our direction, counsel for the County and for the Board filed
memoranda addressing the question of whether, in light of that legislative
development, the County’s claim remained justiciable. Based on those filings, we
then gave the County an opportunity to file a motion that would bring into this
action an existing entity to substitute for the Board, which no longer exists.
See M.R. Civ. P. 25(c); M.R. App. P. 10.
[¶3] The County filed a motion to substitute DOC for the Board, arguing
that many of the responsibilities held by the Board, including some of the financial
3
management of the county jail system, were transferred to DOC, and so DOC
became the proper entity in this financial dispute to stand in the Board’s shoes.
The County supported its motion with an affidavit executed by Sagadahoc County
Sheriff Joel A. Merry, who had been a member of the Board since 2014 and was
serving as its Chair when it ceased to exist in July 2015. In his affidavit, Sheriff
Merry certified that as the Board wound up its financial responsibilities, it prepared
a final report of its remaining funds as of June 30, 2015. Sheriff Merry stated that
the report, which he appended to his affidavit, “reflects a FY2014 carry forward of
$560,884 for the anticipated expenditure to Somerset County for FY2013, which
[the Board] understood could be distributed, depending upon the result of the
pending litigation.” The sum of $560,884 is the combined amount in dispute in
this action and a companion case that raises the same issues. See infra n.6.
[¶4] DOC filed a memorandum in opposition to the County’s motion,
disputing the County’s assertion that the Board created the reserve referenced in
Sheriff Merry’s affidavit and contending that the financial provisions in the
legislation abolishing the Board did not allow any fiscal room to satisfy the
County’s claims if the County were successful here.
4
[¶5] Although the record creates some measure of ambiguity,1 we cannot
disregard Sheriff Merry’s sworn assertion that funds from the Board’s budget were
earmarked to pay the County if we were to hold that the Board erred by
withholding money otherwise due to the County. Further, pursuant to the
legislation that abolished the Board, the money in the Board’s budget was to be
carried forward to the County Jail Operations Fund General Fund account
administered by DOC. P.L. 2015, ch. 335, §§ 22, 23, 29 (codified at 34-A M.R.S.
§§ 1208-B, 1210-D (2015)). Although the new legislation generally prescribes the
way DOC is to use that money, see P.L. 2015, ch. 335, § 23 (codified at
34-A M.R.S. § 1210-D), it does not affirmatively foreclose the creation of the
reserve fund described in Sheriff Merry’s affidavit.
[¶6] The record therefore is sufficient for us to determine that the process by
which the Board was eliminated preserved the justiciability of this action.
According to Sheriff Merry’s affidavit, money that would be used to satisfy a
judgment was set aside to DOC. Because DOC thereby was given the role of the
responsible party in the event the County were to prevail here, DOC may be
properly substituted for the Board. Cf. Skolnick v. Kerner, 435 F.2d 694, 695
(7th Cir. 1970) (holding that “a pending suit, even if properly instituted against an
1
That ambiguity is created by a second affidavit executed by Sheriff Merry, submitted by DOC in
support of its opposition to the County’s motion, in which he qualified some of the statements he made in
the first affidavit.
5
existing governmental agency, [must] abate when the agency dissolves without a
successor assuming its powers and functions.”). Accordingly, we grant the
County’s motion and substitute DOC for the Board as the defendant and appellant
in this action.
II. BACKGROUND
[¶7] The facts are not in material dispute. In 2008, the Legislature created
the Board of Corrections to oversee Maine’s coordinated corrections system. P.L.
2007, ch. 653, part A, § A-30 (emergency, effective Apr. 18, 2008); 34-A M.R.S.
§§ 1801-1807 (2013).2 One of the Board’s functions was to “[r]eview, amend if
necessary and adopt the correctional services expenditures in each county budget
under Title 30-A, section 710.” 34-A M.R.S. § 1803(1)(A). In 2012, the County
submitted its proposed SCJ budget for FY 2013 to the Board, which approved a
total budget of $6,805,069. The approved expenses did not include debt service
for the County’s new jail facility.
[¶8] The SCJ budget was funded primarily through three sources. First, the
County itself was to pay $4,863,215 from taxes assessed and collected from local
2
Several of these sections have since been amended and other sections have been added. Of those
modifications, among the most significant, for purposes of this case, can be found at P.L. 2013, ch. 598,
§§ 8-10, 12-22, 27, 41 (effective May 1, 2014) and P.L. 2015, ch. 335 (emergency, effective July 12,
2015) (abolishing the Board of Corrections). Although many of the statutes cited in this opinion have
undergone significant changes, all citations are to statutes in effect at the time these issues arose.
6
municipalities. See 30-A M.R.S. § 701(2-A) (2012).3 Second, the County was to
receive $1,131,768 from the State Investment Fund, which consists of money
appropriated from State General Fund accounts and Other Special Revenue Funds
accounts. See 34-A M.R.S. §§ 1805(1), (3). Third, the budget was supported with
estimated revenue of $450,960 that the County expected to receive from the United
States Marshals Service to board federal prisoners at the SCJ.4 The record
indicates that this was the total amount of federal boarding revenue that the County
expected to receive in FY 2013, based on the amount of income actually received
during the previous fiscal year.
[¶9] On July 31, 2012, the Board approved payment of $560,833 to the
County, which constituted the State Investment Fund disbursement for the first two
quarters of FY 2013.
[¶10] When the second quarter of FY 2013 ended, the County had already
received $660,259 in federal prisoner boarding revenue. Because this amount
substantially exceeded the amount of federal revenue that the County expected to
receive for the entire fiscal year, on January 2, 2013, the County Commissioners
3
This statute was amended in a way that is not pertinent to this case effective July 1, 2013, see P.L.
2011, ch. 431, § 1, and underwent subsequent amendments before it was repealed and replaced by P.L.
2015, ch. 335 §§ 9, 11 (emergency, effective July 1, 2015) (codified at 30-A M.R.S. § 701(2-C) (2015)).
Additionally, the amounts of funding designated by statute differ from the corresponding amounts
referenced in the record. Although these discrepancies are not explained in the record, they are not
material to the issues presented on appeal.
4
By contract, the Marshals Service pays the County $90 as the daily board fee for each federal
prisoner and $22.50 per hour for transportation.
7
passed Resolution 13-007, which directed how federal prisoner boarding revenue
in excess of the originally anticipated amount of $450,960 would be used. Under
the Resolution, twenty-five percent of that surplus would be transferred into a
dedicated Jail Capital Improvement Fund, and the remaining seventy-five percent
would be applied to the County’s jail debt service. Resolution 13-007 was made
retroactive to July 1, 2012, which was the starting date for FY 2013. The County
did not seek or obtain approval from the Board for this disposition of surplus
federal boarding revenue.
[¶11] The County submitted a financial report to the Board for
January 2013, showing that it had applied federal boarding receipts of $445,547 to
the Jail Capital Improvement Fund and the SCJ debt as authorized by the
Resolution.5 The County then requested its third and fourth quarter disbursements
for FY 2013 from the Board. At a meeting held in March 2013, the Board deferred
any decision on the County’s request until it could consider whether the requested
disbursements would be affected by the County’s use of the surplus federal
prisoner boarding revenue under the Resolution. During this period of time in
5
In documents reflecting federal boarding revenue, the County presented this amount as a loss for
January 2013 even though the County in fact received federal boarding revenue for that month. Creating
a negative figure was the accounting mechanism the County employed to change the use of federal
boarding revenue that was approved by the Board in the FY 2013 budget to the use prescribed by
Resolution 13-007.
8
February and March 2013, the Board received projections forecasting a State
Investment Fund deficit of between approximately $725,000 and $965,000.
[¶12] At a meeting held on April 3, County representatives argued to Board
representatives that the County was entitled to apply surplus federal boarding
revenue toward its jail debt service without the Board’s approval. After that
meeting, the Board provided the County with a further opportunity to submit
additional argument or supporting material. County representatives did not
respond, and on April 23 the Board voted to withhold the third quarter State
Investment Fund disbursement of $280,442 that was due to the County under the
original budget.6 Three days later, the Board sent a letter to the County explaining
its position that under Maine law, payments from the State Investment Fund can be
used only for correctional services approved by the Board; that the County’s use of
surplus federal prisoner boarding revenue was effectively an unauthorized use of
State Investment Fund money; and that the Board was therefore foreclosed from
disbursing the third quarter payment. The Board further explained that if it were to
release that payment to the County, it would not be administering “a coordinated
correctional system that demonstrates sound fiscal management” as was required
by statute. See 34-A M.R.S. § 1801(1).
6
According to the Superior Court’s order, the Board also withheld the fourth quarter disbursement
from the State Investment Fund and the County filed a Rule 80C appeal from that decision. By
agreement of the parties, that separate action has been stayed pending resolution of the case at bar.
9
[¶13] Pursuant to 34-A M.R.S. § 1803(9), 5 M.R.S. §§ 11001 and 11002
(2014), and M.R. Civ. P. 80C, the County appealed to the Superior Court, which
vacated the Board’s decision to withhold the third quarter State Investment Fund
disbursement. From that judgment, the Board filed a timely appeal.7
III. DISCUSSION
[¶14] “When the Superior Court acts in an intermediate appellate capacity
pursuant to M.R. Civ. P. 80C, we review the [administrative agency’s] decision
directly for errors of law, abuse of discretion, or findings not supported by
substantial evidence in the record.” Merrill v. Me. Pub. Emps. Ret. Sys.,
2014 ME 100, ¶ 13, 98 A.3d 211 (quotation marks omitted). “The party seeking to
overturn the Board’s decision bears the burden of persuasion on appeal.”
Id. (quotation marks omitted). To determine if the Board had the statutory
authority to amend the County’s allocation of State Investment Fund money in
response to the County’s use of surplus federal revenue under Resolution 13-007,
we first examine the statutes that governed the Board’s role in financial matters
7
The Board argues that the County is not entitled to relief on appeal because it failed to exhaust its
administrative remedies. We find no merit to this contention. The claimed failure is based on the
County’s apparent choice not to present further argument when the matter was pending before the Board
in April 2013. The County, however, had made its position known to the Board, which thereby was in a
position to consider and act on it. Cf. Carrier v. Sec’y of State, 2012 ME 142, ¶ 18, 60 A.3d 1241
(“Issues not raised at the administrative level are deemed unpreserved for appellate review.” (quotation
marks omitted)). Further, the Board does not point to an established or settled procedure that required the
County to take action of some sort. Because the County was an active participant in the agency process
and conveyed its position for the Board’s consideration, we decline to attach significance to the County’s
lack of response to the Board’s isolated ad hoc invitation.
10
pertinent to county jails, and we then apply those statutes to the parties’ specific
dispute.
A. Statutory Overview of the Coordinated Corrections System
[¶15] The Board served as the comprehensive and integrated management
authority over “a coordinated correctional system” of local facilities and programs.
34-A M.R.S. § 1801(1). The express statutory purpose of the Board was “to
develop and implement a coordinated correctional system that demonstrates sound
fiscal management, achieves efficiencies, reduces recidivism and ensures the safety
and security of correctional staff, inmates, visitors, volunteers and surrounding
communities.” Id. To allow the Board to discharge these responsibilities, the
Legislature gave the Board considerable breadth of responsibility and authority. In
areas aside from financial management, the Board’s responsibility and authority
included determining how individual correctional facilities were to be used
(including whether a facility will be downsized or even closed); promulgating
standards for a number of correctional practices, including those affecting the
treatment of inmates with mental illnesses; implementing a certificate-of-need
process to determine whether correctional construction projects could proceed; and
receiving and reviewing recommendations from many sectors and stakeholders
regarding “the delivery of state and county corrections services.”
Id. § 1803(2)-(6).
 11
[¶16] Significant to this case, the Legislature also empowered the Board to
comprehensively oversee and control the finances of county correctional facilities.
In order to achieve the goal of developing and implementing a “system that
demonstrates sound fiscal management,” id. § 1801(1)(C), the Board was required
to create “a plan to achieve systemic cost savings and cost avoidance” through
operational efficiencies, id. § 1803(1). As part of this grant of authority, the Board
was required to “[r]eview, amend if necessary and adopt the correctional services
expenditures in each county budget.” Id. § 1803(1)(A). The Board also was
responsible for identifying and approving “cost-saving agreements and
efficiencies” to reduce expenses and share resources. Id. § 1803(5)(A). Further,
the Board had the administrative responsibility to submit to the Governor a budget
for the State Investment Fund, which was one of the two primary sources of capital
used to operate the correctional services it oversaw. Id. §§ 1803(5)(E), 1805. As
is clear from the Legislature’s broad and multi-layered grant of power and
authority, the Board had a comprehensive level of control over local correctional
budgets.
[¶17] By statute, there were two principal categories of funding that
financed the coordinated correctional system: money collected by counties from
municipalities pursuant to 30-A M.R.S. § 701(2-A), and the State Investment Fund
created in 34-A M.R.S. § 1805.
12
[¶18] To generate the first of these funding sources, each county was
required to collect a fixed amount from local municipalities. 30-A M.R.S.
§ 701(2-A). Counties were then required to use those municipal funds for
“correctional services, excluding debt service.” Id. As defined by section
701(2-A), the term “‘correctional services’ include[d] the management services,
personal services, contractual services, commodity purchases, capital expenditures
and all other costs, or portions thereof, necessary to maintain and operate
correctional services.”8 The express terms of section 701(2-A) made this definition
applicable only to that subsection.
[¶19] Because counties were prohibited from paying “debt service” with the
municipal funds collected pursuant to section 701(2-A), counties had to pay jail
construction debt from other revenue or funds. To retire county jail debt that
existed as of July 1, 2008, which is the date the Board came into existence,
30-A M.R.S. § 701(2-B) (2012) required counties to collect taxes from
municipalities separately from funds collected under section 701(2-A).
8
This statute was amended in 2013 so that “county jail debt” became excluded from the definition of
“correctional services,” instead of “debt service” being a type of correctional service to which the
municipal funds may not be applied. See P.L. 2013, ch. 598, § 3 (effective May 1, 2014) (codified at
30-A M.R.S. § 701).
13
[¶20] Title 30-A M.R.S. § 924 (2012)9 specified the ways that counties were
required to use unencumbered funds that remained at the end of a fiscal year. As
pertinent here, subsection 924(3) required—as it does now—that surplus
“[c]orrectional services funds” be used only for “corrections services,” in contrast
with surplus funds in other accounts, which were not subject to that type of
restriction. Although the Legislature defined “correctional services” in section
701(2-A), it did not define the terms “correctional services funds” or “corrections
services” as used in section 924. The definition of “correctional services” found in
section 701(2-A) was confined to that subsection and did not apply to the same
phrase in section 924, leaving the phrase undefined in that setting. See Aydelott v.
City of Portland, 2010 ME 25, ¶ 12, 990 A.2d 1024.
[¶21] The second of the two principal funding categories was the State
Investment Fund, which had two sources: money appropriated from the State’s
General Fund, and accounts that made up “Other Special Revenue Funds,” which
contained money credited from several specific sources and money otherwise
designated for use in the State Investment Fund. 34-A M.R.S. § 1805(1), (3). The
purpose of the State Investment Fund was to supplement the municipal funds
collected by counties pursuant to section 701(2-A), in order “to support the actual
9
Section 924 has since been amended, see P.L. 2013, ch. 16, § 10 (effective Oct. 9, 2013) (codified at
30-A M.R.S. § 924 (2014)), but the amendment does not affect this appeal.
14
costs of corrections” that were approved by the Board and the Legislature.
34-A M.R.S. §§ 1803(5)(A), (E), 1805(2). Because the amount of the counties’
payments into the coordinated correctional system was fixed, the State was
responsible for providing additional money, including increases over time, needed
to finance the system.
B. Application of Statutes to Federal Boarding Revenue
[¶22] We now consider the effect of this statutory framework on the
County’s use of surplus federal boarding revenue.
[¶23] The Board argues that the County did not have the statutory authority
to apply surplus federal boarding revenue to reduce its jail debt. The Board further
contends that when the County did so, the Board was then either required or, as a
discretionary matter, authorized to withhold money that was otherwise due to the
County under the budget it had approved for FY 2013. The County contends that
the Board had no authority to control federal boarding revenue received by the
County.
[¶24] The statutes governing the financial relationship between the Board
and county jails did not expressly address the use or effect of federal boarding
revenues that counties might have received: federal boarding revenue was not one
of the funding sources specifically described in the statutes governing the
coordinated correctional system, and the statutes did not explicitly mention or
15
address the permissible uses of that money or the Board’s right to control it.10 The
issue presented here is where federal boarding revenue fit within the overall
financial framework for the coordinated correctional system established by the
Legislature.11
[¶25] The dispute between the parties is entirely a question of statutory
interpretation. In construing statutes, “our single goal is to give effect to the
Legislature’s intent in enacting the statute.” Dickau v. Vt. Mut. Ins. Co.,
2014 ME 158, ¶ 19, 107 A.3d 621. To accomplish this result in the case of a
statute administered by an administrative agency,
[o]ur first inquiry is to determine de novo whether the statute is
ambiguous. An ambiguous statute has language that is reasonably
susceptible of different interpretations. Second, we either review the
agency’s construction of the ambiguous statute for reasonableness or
plainly construe the unambiguous statute. We accord great deference
to the agency’s interpretation if the statute is considered ambiguous,
but will apply a different interpretation if the statute plainly compels a
contrary result.
10
The only statutory reference to federal boarding revenue was one that removed from the Board
responsibility to establish boarding rates. 34-A M.R.S. § 1803(1)(C) (2013).
11
Although the statutes that were in effect at the time relevant to this case do not expressly address
this issue, thereby requiring us to engage in the process of statutory construction, the Legislature
subsequently amended the governing statute to allow counties to retain both federal and state boarding
revenue and allocate it in a way that is similar or identical to the formula set out in Resolution 13-007,
without an offset against the appropriation approved by the Board. 34-A M.R.S. § 1812(4) (2014). After
the events at issue here, the Legislature also enacted a statute giving the Board authority to “curtail funds
as necessary to address shortfalls.” 34-A M.R.S. § 1812(5) (2014). Even though many of these statutes
have been affected by even more recent legislation, because these statutes were not in effect at the time
the Board withheld the County’s appropriation in FY 2013, and because the Legislature did not make
them retroactive, they are not applicable to this action, and we decline to use them as post hoc interpretive
aids to the construction of statutes that were in effect previously. See, e.g., MacImage of Me., LLC v.
Androscoggin Cty., 2012 ME 44, ¶¶ 22-23, 40 A.3d 975.
16
Merrill, 2014 ME 100, ¶ 13, 98 A.3d 211 (quotation marks omitted).
[¶26] We conclude that under the statutory scheme that governed the fiscal
relationship between the Board and county jail administration, the Board was
authorized to control the disposition of federal boarding revenue for the following
reasons: (1) a detailed examination of the applicable statutes reveals that revenues
generated by boarding federal prisoners constituted “correctional services funds”
and were not subject to the County’s control; (2) when the statutory coordinated
correctional system is viewed at the macro level, the Board was the entity with
ultimate control over county jail funding issues, which would include the use of
federal boarding revenue; and (3) the County’s assertion that the Board had no
control over the use of federal boarding revenue is undermined by the County’s
own agreement to use that revenue as a funding source for the budget that it
submitted to the Board for the Board’s approval. We will examine these three
issues in turn and then review the Board’s actions.
1. Federal Boarding Revenue as “Correctional Services Funds”
[¶27] First, section 924(3) of title 30-A provided, as it still does,
“Correctional services funds may be expended only for corrections services.”
Federal boarding revenue consists of payments made by a federal agency to
compensate a county for housing, transporting, and otherwise providing for federal
17
prisoners. Those services are “correctional services” within the plain meaning of
that phrase. Revenues generated by those services were therefore “correctional
services funds” and, under section 924, may have been used only for “corrections
services.”12 The resulting question is whether payments made toward the
construction costs of a jail were expenditures for “corrections services.”
[¶28] The Legislature did not define the phrase “corrections services” for
purposes of section 924. Because it is susceptible to more than one interpretation,
it is ambiguous. See Merrill, 2014 ME 100, ¶ 13, 98 A.3d 211. It certainly
encompasses the day-to-day support needed to maintain a facility’s population and
to achieve the programmatic objectives of the coordinated correctional system.
However, it also may reasonably be construed more expansively to include
construction of the infrastructure and physical plant that is required for the system
to exist and operate. Under this latter interpretation of section 924, the cost to
build a jail facility would be an expenditure for corrections services.13
12
Section 924 addresses the permissible uses of unencumbered funds that remain unspent at the end
of a fiscal year, although the particular provision at issue is not limited in that way. Neither party argues
that the statutory restriction on the use of correctional services funds would arise only at that time.
Further, such a construction would be a difficult one because it would allow counties to avoid the effects
of the restriction simply by disposing of surplus funds at any other time—even moments prior to the end
of a fiscal year, thereby defeating the clear legislative intent of the statute. Therefore, although the
financial transactions relevant to this action did not coincide with the end of a fiscal year, they remain
controlled by the fiscal restriction created in section 924.
13
In its assertions about the meaning of section 924, the Board attaches significance to a subsequent
amendment to section 701(2-A), which provides, “Correctional services does not include county jail
debt.” 30-A M.R.S. § 701(2-A) (2014). This contention fails for two reasons. First, in both versions of
section 701(2-A), the Legislature expressly limited the definition to that subsection, and it therefore does
18
[¶29] Because of the particular nature of the parties’ dispute, however, we
need not specifically determine whether, as a matter of statutory interpretation of
section 924, corrections services expenditures could be interpreted to include
payments toward a jail’s construction cost. Regardless of how the statute is
construed, the County’s unilateral application of federal boarding revenue toward
the construction costs of the jail was contravened by the legislative scheme
governing the coordinated correctional system.
[¶30] If the construction of the jail facility were a type of “corrections
service,” then any use of federal revenue to pay for the construction debt would
have been subject to the Board’s control because pursuant to section 1803(1)(A),
the Board was vested with oversight authority over the counties’ “correctional
services expenditures.” When sections 924 and 1803(1)(A) are read in this way,
the County would not be entitled to dedicate federal boarding revenue to its jail
debt without the Board’s approval. Here, without the Board’s approval—and in
fact over its opposition—the County diverted a portion of a revenue stream that
would have been under the Board’s control. Under this reading of the statute, the
County’s actions would be improper.
not carry over to other statutes, such as section 924. Second, we decline to engage in the logical fallacy
of attempting to discern the Legislature’s intention underlying an earlier version of a statute through the
lens of subsequent changes to that law. See MacImage of Me., LLC, 2012 ME 44, ¶¶ 22-23, 40 A.3d 975.
19
[¶31] Alternatively, if the construction of the county jail were not a
“corrections service” within the meaning of section 924, then that statute would
have barred the County from using federal boarding revenue to pay for the
construction, because that revenue, comprising “[c]orrectional services funds,”
could have been used only for corrections services. Under this alternative reading
of the statute, such services would not encompass construction costs, and the
County would have misapplied corrections-related funds.
[¶32] The County argues that the Board did not have statutory authority to
control federal boarding revenue because that money was neither a municipal tax
assessment nor part of the State Investment Fund over which the Board had
express fiscal authority. For several reasons, however, this view is too narrow.
First, pursuant to 30-A M.R.S. § 710(2) (2013),14 the Board had authority to
“review, amend if necessary and approve each county correctional services
budget.” The plain language of this statute created a grant of authority that was not
limited to the mere use of budgeted funds but included other aspects of a budget,
including revenue. Second, it would make little sense to limit the fiscal authority
of the Board, which had the primary authority over the coordinated correctional
system, to controlling expenditures without the ability to reach the corresponding
14
Section 710(2) was later amended and repealed. See P.L. 2013, ch. 598, § 6 (effective May 1,
2014) (codified at 30-A M.R.S. § 710 (2014)); see also P.L. 2015, ch. 335 § 14, repealing section 710
(emergency, effective July 1, 2015).
20
essential feature of a budget, namely, income. We cannot conclude that the
Legislature gave the Board responsibility to ensure “sound fiscal management” of
the coordinated correctional system, 34-A M.R.S. § 1801(1), with authority
extending to only one side of the balance sheet.
[¶33] Additionally, under the County’s analysis, it would have been entitled
to use federal boarding revenue for any purpose and still incur costs to maintain
federal prisoners, which then would have had to be subsidized by the State
Investment Fund. We find it unlikely that the Legislature intended such a result
when it established the coordinated correctional system administered by the Board.
2. Overall Role of the Board in Financial Governance of County Jails
[¶34] Second, because the statutes that were in effect when this dispute
arose did not provide clear guidance about the use and effect of federal boarding
revenue, we place particular weight on the overall statutory structure that governed
the coordinated correctional system. The broad view of that statutory scheme
reveals the Legislature’s intent to vest the Board with a comprehensive level of
control over the finances of county jails. As the Legislature itself characterized the
arrangement, the correctional system was a “coordinated” one. 34-A M.R.S.
§ 1801(1). Although the Board and the counties were constituents, the system was
a unified one, and the Board served as the central, unifying element. The system’s
cohesiveness would have been diminished if counties were to operate
21
independently on financial matters that bore directly on corrections. Such financial
matters were within the express grant of power to the Board and were fundamental
to the operation of the coordinated system.
3. The County’s Submission of Federal Boarding Revenue to the
Board’s Control
[¶35] Finally, the County’s assertion that the Board had no authority to
“count[] or control[]” federal boarding revenue is undermined by the County’s own
agreement to include that money in the proposed budget it submitted to the Board
for the Board’s approval. In the proposed FY 2013 budget that the County
presented to the Board, the County proposed to use all of that fiscal year’s
anticipated federal boarding revenue to pay expenses included in the corrections
budget that the Board was authorized to approve and control. This plainly
demonstrates that, contrary to its present assertion, the County itself treated federal
boarding revenue as a funding source controlled by the Board.
4. The Board’s Actions
[¶36] For these reasons, the Board correctly concluded that the County
acted outside of its legal authority by using surplus federal boarding revenue for
purposes that the Board had not approved. Based on this determination, the Board
declined to make the third quarter disbursement from the State Investment Fund,
thereby effectively amending the County’s corrections budget. Pursuant to section
22
1803(1)(A), the Board was fully authorized to “amend if necessary and adopt the
correctional services expenditures in each county budget.” We afford deference to
the Board’s determination that it was “necessary” to withhold payment.
34-A M.R.S. § 1803(1)(A); see also id. § 1801(1) (charging the Board with the
responsibility of developing and implementing a “system that demonstrates sound
fiscal management”); Merrill, 2014 ME 100, ¶ 13, 98 A.3d 211 (stating that
agency action is reviewed for an abuse of discretion).
[¶37] The record supports that determination. As a general matter, the
Board was entitled to determine that when the County used surplus correctional
revenues for debt service rather than for needs addressed in an established
corrections budget, it was necessary to amend the budget and correspondingly
reduce the amount of financial support that the Board had agreed to provide.
Additionally, when the County unilaterally allocated surplus correctional services
funds to its own objectives, the actual financial demands of the state-wide
coordinated correctional system had placed pressure on the budget, and in fact the
Board anticipated that the system’s existing funding would be insufficient to cover
the FY 2013 budget. Given these circumstances, the Board was warranted in
determining that it was “necessary” to adjust the amount of appropriations from
other sources for the County’s corrections budget.
23
[¶38] The County further argues that the Board abused its discretion when it
failed to disburse amounts otherwise due from the State Investment Fund, because
the Board did not withhold appropriations from any other county. The County also
points to the Board’s willingness to make a quarterly payment to another county
that the Board characterized as a “team player,” even if the payment exceeded that
county’s actual needs. Somerset County, however, created a unique situation
because it diverted correctional funds that, if used in a way that was within
statutory parameters, would have reduced its need for payments from the
State Investment Fund. Regardless of whether the Board properly decided to make
State Investment Fund disbursements to other counties, we conclude that the Board
acted within its authority when it took action affecting the disbursement otherwise
due to Somerset County.
IV. CONCLUSION
[¶39] We therefore hold that the Board did not err when it refused to make
the third quarter State Investment Fund payment based on its determination that the
action was necessary to offset the County’s unauthorized application of federal
boarding revenue to jail construction debt service.
The entry shall be:
The Department of Corrections is substituted for
the Board of Corrections.
24
Judgment vacated. Remanded to Superior Court
for entry of judgment in favor of the Department
of Corrections.
MEAD, J., dissenting.
[¶40] I respectfully dissent. I do not disagree with the Court’s discussion of
the history and statutes relating to the establishment of the State Board of
Corrections. I agree also with the Court’s statement of the central issue raised in
this matter: “The issue presented here is where federal boarding revenue fit within
the overall financial framework for the coordinated correctional system established
by the Legislature.” Court’s Opinion ¶ 24. I agree that the answer turns on
questions of statutory interpretation. Court’s Opinion ¶ 25.
[¶41] The legislative record is abundantly clear that the motivation behind
the creation of the Board of Corrections was to reap the benefits afforded by
centralized administration of the correctional services rendered by the state’s
fifteen county jails, each of which was previously required to administer its own
incarceration, pretrial detention, and transport services. The Board was vested
with broad authority to develop goals and processes to accomplish cost savings
while serving overarching correctional objectives.
25
[¶42] Maine’s criminal justice system requires the availability of short-term,
local detention facilities. Each county jail has historically provided these services
with little or no collaboration or communication with other county jails offering
identical services. As jail costs have risen, counties have struggled to shoulder
onerous financial burdens. As the Court points out, the Board of Corrections was
the Legislature’s response to the need to reconfigure the county jail system.
Court’s Opinion ¶ 15.
[¶43] Several counties undertook to modernize their aging jail facilities
prior to the creation of the State Board of Corrections and incurred substantial
construction debt in the process. Although the record is less than clear, it can fairly
be inferred that Somerset County significantly overbuilt its new county jail with a
clear intent to recoup construction costs by using its surplus capacity to house
inmates from courts of other jurisdictions (principally the federal courts) and apply
the boarding fees to retirement of the construction debt. The boarding capabilities
of the Somerset County Jail create a quasi-proprietary income-generating
mechanism for the County.
[¶44] In April 2015, the Board of Corrections withheld the previously
authorized disbursement due to Somerset County from the State Investment Fund
after having been advised that Somerset County directed $445,547 in surplus
federal boarding revenues to its Jail Capital Improvement Fund and existing jail
26
debt. The Board predicated its action upon the assertion that federal boarding
revenues fell within its exclusive purview and authority.
[¶45] Through the approach it took, the Board of Corrections overstepped
its statutory authority and effectively appropriated these proprietary boarding fees.
The Board treated the federal boarding revenues as though they were assets of the
State Board of Corrections Investment Fund as established by 34-A M.R.S. § 1805
(2013).15 For all of its forward thinking and planning, Somerset County’s reward
was to have its earmarked debt-reduction funds diverted and replaced with the
Board’s disheartening suggestion that it seek debt reduction funds through yet
another tax on the residents of Somerset County. I do not believe the Legislature
intended such a result, and I believe the plain language of the statute provided
otherwise.
[¶46] The Board’s broad grant of authority established by 34-A M.R.S.
§ 1803 (2013) was clearly directed to the objectives of obtaining cost savings and
encouraging efficiency within the county jails while accomplishing the jails’ core
responsibility to house prisoners and pretrial detainees from the state judicial
15
Title 34-A M.R.S. § 1805(3) (2013) designated sources of funds for the Investment Fund. It did not
provide for boarding fees to be incorporated into the fund. Title 34-A M.R.S. §§ 1801-1807 were
repealed by P.L. 2015, ch. 335, § 27 (emergency, effective July 12, 2015).
27
system.16 No language appeared anywhere within title 34-A, chapter 1,
subchapter 5 suggesting that the Board was created to address any aspect of
boarding federal detainees. Indeed, the only mention of federal detainees was
found at 34-A M.R.S. § 1803(1)(C), which clearly provided that the Board had no
role in setting boarding rates for federal inmates.17 Accordingly, the word
“corrections” and the phrases “correctional services” and “correctional services
funds,” 34-A M.R.S. §§ 1801-1806 (2013), must be viewed in the context of the
jails’ duty to house inmates committed by the courts of the State of Maine. Thus,
the revenue stream received by the county for housing detainees committed by the
federal courts or courts of foreign jurisdictions was outside the scope of authority
of the Board of Corrections.
[¶47] The Court invokes 30-A M.R.S. § 924(3) (2012), which provided in
part that “[c]orrectional services funds may be expended only for corrections
services,”18 for the proposition that
16
The county jails were and are under no legal obligation to accept detainees from any jurisdiction
other than the State of Maine.
17
Title 34-A M.R.S. § 1803(1)(C) (2013) provided: “[T]he board is charged with the following
responsibilities and duties. . . . [e]stablish[ing] boarding rates for the coordinated correctional system,
except boarding rates for federal inmates.”
18
Section 924 governed unencumbered surplus funds remaining at the end of a fiscal year. It
provided, in part:
If not used for [designated higher priority] purposes, any remaining surplus funds may
not be expended but must be retained as working capital for the use and benefit of the
county except that correctional unencumbered surplus may not lapse to the county’s
28
[f]ederal boarding revenue consists of payments made by a federal
agency to compensate a county for housing, transporting, and
otherwise providing for federal prisoners. Those services are
“correctional services” within the plain meaning of that phrase.
Revenues generated by those services were therefore “correctional
services funds” and, under section 924, may have been used only for
“corrections services.”
Court’s Opinion ¶ 27.
[¶48] I respectfully disagree with the Court’s reasoning. The act of
housing, feeding, and transporting federal prisoners while they are in custody may
arguably be considered to be providing correctional services. However, the fact
that a county receives contracted fees in return for those services that may, or may
not, reflect the out-of-pocket value of such services, does not ipso facto establish
that those monies are “correctional services funds.” Indeed, common usage would
suggest that correctional services funds are those funds expended by the
correctional facility, not the incoming funds that might, in the absence of the
recently enacted statute, be applied to other noncorrectional debts or obligations of
the governmental entity.19
noncorrectional fund balance but must be carried forward as the county or regional jail
authority correctional services fund balance. Correctional services funds may be
expended only for corrections services.
30-A M.R.S. § 924(3) (2012). Neither section 924, nor any portion of former title 34-A, chapter 1,
subchapter 5 defined “correctional services funds.”
19
The Court opines that the Board had authority over funding sources as well as expenditures.
Court’s Opinion ¶ 32. I respectfully disagree. Section 1803(1)(A) provided that the Board’s authority
was limited to the following action: “Review, amend if necessary and adopt the correctional services
29
[¶49] The Court correctly notes that Somerset County included federal
boarding revenues in its budget request to the Board, and the Board based its
funding allocations to the County based upon that budget request. Court’s
Opinion ¶ 35. This action by the County would suggest that it accepted the notion
that the Board had the authority to consider federal boarding revenues in allocating
funding grants to the county jails. In the middle of fiscal year 2013, however, the
County apparently changed its position regarding the Board’s authority over
federal boarding revenues. While this midstream change of policy is clearly not
conducive to positive inter-governmental relations, the fact remains that past
practice, or past positions expressed, cannot create legal authority in the face of
contradictory statutory provisions.20 Stated otherwise, governmental entities
cannot create authority, or erase authority, merely by establishing a practice or
policy.
expenditures in each county budget under Title 30-A, section 710.” 34-A M.R.S. § 1803(1)(A) (2013)
(emphasis added).
20
Paradis v. Town of Peru, 2015 ME 54, ¶ 8, 115 A.3d 610 (“Administrative bodies . . . are statutory
in nature and can only have such powers as those expressly conferred on them by the Legislature, or such
as arise therefrom by necessary implication to allow carrying out the powers accorded to them.”
(quotation marks omitted)); Molasses Pond Lake Ass’n. v. Soil & Water Conservation Comm’n,
534 A.2d 679, 681 (Me. 1987) (“[I]t is axiomatic that State agencies may exercise only that power which
is conferred upon them by law.”); MacDonald v. Sheriff, 148 Me. 365, 372, 94 A.2d 555 (1953) (“The
Commission being purely a creature of statute is subject to the rule universally applicable to all bodies
that owe their existence to legislative act. It must look to the statute for its authority.” (quotation marks
omitted)); see also Medellin v. Texas, 552 U.S. 491, 532 (2008) (saying that “‘[p]ast practice does not, by
itself, create power’” in the context of executive action by the President) (alteration in original) (quoting
Dames & Moore v. Regan, 453 U.S. 654, 686 (1981)).
30
[¶50] The Board of Corrections argues quite properly that the State should
not underwrite the costs of federal prisoners being held in the county jails. This
issue could have easily been addressed, if either party had been so inclined, as part
of the budget review process. The per capita expense for individual inmates could
have been determined, and the budget then reduced by the cost of the number of
federal prisoners anticipated to be housed during the budget term. Federal
revenues would have been used to pay for federal prisoners; state revenues would
have been used to pay for state prisoners. To the extent that the County realized a
profit on its federal prisoners, that profit could have been directed toward any other
purpose that the Commissioners deemed appropriate and that the law allowed.
[¶51] In this matter, both parties bear some responsibility for the new jail
funding process devolving into dispute in Somerset County. The County’s
fundamental change in its approach to the treatment of federal boarding revenues
in the middle of a disbursement cycle signaled a potential crisis in the management
of the State Investment Fund. The Board of Corrections had a powerful tool at its
disposal, however, to address any perceived overages paid to Somerset County—
an adjustment during the next budgeting cycle. The Board’s error in exceeding its
authority by including federal boarding revenues in its computations was
compounded by its unilateral and punitive action of withholding previously
authorized allotments to Somerset County. Although I reach this conclusion upon
31
a rationale that differs slightly from that employed by the Superior Court, I am in
full accord with the Superior Court’s finding that the Board acted in excess of its
authority when it withheld payments from the Investment Fund with a stated
purpose to prohibit use of any and all federal prisoner boarding revenues—and
particularly amounts in excess of the budgeted $475,960—for payments on jail
debt or any other corrections-related purpose. I would affirm the Superior Court’s
judgment vacating the decision of the Board of Corrections and remanding the
matter to the Board for further proceedings to determine how the Board’s unmet
obligations for fiscal year 2013 should be addressed.
On the briefs:
Janet T. Mills, Attorney General, and Andrew L. Black, Asst. Atty. General,
Office of the Attorney General, Augusta, for appellant State Board of
Corrections
Michael Hodgins, Esq., and N. Joel Moser, Esq., Bernstein Shur, Augusta,
for appellee Somerset County
At oral argument:
Andrew L. Black, Asst. Atty. General, for appellant State Board of
Corrections
Michael Hodgins, Esq., for appellee Somerset County
32
On the motion to substitute party:
Michael Hodgins, Esq., and Meredith C. Eilers, Esq., Bernstein Shur,
Augusta, for movant and appellee Somerset County
Janet T. Mills, Attorney General, and Diane Sleek, Asst. Atty. General,
Office of the Attorney General, Augusta, for respondent and substituted
appellant Department of Corrections
Somerset County Superior Court docket number AP-2013-4
FOR CLERK REFERENCE ONLY