Bill Text: MI SB0956 | 2013-2014 | 97th Legislature | Introduced

---

Bill Title: Education; financing; issuance of school financing stability bonds; allow. Amends sec. 1356 of 1976 PA 451 (MCL 380.1356). TIE BAR WITH: SB 0952'14, SB 0953'14, SB 0955'14

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2014-05-21 - Referred To Committee On Appropriations [SB0956 Detail]

Download: Michigan-2013-SB0956-Introduced.html

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SENATE BILL No. 956

 

 

May 21, 2014, Introduced by Senators PAPPAGEORGE and KAHN and referred to the Committee on Appropriations.

 

 

 

     A bill to amend 1976 PA 451, entitled

 

"The revised school code,"

 

by amending section 1356 (MCL 380.1356), as amended by 2002 PA 181.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1356. (1) Notwithstanding section 1351, a school district

 

that has an operating or projected operating deficit in excess of

 

$100.00 per membership pupil may borrow and issue its negotiable

 

interest bearing notes or bonds for the purpose of funding the

 

deficit in accordance with this section. or that has outstanding

 

state aid anticipation notes issued under section 1225 through the

 

Michigan finance authority may, with the approval of the state

 

treasurer, borrow and issue notes or bonds for the purpose of

 

eliminating the deficit or refunding or refinancing the state aid

 

anticipation notes in accordance with this section. Notes or bonds

 

issued under this section shall be known as school financing

 

stability bonds and may be issued only through the Michigan finance

 

authority. This authority is in addition to and not in derogation

 

of any power granted to a school district by any other provision of

 

this act. However, except for the purpose of funding an operating

 

or projected operating deficit resulting from a state tax tribunal

 

order or a court order, a school district shall not initiate the

 

procedures to borrow money or issue notes or bonds under this

 

section after January 1, 1994.

 

     (2) Before a board of a school district issues notes or bonds

 

under this section, the board of the school district shall provide

 

by resolution for the submission of the following certified and

 

substantiated information to the department of treasury:

 

     (a) There exists or will exist an operating deficit in the

 

school district in excess of $100.00 per membership pupil or the

 

school district has outstanding state aid anticipation notes issued

 

under section 1225 through the Michigan finance authority.

 

     (b) During If the school district has a deficit, during or

 

before the fiscal year in which the application is made, the school

 

district has made every available effort to offset the deficit. ,

 

including submission of a question to the school electors of the

 

district to increase the rate of ad valorem property taxes levied

 

in the school district.

 

     (c) The school district has a plan approved by the school

 

board state treasurer that outlines actions to be taken to balance

 

future expenditures with anticipated revenues and to repay any

 

bonds or notes issued under this section, and that demonstrates

 

that the finances of the school district are structurally balanced.

 

The state treasurer may recognize a deficit elimination plan or

 

enhanced deficit elimination plan under section 1220 as satisfying

 

the requirements for an approved plan under this subdivision.

 

     (3) The existence of the an operating or projected operating

 

deficit, and the amount of the operating or projected operating

 

deficit, and the amount necessary to refund or refinance any school

 

aid anticipation notes issued under section 1225 through the

 

Michigan finance authority shall be determined by the department of

 

treasury, using normal school accounting practices. If a financial

 

audit is required to arrive at a conclusive determination as to the

 

amount of the a deficit, the state treasurer shall charge all

 

necessary expenses for the audit, including per diem and travel

 

expenses, to the school district, and the school district shall

 

make payment to the state treasurer for these expenses. The A

 

determination by the department of treasury under this subsection

 

is final and conclusive. as to the existence of an operating or

 

projected operating deficit, the amount of the deficit, and the

 

amount of the deficit per membership pupil.

 

     (4) The notes or bonds may be issued in 1 or more series by

 

resolution adopted by the school board, which resolution in each

 

case shall make reference to the determination of the department of

 

treasury under subsection (3). The amount of a note or bond issued

 

shall not exceed the amount of the operating deficit as shown by

 

the determination.determined by the department of treasury under

 

subsection (3).

 

     (5) The school district shall may pledge as secondary security

 

for the repayment of principal and interest on notes or bonds

 

future issued under this section money from state school aid

 

payments , if any, and other funds paid or payable to the school

 

district, revenue from taxes levied by the school district for

 

school operating purposes under section 1211, and other tax revenue

 

or other money of the school district legally available as

 

security. A pledge under this subsection is valid and binding from

 

the time the pledge is made. A pledge under this subsection for the

 

benefit of the holders of notes or bonds or for the benefit of

 

others is perfected without delivery, recording, or notice. A

 

school district may enter into an agreement with the department of

 

treasury or the Michigan finance authority, or both, providing for

 

the direct payment on behalf of the school district to the Michigan

 

finance authority or a designated trustee of state school aid

 

pledged for the repayment of principal and interest on notes or

 

bonds issued under this section in the same manner as an agreement

 

under section 17a(4) of the state school aid act of 1979, MCL

 

388.1617a.

 

     (6) The notes or bonds shall mature serially with annual

 

maturities not more than 10 years from their date and shall bear

 

interest, payable annually or semiannually, at a rate or rates not

 

exceeding a rate determined by the school board in the school

 

district's borrowing resolution. The first principal installment on

 

the notes or bonds shall be due not more than 18 months from the

 

date of the issuance of the notes or bonds. , and a principal

 

installment on the notes shall not be less than 1/3 of the

 

principal amount of a subsequent principal installment. The notes

 

or bonds may be made subject to redemption before maturity with or

 

without premium in a manner and at times provided in the resolution

 

authorizing the issuance of the notes or bonds.

 

     (7) Notes or bonds issued under this section are valid and

 

binding general obligations of the school district, it being the

 

intent and purpose that the notes or bonds and the interest on the

 

notes or bonds be promptly paid when due from the first money

 

available to the school district not pledged for other indebtedness

 

and except to the extent that the use is restricted by the state

 

constitution of 1963 or the laws of the United States. If a school

 

district does not receive state school aid, the validity of a note

 

or bond issued under this section is not affected.

 

     (8) Except as otherwise provided in this section, bonds and

 

notes issued under this section are subject to the revised

 

municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.

 

     (9) The proceeds of the sale of notes or bonds authorized

 

under this section, after payment of the costs of issuance of the

 

notes or bonds and interest on the notes or bonds, for a period not

 

to exceed 9 months, shall be used solely for the purpose of paying

 

necessary operating expenses of the school district, including the

 

payment of principal of and interest on notes or bonds of the

 

school district issued for operating purposes under this or any

 

other act.

 

     (10) A board of a school district that borrows pursuant to

 

subsections (1) to (9) under this section shall submit its budget

 

for review and approval to the department of education. treasury.

 

The department of education treasury shall take necessary steps,

 

subject to the school district's contracts and statutory

 

obligations, to assure that the expenditures of a school district

 

that receives money under this part shall not exceed revenues on an

 

annual basis and that the school district maintains a balanced

 

budget.

 

     Enacting section 1. This amendatory act does not take effect

 

unless all of the following bills of the 97th Legislature are

 

enacted into law:

 

     (a) Senate Bill No.953                                      

 

           .

 

     (b) Senate Bill No.955                                        

 

           .

 

     (c) Senate Bill No.952                                     

 

           .