HB-6069, As Passed House, May 24, 2006
May 16, 2006, Introduced by Rep. Baxter and referred to the Committee on Education.
A bill to amend 1976 PA 451, entitled
"The revised school code,"
by amending section 1225 (MCL 380.1225), as amended by 2002 PA 246.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1225. (1) Subject to restrictions of this section, the
board of a local or intermediate school district may borrow money
and issue its notes for the borrowed money to secure funds for
school operations or to pay previous loans obtained for school
operations under this or any other statute. The school board or
intermediate school board shall pledge money to be received by it
from state school aid for the payment of notes issued under this
section. The notes are full faith and credit obligations of the
school district or intermediate school district and are payable
from tax levies or from unencumbered funds of the school district
or intermediate school district in event of the unavailability or
insufficiency of state school aid for any reason.
(2) Notes issued under this section shall become due not later
than 12
13 months after the date on which they are issued,
except
as
provided in this section. Except as otherwise provided in this
subsection,
notes Notes issued within a fiscal year shall not
exceed 70% of the difference between the total state aid funds
apportioned to the school district or intermediate school district
for that fiscal year and the portion already received or pledged,
except
secondary pledges made under section 1356. Until June 30,
1999,
notes issued and sold to the Michigan municipal bond
authority
within a fiscal year shall not exceed 70% of the
difference
between the total state aid funds apportioned to the
school
district or intermediate school district for that fiscal
year
and the portion already received.
(3) A school district or intermediate school district that is
not
able to redeem its notes within 12 13
months after the date
on which the notes were issued may enter into a multi-year
agreement with a lending institution to repay its obligation. A
repayment agreement shall not be executed without the prior
approval of an authorized representative of the state board or, for
notes sold to the Michigan municipal bond authority only, without
the approval of an authorized representative of the department of
treasury.
(4) During the last 4 months of a fiscal year, notes may be
issued pledging state school aid for the next succeeding fiscal
year. Except as otherwise provided in this subsection, the notes
shall not exceed 50% of the state school aid apportioned to the
school district or intermediate school district for the next
succeeding fiscal year or, if the apportionment has not been made,
50%
of the apportionment for the then current fiscal year. For
the
1997-98
fiscal year only, with the approval of the state treasurer
or
the department, notes may be issued that shall not exceed 70% of
the
state school aid apportioned to the school district or
intermediate
school district for the next succeeding fiscal year
or,
if the apportionment has not been made, 70% of the
apportionment
for the then current fiscal year. For the 1998-99
fiscal
year only, with the approval of the state treasurer or the
department,
notes may be issued that shall not exceed 60% of the
state
school aid apportioned to the school district or intermediate
school
district for the next succeeding fiscal year or, if the
apportionment
has not been made, 60% of the apportionment for the
then
current fiscal year. The notes shall mature not later than
12
13 months after the date of issuance.
(5) Notes issued under this section are subject to the revised
municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.
Failure of a school district or intermediate school district to
receive state school aid does not affect the validity or
enforceability of a note issued under this section.
(6) A school board or intermediate school board may make more
than 1 borrowing under this section during a school year.
(7) In addition to other powers under this section, with the
approval of the state treasurer, the board of a local or
intermediate school district may obtain a line of credit to secure
funds for school operations or to pay previous loans obtained for
school operations under this or any other statute. The school board
or intermediate school board shall pledge not more than 30% of the
state school aid apportioned to the school district or intermediate
school district for that fiscal year for repayment of funds
received pursuant to a line of credit obtained under this
subsection. However, the school board or intermediate school board
shall not borrow against the line of credit an amount greater than
the difference, as of the date of the borrowing, between the total
state school aid funds apportioned to the school district or
intermediate school district for that fiscal year and the portion
already received or pledged, except secondary pledges made under
section 1356. To obtain approval for obtaining a line of credit
under this subsection, a school board or intermediate school board
shall apply to the state treasurer in the form and manner
prescribed by the state treasurer, and shall provide information as
requested by the state treasurer for evaluating the application.
The state treasurer shall approve or disapprove an application and
notify the school board or intermediate school board within 20
business days after receiving a proper application. If the state
treasurer disapproves an application, the state treasurer shall
include the reasons for disapproval in the notification to the
school board or intermediate school board.