HB-6069, As Passed Senate, June 22, 2006

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 6069

     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 months  372 days 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 months  372 days 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 months  372 days 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.