HB-4813, As Passed House, June 13, 2013

SUBSTITUTE FOR

HOUSE BILL NO. 4813

     A bill to amend 1976 PA 451, entitled

"The revised school code,"

by amending section 12 (MCL 380.12) and by adding section 12a.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 12. (1) A school district shall lose its organization if

there and shall be declared dissolved if any of the following

conditions are met:

     (a) There are not enough persons residing in the school

district and qualified under the law to hold district all of the

offices of the school district or who will accept the offices of

the school district. Under either condition,

     (b) The superintendent of public instruction and state

treasurer jointly determine that all of the following apply:

House Bill No. 4813 (H-4) as amended June 13, 2013

     (i) The school district was required to submit a deficit

elimination plan under the state school aid act of 1979 and the

school district either has failed to submit a plan or lacks the

capability to both implement a deficit elimination plan and meet

the school district's obligations to provide public educational

services to pupils and other residents of the school district in a

manner that complies with this act, the state school aid act of

1979, and rules promulgated by the department.

     (ii) The school district is not financially viable and is

unable to educate pupils in grades K-12 residing in the school

district by operating schools for a full school year and providing

the required number of instructional hours under this act and the

state school aid act of 1979. As used in this subparagraph,

"financially viable" means that a school district has the financial

resources to carry out at least the educational program required by

law and pay its existing debts as they become due taking into

consideration the projected enrollment, cash flow, revenues, and

borrowing capability of the school district.

     (iii) The school district has fewer than 2,500 pupils in

membership.

[(iv) The number of pupils in membership in the school district for the most recently completed school year was at least 10% less than the number of pupils in membership in the school district for the school year immediately preceding the most recently completed school year.]

     (2) If a school district meets either or both of subsection

(1)(a) or (b), the intermediate school board of the intermediate

school district to which the school district is constituent, or the

superintendent of public instruction if that intermediate school

board requests the superintendent of public instruction to act in

its place, shall declare the school district dissolved and

immediately shall attach order attachment of the territory of the

House Bill No. 4813 (H-4) as amended June 13, 2013

school district, in whole or in part, to 1 or more other organized

school districts and within the intermediate school district. In

attaching the territory of the dissolved school district to other

school districts, the intermediate school board or the

superintendent of public instruction shall take into account the

number of pupils who will become pupils of each of those other

school districts relative to the number of pupils already enrolled

in the other school district and the numbers of pupils who qualify

for free and reduced price lunch among the other school districts.

For a school district that is declared dissolved in 2013, within 21

days after the school district is declared dissolved, and for a

school district that is declared dissolved after 2013, within 60

days after the school district is declared dissolved, the dissolved

school district shall account to the intermediate school district

for all records, funds, and property of the school district and

shall make an equitable distribution of the money, property, and

other material belonging to the district among the districts to

which the territory is attached.records, funds, and property

consistent with the ordered attachment to each receiving school

district. [A school building or other real property owned by and located

 in the dissolved district shall become part of and owned by the receiving school district in which it is located.]

     (2) The property of the disorganized district is subject to

all increases in the constitutional limitation on taxes which have

been voted by the school electors of the district to which it is

attached. The disorganized district shall receive a credit in the

amount of a levy remaining to be paid on an outstanding debt in the

disorganized district, which shall be paid until debt is retired.

The disorganized district shall pay an amount equal to the amount

levied for debt retirement by the district to which it is attached

not to exceed 5 mills on the state equalized valuation in the

disorganized district. All other taxes levied for the purposes of

the combined school district, including taxes for the retirement of

bonded indebtedness, shall be spread over the entire area of the

combined district.

     (3) A disorganized district having a bonded indebtedness shall

be attached in whole to another school district by the intermediate

school board. The identity of the district is not lost because of

the attachment, and its territory remains as separate assessing

unit for the purpose of the bonded indebtedness until the

indebtedness is retired or refunded. The board of the district to

which the disorganized district is attached shall constitute the

board of trustees for the disorganized district having the bonded

indebtedness. Its officers shall be the officers for the

disorganized district. The board of the district to which the

disorganized district is attached shall certify the levy of taxes

for bonded indebtedness in the name of the disorganized district,

shall not commingle the debt retirement funds of the disorganized

district with those of the district to which it is attached, and

shall do all things relative to the bonded indebtedness required by

law and by the terms under which the issuance and sale of the bonds

were originally authorized. All other taxes levied for the purposes

of the combined school district, including taxes levied for the

retirement of bonded indebtedness, shall be spread over the entire

area of the combined school district.

     (3) If a dissolved school district has outstanding debt, the

dissolved school district shall retain a limited separate identity

and the territory of the dissolved school district shall continue

as a separate taxing unit for the limited purpose of the debt until

the debt is retired or refunded. The board and other officers of

the school district to which the largest share of the state

equalized value of the dissolved school district is attached shall

perform the functions and satisfy the responsibilities of the board

and other officers of the dissolved school district relating to the

debt, including, but not limited to, all of the following:

     (a) Certifying and levying taxes for satisfaction of the debt

in the name of the dissolved school district.

     (b) Holding debt retirement funds of the dissolved school

district separately from the funds of the receiving school

district.

     (c) Doing all other things relative to the outstanding debt of

the dissolved school district required by law and by the terms of

the debt, including, but not limited to, levying or renewing a

school operating tax under section 1211. The question of renewal of

a school operating tax pledged to the repayment of debt of the

dissolved school district shall be submitted only to school

electors residing within the geographic area of the dissolved

school district and does not require approval by electors of a

receiving school district not residing within the geographic area

of the dissolved school district.

     (4) Upon the attachment of a disorganized dissolved school

district to another school district, the intermediate school board

shall audit the assets and liabilities of the disorganized

dissolved school district. If a considerable discrepancy is found,

the intermediate school board shall order the receiving dissolved

school district to pay the discrepancy to 1 or more appropriate

receiving school districts. The disorganized After first satisfying

debt obligations, the dissolved school district shall repay that

amount to 1 or more appropriate receiving school districts from

moneys money available to the dissolved school district including

voted millage within a time to be determined by the intermediate

school board.

     (5) If a tax is authorized within a receiving school district

at a rate greater than the rate authorized within the dissolved

school district at the time of the dissolution, the tax may not be

levied within the geographic area of the dissolved school district

until approved by the school electors residing within the

geographic area of the dissolved school district or by all school

electors within the receiving school district, including any

expanded geographic area of the receiving school district resulting

from attachment under this section.

     (6) If a dissolved school district was authorized to levy a

sinking fund tax under section 1212 at the time of dissolution, the

identity of the dissolving school district as a legal entity shall

not be lost and its territory shall remain as a taxing unit for the

limited purpose of levying a sinking fund tax under section 1212

until the authorization to levy a sinking fund tax within the

dissolved school district expires. For purposes of this subsection,

the board and other officers of the receiving school district that

received the largest share of the state equalized valuation of the

House Bill No. 4813 (H-4) as amended June 13, 2013

dissolved school district shall perform the functions and

responsibilities of the board and other officers of the dissolved

school district relating to levying the sinking fund tax and shall

distribute the proceeds of the levy to each receiving school

district that operates a school building previously operated by the

dissolved school district. The proceeds of a sinking fund tax levy

under this subsection may be used only within the geographic area

of the dissolved school district for purposes authorized under

section 1212. A receiving school district may not renew or

authorize a new sinking fund tax that is levied only within the

geographic area of the dissolved school district.

     (7) To the extent permitted under federal law and any

applicable waiver approved by the United States department of

education, the department shall not include the test scores of

pupils from the dissolved school district for determining adequate

yearly progress status or for "top-to-bottom" rankings of the

receiving school districts for the first 3 school years after

dissolution.

[(8) For the same number of school years for which test scores of pupils from the dissolved district are not used under subsection (7), a receiving school district shall not use the test scores of pupils from the dissolved school district as a factor in any performance evaluation of an employee of the receiving school district.

(9)] The pupils formerly enrolled in the dissolved school

district have all the legal and constitutional rights and

privileges of the other pupils enrolled in the receiving school

districts.

[(10)] As used in this section:

     (a) "Debt" means that term as defined in section 103 of the

revised municipal finance act, 2001 PA 34, MCL 141.2103[, and any unpaid

 amounts payable by a dissolved school district to the Michigan public school employees' retirement board under the public school employees retirement act of 1979, 1980 PA 300, MCL 38.1301 to 38.1437].

     (b) "Receiving school district" means a school district to

which all or part of the territory of a dissolved school district

is attached under this section.

     Sec. 12a. (1) As permitted under federal law, if a school

district is dissolved under section 12 or if the functions and

responsibilities of a school district for operating a public school

are transferred to another public entity, including, but not

limited to, a transfer to another public entity under section

1280c, the superintendent of public instruction shall grant each

receiving school district or other public entity assuming the

functions and responsibilities for the public school an allocation

of grants under 20 USC 6333, 6334, 6335, and 6337 and of other

federal funds that would otherwise be made available for grants to

or federal funding for the public school or make other adjustments

in the allocation of federal funds to implement the dissolution of

the school district or other transfer of functions and

responsibilities.

     (2) As used in this section, "receiving school district" means

that term as defined in section 12.

     Enacting section 1. This amendatory act does not take effect

unless House Bill No. 4815 of the 97th Legislature is enacted into

law.