April 17, 2014, Introduced by Rep. Knezek and referred to the Committee on Education.
A bill to amend 1976 PA 451, entitled
"The revised school code,"
by amending section 12 (MCL 380.12), as amended by 2013 PA 96, and
by adding section 12b.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 12. (1) A school district shall lose its organization 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 law to hold all of the offices of the
school district or who will accept the offices of the school
district.
(b) After consultation with the intermediate school district
in which the district is located, the superintendent of public
instruction and state treasurer jointly determine that all of the
following apply:
(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 at least 300 and not more than
2,400 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.
(v) The school district began the school fiscal year ending in
the current state fiscal year with an operating fund deficit and is
projected to end the school fiscal year ending in the current state
fiscal year with a greater operating fund deficit or received a
loan approved by the local emergency financial assistance loan
board that had the effect of reducing the deficit for the school
year ending in the current state fiscal year.
(vi) The school district has not consolidated with another
school district during the immediately preceding 12 calendar
months.
(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 order attachment of the territory of the school
district, in whole or in part, to 1 or more other organized school
districts 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, special education services and at-risk funding 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 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.
(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 intermediate school board and
other officers of the intermediate school district in which the
geographic area of the dissolved school district is located 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 dissolved school district to
another school district, the intermediate school board shall audit
the assets and liabilities of the dissolved school district. If a
considerable discrepancy is found, the intermediate school board
shall order the dissolved school district to pay the discrepancy to
1 or more appropriate receiving school districts. After first
satisfying debt obligations, the dissolved school district shall
repay that amount to 1 or more appropriate receiving school
districts from 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 intermediate school board and other officers of the
intermediate school district in which the geographic area of the
dissolved school district is located 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) A school district declared dissolved under this section
retains a limited separate legal identity for the following
purposes:
(a) Serving as a taxing unit for the limited purpose of
levying a sinking fund tax as provided under subsection (6).
(b) Serving as a separate electoral unit for the purposes of
renewal of a school operating tax as provided under subsection
(3)(c), approval of reorganizing the school district under section
12b, or approval of bonds and levying taxes for the repayment of
those bonds under subdivision (c).
(c) Issuing bonds and levying taxes for the payment of those
bonds for new school buildings as needed for reorganization of the
school district under section 12b.
(11) (10)
As used in this section and section 12b:
(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. 12b. (1) A school district that has been declared
dissolved under section 12 after July 1, 2013 may be reorganized by
the intermediate school district to which the dissolved school
district was constituent before the dissolution if the intermediate
school district determines that all of the following are met:
(a) All outstanding debt of the dissolved school district has
been retired.
(b) School buildings needed for educating pupils are available
for use in 1 or more of the following ways:
(i) School buildings that were formerly part of the dissolved
school district will be returned to the dissolved school from 1 or
more receiving school districts, according to formal written
agreement with the receiving school or districts.
(ii) Bonds have been approved in the territory of the dissolved
school district for the construction of new school buildings.
(iii) School buildings will be procured from private resources
to be donated to the reorganized school district for the express
purpose of educating pupils, according to formal written agreement.
(c) There has been an affirmative vote of the residents of the
territory of the dissolved school district in favor of reorganizing
the dissolved school district.
(2) If an intermediate school district determines that the
requirements of subsection (1) are met and orders the
reorganization of a school district, the intermediate school board
shall cause a school board election to be held within the
boundaries of the reorganized school district in the manner
provided by law for a newly constituted school district. Subject to
subsection (3), the school board elected under this subsection will
have all of the same powers and duties of the school board that
existed before the school district was declared dissolved under
section 12.
(3) For the first 5 full school fiscal years after a school
district is reorganized under this section, the school district
shall be placed under a probationary agreement with the
intermediate school district that provides that all budgetary
decisions will be subject to the review and approval of the
intermediate school district. If the intermediate school district
does not approve a budgetary decision made by the school board, the
school district may appeal that decision to the intermediate school
board. The process for an appeal to be filed, heard, and decided
shall not exceed a total of 30 days from the initial disapproval.
The decision of the intermediate school board on any appeal is
final.
(4) At the end of the probationary period under subsection
(3), the intermediate school district shall either release the
school district from the probationary period and grant the school
district full autonomy in the budget process or extend the
probationary period on a year-to-year basis.