February 4, 2014, Introduced by Senators CASWELL and PAPPAGEORGE 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 2012 PA 1.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1225. (1) Subject to restrictions of this section, a
school board or intermediate school board may borrow money and
issue notes of the school district or intermediate school district
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. A pledge of state
school aid by a school district or intermediate school district for
the payment of notes issued pursuant to this section is valid and
binding from the time when the pledge is made. A pledge made
pursuant to this section for the benefit of the holders of notes or
for the benefit of others is perfected without delivery, recording,
or notice. Notes issued pursuant to this section 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) A school district or intermediate school district for
which
an emergency manager has been appointed pursuant to the local
government
and school district fiscal accountability act, 2011 PA
4,
MCL 141.1501 to 141.1531, local
fiscal stability and choice act,
2012 PA 436, MCL 141.1541 to 141.1575, or a school district or
intermediate school district that has an approved deficit
elimination plan under section 102 of the state school aid act of
1979, MCL 388.1702, may enter into an agreement with the Michigan
finance authority in accordance with section 17a(4) of the state
school aid act of 1979, MCL 388.1617a, providing for the direct
payment on behalf of the school district or intermediate school
district to the Michigan finance authority, or to a trustee
designated by the Michigan finance authority, of state school aid
pledged and to be used for the sole purpose of paying the principal
of and interest on the notes issued pursuant to this section and
secured by state school aid.
(3) Notes issued under this section shall become due not later
than 372 days after the date on which they are issued, except as
otherwise provided in this section. Notes issued within a fiscal
year
shall not exceed 70% 60% 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.
(4) A school district or intermediate school district that is
not able to redeem its notes within 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 finance authority only, without the approval of an
authorized
representative of the department of
treasury.
(5) 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% 43% 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%
43% of the apportionment for the then current fiscal
year. The
notes shall mature not later than 372 days after the date of
issuance.
(6) 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.
(7) A school board or intermediate school board may make more
than 1 borrowing under this section during a school year.
(8) In addition to other powers under this section, with the
approval of the state treasurer, a school board or intermediate
school board 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.