ALLOWABLE USES OF SINKING FUNDS                                                   H.B. 4388 (H-3):

                                                                                                    SUMMARY OF BILL

                                                                                      REPORTED FROM COMMITTEE

 

 

 

 

 

 

 

 

 

House Bill 4388 (Substitute H-3 as reported without amendment)

Sponsor:  Representative Michael McCready

House Committee:  Education

Senate Committee:  Appropriations

 

CONTENT

 

The bill would amend the Revised School Code to expand the allowable uses of sinking funds to include school security improvements and technology. For sinking fund millages approved by voters after the bill was enacted, the maximum allowable millage rate that could be levied would decline from the current 5 mills to 3 mills, and the maximum number of years to levy the millage would decline from the current 20 years to 10 years.

 

Section 1212 of the Revised School Code provides for the levying of sinking fund mills by local school districts (i.e., not intermediate school districts or charter schools) if approved by voters, with a maximum millage levy of 5 mills over 20 years. (After 20 years, the district has to seek voter approval for another millage.) The current allowable uses of sinking funds are restricted to the purchase of real estate for sites for, and the construction or repair of, school buildings. A sinking fund essentially is a savings account, and allows a district to accumulate funds to pay for real estate, construction, or repair of buildings without incurring debt service costs that accrue when bonding for capital projects.

 

The bill would expand the allowable uses of a sinking fund to include school security improvements and technology; however, sinking funds approved after the effective date of the bill would be limited to a maximum of 3 mills over 10 years. The bill would define "school security improvement" as any capital improvement or purchase designed to act as a deterrent to unauthorized entry onto school premises or to otherwise promote security. The bill specifies that "security improvement" would include metal detectors, locks, doors, cameras, and other items, including a mobile telephone application connecting school personnel with a 9-1-1 call center, but would exclude personnel costs or operation costs related to these capital improvements.

 

"Technology" would mean that term as defined in Section 1351a of the Revised School Code, namely hardware and communication devices that transmit, receive, or compute information for pupil instructional purposes; the initial purchase of operating system software or customized application software accompanying the purchase of hardware and communication devices; and the costs of design and installation of the hardware, communication devices, and initial operating system software or customized application software.

 

MCL 380.1212

 

FISCAL IMPACT

 

As of the August 2016 State Aid status report information from the Michigan Department of Education, there are 173 districts (out of 544) currently levying sinking fund mills, raising an estimated $134.5 million in sinking fund revenue for fiscal year 2015-16, with an average


millage rate of 1.367 mills. Of the 173 districts, 12 are levying an amount greater than the 3-mill cap proposed by the bill; had the cap been in place for the existing millages, the revenue raised from the millage in those 12 districts would have been $2.5 million lower than what is actually being received. However, the cap would not apply to sinking funds already being levied, and would be prospective in nature.  

 

Districts that in the future were looking to ask voters to approve a millage in excess of the proposed 3-mill cap would be restricted to asking for a lower millage levy, but the bill would allow for more uses of a new sinking fund levy. Therefore, the overall fiscal impact of the bill on local school districts, which would broaden the uses but lower the maximum millage rate, is indeterminate.

 

Districts that were using general operating funds to pay for security or technology improvements could see increased net revenue if they were to seek, and voters were to approve, a sinking fund for security or technology improvements. Districts that were planning to seek a bond issue for security or technology uses could instead seek a sinking fund levy; in this case, the mills could be the same, but the overall cost to voters would be lower under the sinking fund proposal due to the avoidance of interest costs associated with bond issues. Districts that, in the future, were planning to ask voters to approve a levy greater than 3 mills for the purchase of real estate or construction or repair of school buildings would be limited to the lower 3-mill cap, and would need to either "save up" for a longer period of time or dip into other fund sources to make up the difference.

 

The bill would have no fiscal impact on the State.

 

Below, Table 1 shows the districts currently levying sinking fund mills, the mills levied, and the estimated revenue generated from those sinking fund mills.

 

Table 1

Districts Levying Sinking Fund Mills as of August 2016

 

 

 

County

 

 

School District Name

Sinking Fund Mills

Estimated Sinking Fund Revenue

ALGER COUNTY

SUPERIOR CENTRAL SCHOOL DISTRICT

2.5

$179,374

ALLEGAN COUNTY

FENNVILLE PUBLIC SCHOOLS

0.5

$169,121

ALLEGAN COUNTY

SAUGATUCK PUBLIC SCHOOLS

0.4997

$277,977

ANTRIM COUNTY

ALBA PUBLIC SCHOOLS

0.5

$25,959

ANTRIM COUNTY

CENTRAL LAKE PUBLIC SCHOOLS

0.45

$112,581

ANTRIM COUNTY

ELLSWORTH COMMUNITY SCHOOL

1.5

$131,279

ANTRIM COUNTY

MANCELONA PUBLIC SCHOOLS

0.4

$119,230

BARRY COUNTY

HASTINGS AREA SCHOOL DISTRICT

1

$554,206

BAY COUNTY

ESSEXVILLE-HAMPTON PUBLIC SCHOOLS

3

$1,064,492

BERRIEN COUNTY

BENTON HARBOR AREA SCHOOLS

2

$1,405,273

BERRIEN COUNTY

ST. JOSEPH PUBLIC SCHOOLS

0.9946

$977,962

BERRIEN COUNTY

LAKESHORE SCHOOL DISTRICT (BERRIEN)

1.4971

$1,144,655

BERRIEN COUNTY

RIVER VALLEY SCHOOL DISTRICT

0.5

$336,358

BERRIEN COUNTY

BERRIEN SPRINGS PUBLIC SCHOOLS

1

$349,773

 

 

County

 

 

School District Name

Sinking Fund Mills

Estimated Sinking Fund Revenue

BERRIEN COUNTY

NILES COMMUNITY SCHOOLS

1

$585,578

BERRIEN COUNTY

BUCHANAN COMMUNITY SCHOOLS

0.8

$243,094

BERRIEN COUNTY

BRIDGMAN PUBLIC SCHOOLS

0.1

$130,904

BRANCH COUNTY

COLDWATER COMMUNITY SCHOOLS

0.9744

$767,756

BRANCH COUNTY

BRONSON COMMUNITY SCHOOL DISTRICT

2

$421,326

BRANCH COUNTY

QUINCY COMMUNITY SCHOOLS

1.5

$318,491

BRANCH COUNTY

UNION CITY COMMUNITY SCHOOLS

4.5

$630,311

CALHOUN COUNTY

ALBION PUBLIC SCHOOLS

4

$847,592

CALHOUN COUNTY

BATTLE CREEK PUBLIC SCHOOLS

2

$1,571,180

CALHOUN COUNTY

MAR LEE SCHOOL DISTRICT

0.75

$58,264

CALHOUN COUNTY

MARSHALL PUBLIC SCHOOLS

1

$481,270

CALHOUN COUNTY

TEKONSHA COMMUNITY SCHOOLS

1

$63,758

CASS COUNTY

CASSOPOLIS PUBLIC SCHOOLS

0.8379

$371,103

CHARLEVOIX COUNTY

EAST JORDAN PUBLIC SCHOOLS

0.3943

$139,471

CHEBOYGAN COUNTY

CHEBOYGAN AREA SCHOOLS

0.5603

$318,610

CHEBOYGAN COUNTY

WOLVERINE COMMUNITY SCHOOL DISTRICT

0.6

$57,510

CLINTON COUNTY

BATH COMMUNITY SCHOOLS

1

$250,505

DELTA COUNTY

BIG BAY DE NOC SCHOOL DISTRICT

1.9

$299,797

DICKINSON COUNTY

NORTH DICKINSON COUNTY SCHOOLS

1.9645

$218,022

EATON COUNTY

GRAND LEDGE PUBLIC SCHOOLS

0.8

$995,972

EATON COUNTY

POTTERVILLE PUBLIC SCHOOLS

4.984

$637,061

EMMET COUNTY

MACKINAW CITY PUBLIC SCHOOLS

0.75

$109,860

EMMET COUNTY

HARBOR SPRINGS SCHOOL DISTRICT

0.5399

$558,233

EMMET COUNTY

ALANSON PUBLIC SCHOOLS

0.75

$105,178

EMMET COUNTY

PUBLIC SCHOOLS OF PETOSKEY

1.3189

$1,867,385

GENESEE COUNTY

FLINT, SCHOOL DISTRICT OF THE CITY OF

4

$2,752,501

GENESEE COUNTY

GRAND BLANC COMMUNITY SCHOOLS

1

$1,450,715

GENESEE COUNTY

MT. MORRIS CONSOLIDATED SCHOOLS

2.5

$466,895

GENESEE COUNTY

BENDLE PUBLIC SCHOOLS

2

$136,538

GENESEE COUNTY

GENESEE SCHOOL DISTRICT

1

$41,680

GENESEE COUNTY

CARMAN-AINSWORTH COMMUNITY SCHOOLS

0.5

$335,145

GENESEE COUNTY

FENTON AREA PUBLIC SCHOOLS

0.9362

$724,655

GENESEE COUNTY

KEARSLEY COMMUNITY SCHOOL DISTRICT

3.3

$928,105

GENESEE COUNTY

FLUSHING COMMUNITY SCHOOLS

0.7488

$480,560

GENESEE COUNTY

DAVISON COMMUNITY SCHOOLS

1.4016

$1,055,888

GENESEE COUNTY

CLIO AREA SCHOOL DISTRICT

2

$934,789

GENESEE COUNTY

SWARTZ CREEK COMMUNITY SCHOOLS

1.8059

$1,429,973

GENESEE COUNTY

LAKE FENTON COMMUNITY SCHOOLS

0.9982

$514,279

GENESEE COUNTY

WESTWOOD HEIGHTS SCHOOLS

3.2

$371,860

GENESEE COUNTY

LINDEN COMMUNITY SCHOOLS

1.3107

$759,578

GOGEBIC COUNTY

WAKEFIELD-MARENISCO SCHOOL DISTRICT

1

$103,604

GRATIOT COUNTY

FULTON SCHOOLS

3

$440,828

GRATIOT COUNTY

ITHACA PUBLIC SCHOOLS

2

$668,719

HILLSDALE COUNTY

CAMDEN-FRONTIER SCHOOL

3.5

$433,078

 

 

County

 

 

School District Name

Sinking Fund Mills

Estimated Sinking Fund Revenue

HILLSDALE COUNTY

HILLSDALE COMMUNITY SCHOOLS

1.9988

$617,809

HILLSDALE COUNTY

LITCHFIELD COMMUNITY SCHOOLS

0.75

$84,726

HILLSDALE COUNTY

NORTH ADAMS-JEROME PUBLIC SCHOOLS

0.7

$70,524

HILLSDALE COUNTY

READING COMMUNITY SCHOOLS

1.9

$265,659

HILLSDALE COUNTY

WALDRON AREA SCHOOLS

1

$66,510

HOUGHTON COUNTY

CHASSELL TOWNSHIP SCHOOL DISTRICT

0.1931

$10,839

HURON COUNTY

BAD AXE PUBLIC SCHOOLS

0.8

$179,562

HURON COUNTY

ELKTON-PIGEON-BAY PORT LAKER SCHOOLS

1

$674,640

INGHAM COUNTY

EAST LANSING SCHOOL DISTRICT

1.286

$1,330,235

INGHAM COUNTY

LANSING PUBLIC SCHOOL DISTRICT

1.5

$3,335,270

INGHAM COUNTY

DANSVILLE SCHOOLS

1

$182,520

INGHAM COUNTY

HASLETT PUBLIC SCHOOLS

2.0283

$1,115,748

INGHAM COUNTY

MASON PUBLIC SCHOOLS (INGHAM)

1

$659,092

INGHAM COUNTY

OKEMOS PUBLIC SCHOOLS

0.9919

$1,156,974

INGHAM COUNTY

WEBBERVILLE COMMUNITY SCHOOLS

0.9807

$120,728

INGHAM COUNTY

WILLIAMSTON COMMUNITY SCHOOLS

1

$395,376

IOSCO COUNTY

OSCODA AREA SCHOOLS

1

$586,726

IOSCO COUNTY

TAWAS AREA SCHOOLS

0.5

$241,345

IRON COUNTY

WEST IRON COUNTY PUBLIC SCHOOLS

0.4447

$115,593

JACKSON COUNTY

CONCORD COMMUNITY SCHOOLS

2

$273,925

JACKSON COUNTY

HANOVER-HORTON SCHOOL DISTRICT

1

$252,838

KALAMAZOO COUNTY

GULL LAKE COMMUNITY SCHOOLS

0.65

$598,266

KALAMAZOO COUNTY

PORTAGE PUBLIC SCHOOLS

0.5

$1,145,256

KALKASKA COUNTY

FOREST AREA COMMUNITY SCHOOLS

1

$133,084

KENT COUNTY

GRAND RAPIDS PUBLIC SCHOOLS

1

$3,793,926

KENT COUNTY

NORTHVIEW PUBLIC SCHOOLS

1.2056

$687,856

KENT COUNTY

BYRON CENTER PUBLIC SCHOOLS

1

$1,010,431

KENT COUNTY

CEDAR SPRINGS PUBLIC SCHOOLS

1

$532,776

KENT COUNTY

COMSTOCK PARK PUBLIC SCHOOLS

0.9984

$381,924

KENT COUNTY

EAST GRAND RAPIDS PUBLIC SCHOOLS

0.4801

$311,770

KENT COUNTY

GODFREY-LEE PUBLIC SCHOOLS

1.9976

$208,658

KENT COUNTY

GRANDVILLE PUBLIC SCHOOLS

1.4

$2,039,450

KENT COUNTY

KENT CITY COMMUNITY SCHOOLS

1

$191,152

KENT COUNTY

KENTWOOD PUBLIC SCHOOLS

1.6

$3,252,960

KENT COUNTY

LOWELL AREA SCHOOLS

1

$789,212

KENT COUNTY

SPARTA AREA SCHOOLS

1.15

$535,741

LAPEER COUNTY

ALMONT COMMUNITY SCHOOLS

0.9989

$304,618

LEELANAU COUNTY

LELAND PUBLIC SCHOOL DISTRICT

0.2975

$161,962

LEELANAU COUNTY

SUTTONS BAY PUBLIC SCHOOLS

0.5

$213,724

LENAWEE COUNTY

BLISSFIELD COMMUNITY SCHOOLS

1.75

$523,015

LENAWEE COUNTY

CLINTON COMMUNITY SCHOOLS

1

$226,824

LENAWEE COUNTY

MADISON SCHOOL DISTRICT (LENAWEE)

1.25

$216,112

LENAWEE COUNTY

SAND CREEK COMMUNITY SCHOOLS

1.8454

$220,858

MACKINAC COUNTY

ST. IGNACE AREA SCHOOLS

0.9747

$143,967

MACOMB COUNTY

ARMADA AREA SCHOOLS

0.8394

$380,982

 

 

County

 

 

School District Name

Sinking Fund Mills

Estimated Sinking Fund Revenue

MACOMB COUNTY

FITZGERALD PUBLIC SCHOOLS

3.1552

$1,367,112

MACOMB COUNTY

ROMEO COMMUNITY SCHOOLS

1.2438

$2,050,847

MARQUETTE COUNTY

NICE COMMUNITY SCHOOL DISTRICT

1.7438

$419,829

MARQUETTE COUNTY

NEGAUNEE PUBLIC SCHOOLS

1.9926

$506,735

MARQUETTE COUNTY

MARQUETTE AREA PUBLIC SCHOOLS

0.95

$1,099,430

MARQUETTE COUNTY

ISHPEMING PUBLIC SCHOOL DISTRICT NO. 1

2.487

$303,281

MASON COUNTY

MASON COUNTY EASTERN SCHOOLS

0.75

$138,838

MASON COUNTY

LUDINGTON AREA SCHOOL DISTRICT

0.25

$292,334

MECOSTA COUNTY

BIG RAPIDS PUBLIC SCHOOLS

0.75

$310,456

MENOMINEE COUNTY

MENOMINEE AREA PUBLIC SCHOOLS

2

$650,163

MENOMINEE COUNTY

STEPHENSON AREA PUBLIC SCHOOLS

0.92

$203,991

MISSAUKEE COUNTY

LAKE CITY AREA SCHOOL DISTRICT

1.5

$445,678

MONROE COUNTY

MONROE PUBLIC SCHOOLS

1

$1,762,582

MONROE COUNTY

JEFFERSON SCHOOLS (MONROE)

0.95

$863,957

MONROE COUNTY

MASON CONSOLIDATED SCHOOLS (MONROE)

2

$473,358

MONROE COUNTY

WHITEFORD AGRICULTURAL SCHOOL DISTRICT OF THE COUN

1

$203,785

MONTCALM COUNTY

MONTABELLA COMMUNITY SCHOOLS

1.5

$317,883

MONTCALM COUNTY

TRI COUNTY AREA SCHOOLS

1.5

$557,668

MUSKEGON COUNTY

MONA SHORES PUBLIC SCHOOL DISTRICT

1

$807,568

OAKLAND COUNTY

ROYAL OAK SCHOOLS

0.9966

$2,395,684

OAKLAND COUNTY

BERKLEY SCHOOL DISTRICT

0.7269

$669,212

OAKLAND COUNTY

AVONDALE SCHOOL DISTRICT

0.6

$684,821

OAKLAND COUNTY

BLOOMFIELD HILLS SCHOOLS

0.7326

$2,407,634

OAKLAND COUNTY

NOVI COMMUNITY SCHOOL DISTRICT

0.4932

$1,021,255

OAKLAND COUNTY

HAZEL PARK, SCHOOL DISTRICT OF THE CITY OF

1

$263,344

OAKLAND COUNTY

WEST BLOOMFIELD SCHOOL DISTRICT

1.2453

$2,116,126

OAKLAND COUNTY

HURON VALLEY SCHOOLS

0.9487

$2,226,725

OAKLAND COUNTY

OAK PARK, SCHOOL DISTRICT OF THE CITY OF

3

$1,064,455

OAKLAND COUNTY

LAMPHERE PUBLIC SCHOOLS

0.5

$335,469

OAKLAND COUNTY

WALLED LAKE CONSOLIDATED SCHOOLS

0.4985

$2,139,055

OCEANA COUNTY

HART PUBLIC SCHOOL DISTRICT

0.85

$300,666

OSCODA COUNTY

FAIRVIEW AREA SCHOOL DISTRICT

1

$184,164

OTSEGO COUNTY

GAYLORD COMMUNITY SCHOOLS

1.1378

$1,028,258

OTSEGO COUNTY

VANDERBILT AREA SCHOOLS

0.75

$71,644

OTTAWA COUNTY

HOLLAND CITY SCHOOL DISTRICT

0.7422

$885,733

OTTAWA COUNTY

WEST OTTAWA PUBLIC SCHOOL DISTRICT

0.2997

$583,796

OTTAWA COUNTY

HUDSONVILLE PUBLIC SCHOOL DISTRICT

0.9983

$1,289,297

OTTAWA COUNTY

ZEELAND PUBLIC SCHOOLS

1

$1,444,792

PRESQUE ISLE COUNTY

POSEN CONSOLIDATED SCHOOL DISTRICT NO. 9

0.5

$54,054

 

 

County

 

 

School District Name

Sinking Fund Mills

Estimated Sinking Fund Revenue

PRESQUE ISLE COUNTY

ROGERS CITY AREA SCHOOLS

1.1519

$231,647

SAGINAW COUNTY

FRANKENMUTH SCHOOL DISTRICT

2

$962,777

SAGINAW COUNTY

FREELAND COMMUNITY SCHOOL DISTRICT

1

$377,815

SANILAC COUNTY

PECK COMMUNITY SCHOOL DISTRICT

1.5

$103,132

SCHOOLCRAFT COUNTY

MANISTIQUE AREA SCHOOLS

1.5

$429,558


SHIAWASSEE COUNTY

BYRON AREA SCHOOLS

3

$562,822

SHIAWASSEE COUNTY

OWOSSO PUBLIC SCHOOLS

3

$1,554,307

ST. CLAIR COUNTY

EAST CHINA SCHOOL DISTRICT

0.4

$659,719

ST. CLAIR COUNTY

YALE PUBLIC SCHOOLS

1

$390,426

ST. JOSEPH COUNTY

BURR OAK COMMUNITY SCHOOL DISTRICT

3

$124,704

ST. JOSEPH COUNTY

WHITE PIGEON COMMUNITY SCHOOLS

3

$986,202

TUSCOLA COUNTY

MILLINGTON COMMUNITY SCHOOLS

3.74

$785,091

TUSCOLA COUNTY

REESE PUBLIC SCHOOLS

1.5

$362,313

WASHTENAW COUNTY

ANN ARBOR PUBLIC SCHOOLS

0.9992

$7,874,235

WASHTENAW COUNTY

CHELSEA SCHOOL DISTRICT

0.75

$645,107

WASHTENAW COUNTY

SALINE AREA SCHOOLS

0.35

$556,239

WAYNE COUNTY

CLARENCEVILLE SCHOOL DISTRICT

4.5

$1,231,538

WAYNE COUNTY

DEARBORN HEIGHTS SCHOOL DISTRICT #7

4.6682

$896,436

WAYNE COUNTY

GARDEN CITY PUBLIC SCHOOLS

2

$1,006,830

WAYNE COUNTY

GROSSE POINTE PUBLIC SCHOOLS

1

$2,583,890

WAYNE COUNTY

HAMTRAMCK, SCHOOL DISTRICT OF THE CITY OF

4

$750,177

WAYNE COUNTY

LINCOLN PARK, SCHOOL DISTRICT OF THE CITY OF

1.4436

$748,075

WAYNE COUNTY

LIVONIA PUBLIC SCHOOLS SCHOOL DISTRICT

1.12

$4,619,015

WAYNE COUNTY

ROMULUS COMMUNITY SCHOOLS

0.75

$592,880

WAYNE COUNTY

SOUTH REDFORD SCHOOL DISTRICT

2

$898,393

WAYNE COUNTY

WAYNE-WESTLAND COMMUNITY SCHOOL DISTRICT

0.9922

$1,830,078

WAYNE COUNTY

GIBRALTAR SCHOOL DISTRICT

0.5

$314,332

WAYNE COUNTY

GROSSE ILE TOWNSHIP SCHOOLS

0.75

$430,023

WAYNE COUNTY

WOODHAVEN-BROWNSTOWN SCHOOL DISTRICT

0.9778

$1,004,337

WAYNE COUNTY

NORTHVILLE PUBLIC SCHOOLS

0.9937

$2,693,774

WAYNE COUNTY

VAN BUREN PUBLIC SCHOOLS

1.13

$1,681,228

Estimated Statewide Total

$134,495,803

 

Date Completed:  9-19-16

                                                                                Fiscal Analyst:  Kathryn Summers

This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.