January 14, 2010, Introduced by Rep. Pavlov and referred to the Committee on Education.
A bill to amend 1990 PA 72, entitled
"Local government fiscal responsibility act,"
by amending the title and sections 31, 39, 40, and 41 (MCL
141.1231, 141.1239, 141.1240, and 141.1241).
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to provide for review, management, planning, and
control of the financial operation of units of local government,
including all operations of school districts that may affect the
financial condition of the school district; to provide criteria to
be used in determining the financial condition of a local
government; to permit a declaration of the existence of a local
government financial emergency and to prescribe the powers and
duties of the governor, other state boards, agencies, and
officials, and officials and employees of units of local
government; to provide for a review and appeal process; to provide
for the appointment and to prescribe the powers and duties of an
emergency financial manager; to require the development of
financial plans to regulate expenditures and investments by a local
government in a state of financial emergency and to regulate any
operation of a school district affecting the financial condition of
the school district; to set forth the conditions for termination of
a
local government financial emergency; and to repeal certain acts
and parts of acts.
Sec. 31. As used in this article:
(a) "Emergency financial manager" means the emergency
financial manager appointed under section 34.
(b) "Review team" means the review team designated under
section 34.
(c) "Revised school code" means 1976 PA 451, MCL 380.1 to
380.1852.
(d)
(c) "School board" means the governing body of
a school
district.
(e) (d)
"School district" or
"district" means a local school
district established
under part 2, 3, 4, 5, or 6 of the school code
of
1976, being sections 380.71 to 380.485 of the Michigan Compiled
Laws,
or a local act school district as defined in section 5 of the
school
code of 1976, being section 380.5 of the Michigan Compiled
Laws
as defined in the revised
school code.
(f) (e)
"School fiscal year"
means a fiscal year that
commences July 1 and continues through June 30.
(g) (f)
"State board" means the
state board of education.
(g)
"The school code of 1976" means Act No. 451 of the Public
Acts
of 1976, being sections 380.1 to 380.1852 of the Michigan
Compiled
Laws.
Sec. 39. The emergency financial manager shall issue to the
appropriate officials or employees of the school district the
orders that he or she considers necessary to accomplish the
purposes of this article, including, but not limited to, orders for
the timely and satisfactory implementation of a financial plan
developed pursuant to section 40. An order issued under this
section is binding on the school district officials or employees to
whom it is issued, including the school board of the school
district.
Sec.
40. (1) In consultation with the school board, the The
emergency financial manager shall develop, and may from time to
time amend, a written financial plan for the school district. The
financial plan shall provide for both of the following:
(a) Conducting the operations of the school district within
the resources available according to the emergency financial
manager's revenue estimate.
(b) The payment in full of the scheduled debt service
requirements on all bonds and notes of the school district and all
other uncontested legal obligations.
(2) After the initial development of the financial plan
required
by subsection (1), the emergency financial manager in
consultation
with the school board shall regularly
reexamine the
plan, and if the emergency financial manager reduces his or her
revenue estimates, he or she shall modify the financial plan to
conform to revised revenue estimates.
(3) The financial plan shall be in a form, and shall contain
that information for each year the plan is in effect, that the
school district's emergency financial manager specifies.
(4) The emergency financial manager shall provide to the
school board of the school district the financial plan or modified
plan and shall make public the financial plan or modified plan.
(5)
This subsection shall not be
construed to mean that act
does
not require the emergency financial
manager must to receive
public approval or the approval of the school board of the school
district before he or she implements the financial plan or any
modification to the plan or takes any other action authorized under
this act.
Sec. 41. (1) Upon appointment under section 38, an emergency
financial manager shall immediately assume control over all fiscal
matters and other matters concerning the operation of the school
district that affect the financial condition of, and make all
fiscal and related decisions for, the school district for which he
or she is appointed.
(2) In implementing this article and performing his or her
functions under this article, an emergency financial manager may
take 1 or more of the following actions:
(a) Examine the books and records of the school district.
(b) Review payrolls or other claims against the school
district before payment.
(c) Negotiate, renegotiate, approve, and enter into contracts
on behalf of the school district.
(d) Receive and disburse on behalf of the school district all
federal, state, and local funds earmarked for the school district.
These funds may include, but are not limited to, funds for specific
programs and the retirement of debt.
(e) Adopt a final budget for the next school fiscal year and
amend any adopted budget of the school district.
(f) Act as an agent of the school district in collective
bargaining and, to the extent possible under state labor law,
renegotiate existing and negotiate new labor agreements.
(g) Analyze factors contributing to the financial condition of
the school district and recommend to the legislature steps that
need to be taken to improve the district's financial condition.
(h) Require compliance with his or her orders, by court action
if necessary.
(i) Require the attendance of witnesses and the production of
books, papers, contracts, and other documents relevant to an
analysis of the financial condition of the school district.
(j) Recommend to the governor, the legislature, and the state
board that the school district be reorganized with 1 or more
contiguous school districts.
(k) Consolidate divisions or transfer functions from 1
division to another division within the school district and
appoint, supervise, and, at his or her discretion, remove, within
legal limitations, heads of divisions of the school district.
(l) Create a new position or approve or disapprove the creation
of any new position or the filling of a vacancy in a permanent
position by an appointing authority.
(m) Seek approval from the state board for a reduced class
schedule in accordance with administrative rules governing the
distribution of state school aid.
(n) Employ or contract for, at the expense of the school
district and with the approval of the superintendent of public
instruction, auditors and other technical personnel considered
necessary to implement this article.
(o) Reduce expenditures in the budget of the school district.
(p) Borrow money on behalf of the school district.
(q) Approve or disapprove of the issuance of obligations of
the school district.
(r) Order, as necessary, 1 or more school millage elections
for
the school district consistent with the school code of 1976
revised
school code, the Michigan
election law, Act No. 116 of the
Public
Acts of 1954, being sections 168.1 to 168.992 of the
Michigan Compiled Laws 1954 PA 116, MCL 168.1 to 168.992, and
sections 6 and 25 through 34 of article IX of the state
constitution of 1963.
(s) Sell or otherwise use the assets of the school district to
meet past or current obligations, provided the use of assets for
this purpose does not impair the education of the pupils of the
district.
(t) Exercise the authority and responsibilities affecting the
financial condition and operation of the school district that are
prescribed by law to the school board and superintendent of the
school district.
(u) Review and approve or disapprove any action of the school
board of the school district. The school board shall not take any
action that creates an obligation of the school district without
the approval of the emergency financial manager.
(3) After giving written notice to the superintendent of
public instruction, the emergency financial manager may authorize
the
school district to proceed under chapter 9 of title 11 of the
United
States Code the federal
bankruptcy code, 11 U.S.C. USC 901
to
904, 921 to 932, and 941 to 946. This section empowers the
school district for which an emergency financial manager has been
appointed
to become a debtor under chapter 9 of title 11 of the
United
States Code the federal bankruptcy code.