November 29, 2011, Introduced by Senator JOHNSON and referred to the Committee on Appropriations.
A bill to amend 1976 PA 451, entitled
"The revised school code,"
by amending section 1225 (MCL 380.1225), as amended by 2006 PA 285.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1225. (1) Subject to restrictions of this section, the
board of a local or intermediate school district may borrow money
and issue its notes 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.
The notes A pledge of
state school aid by a local 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 local or intermediate school district for which an
emergency manager has been appointed pursuant to the local
government and school district fiscal responsibility act, 2011 PA
4, MCL 141.1501 to 141.1531, may enter into an agreement with the
Michigan finance authority in accordance with section 17a of the
state school aid act of 1979, MCL 388.1617a, providing for the
direct payment 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) (2)
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% 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) (3)
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 municipal bond finance
authority only, without the
approval of an authorized representative of the department of
treasury.
(5) (4)
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% 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% of the apportionment for the then current fiscal year. The
notes shall mature not later than 372 days after the date of
issuance.
(6) (5)
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) (6)
A school board or intermediate
school board may make
more than 1 borrowing under this section during a school year.
(8) (7)
In addition to other powers under
this section, with
the approval of the state treasurer, the board of a local or
intermediate school district 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.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. 827
of the 96th Legislature is enacted into law.