Bill Text: MI HB4767 | 2019-2020 | 100th Legislature | Introduced
Bill Title: Education; financing; reference to emergency managers in the state school aid act of 1979; modify to include reference to financial management teams. Amends sec. 17a of 1979 PA 94 (MCL 388.1617a). TIE BAR WITH: HB 4751'19
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2019-06-26 - Bill Electronically Reproduced 06/26/2019 [HB4767 Detail]
Download: Michigan-2019-HB4767-Introduced.html
HOUSE BILL No. 4767
June 20, 2019, Introduced by Reps. Greig and Yaroch and referred to the Committee on Government Operations.
A bill to amend 1979 PA 94, entitled
"The state school aid act of 1979,"
by amending section 17a (MCL 388.1617a), as amended by 2015 PA 114.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 17a. (1) The department may withhold all or part of any
payment that a district or intermediate district is entitled to
receive under this article to the extent the withholdings are a
component part of a plan, developed and implemented pursuant to the
revised municipal finance act, 2001 PA 34, MCL 141.2101 to
141.2821, the emergency municipal loan act, 1980 PA 243, MCL
141.931 to 141.942, the local financial stability and choice act,
2012 PA 436, MCL 141.1541 to 141.1575, section 1356 of the revised
school code, MCL 380.1356, or other statutory authority, for
financing an outstanding obligation upon which the district or
intermediate district defaulted or for other financial obligations
of
the district or intermediate district. Amounts withheld shall
must be used to pay, on behalf of the district or intermediate
district, unpaid amounts or subsequently due amounts, or both, of
principal and interest on the outstanding obligation upon which the
district or intermediate district defaulted.
(2) The state treasurer may withhold all or part of any
payment that a district or intermediate district is entitled to
receive under this article to the extent authorized or required
under section 15 of the school bond qualification, approval, and
loan act, 2005 PA 92, MCL 388.1935, the emergency municipal loan
act, 1980 PA 243, MCL 141.931 to 141.942, the local financial
stability and choice act, 2012 PA 436, MCL 141.1541 to 141.1575,
section 1356 of the revised school code, MCL 380.1356, or other
statutory authority.
(3) Under an agreement entered into by a district or
intermediate district assigning all or a portion of the payment
that it is eligible to receive under this article to the Michigan
finance authority or to the trustee of a pooled arrangement or
pledging the amount for payment of an obligation it incurred with
the Michigan finance authority or with the trustee of a pooled
arrangement, the state treasurer shall transmit to the Michigan
finance authority or a trustee designated by the Michigan finance
authority or to the trustee of a pooled arrangement or other
designated depository the amount of the payment that is assigned or
pledged under the agreement.
(4) If a district or intermediate district for which an
emergency manager or a financial management team is in place under
the local financial stability and choice act, 2012 PA 436, MCL
141.1541 to 141.1575, or that has an approved deficit elimination
plan or an approved enhanced deficit elimination plan under the
revised school code, enters into or has entered into an agreement
described in subsection (3) pursuant to section 1225(2) of the
revised school code, MCL 380.1225, whether the obligation was
issued
before or after the effective date of this subsection,
February 7, 2012, the portion of state school aid paid or to be
paid on behalf of the district or intermediate district directly to
the Michigan finance authority, or to a trustee designated by the
Michigan finance authority, for the sole purpose of paying the
principal of and interest on the obligation is subject to a lien
and trust that is a statutory lien and trust, paramount and
superior to all other liens and interests of any kind, for the sole
purpose of paying the principal of and interest on the obligation.
The statutory lien and trust applies to the state school aid
received or to be received by the Michigan finance authority, or
trustee designated by the Michigan finance authority, on behalf of
the district or intermediate district, immediately upon the time
when the state school aid is allocated to the district or
intermediate district, but is subject to any subsequent reduction
of the state school aid allocation by operation of law or executive
order. The lien and trust imposed by this section with respect to
state school aid has a priority as established in the agreement,
except
that the agreement shall must
not impair any existing lien
and trust previously created pursuant to this section, including
any lien and trust applicable to a multi-year repayment agreement
under section 1225 of the revised school code, MCL 380.1225. Except
as otherwise provided in this subsection, the lien and trust
created under this subsection for the benefit of holders of the
obligation issued pursuant to this section is valid and binding
against a party having a claim of any kind in tort, contract, or
otherwise against the district or intermediate district that has
issued the obligation secured by a pledge of state school aid
pursuant to this section, regardless of whether that party has
notice of the pledge. A pledge made pursuant to this section for
the benefit of the holders of obligations or others is perfected
without delivery, recording, or notice. The state school aid paid
or to be paid on behalf of a district or intermediate district to
the Michigan finance authority, or trustee designated by the
Michigan
finance authority, shall must
be held in trust for the
sole benefit of the holders of the obligation issued pursuant to
this section or section 1225 of the revised school code, MCL
380.1225, and is exempt from being levied upon, taken, sequestered,
or applied toward paying the debts or liabilities of the district
or intermediate district other than for payment of the obligation
to which the lien applies. However, nothing in this subsection
alters the ability of the state treasurer to withhold state school
aid from a district or intermediate district as provided by law.
(5) Notwithstanding the payment dates prescribed by this
article for distributions under this article, the state treasurer
may advance all or part of a payment that is dedicated for
distribution or for which the appropriation authorizing the payment
has been made if and to the extent, under the terms of an agreement
entered into by a district or intermediate district and the
Michigan finance authority, the payment that the district or
intermediate district is eligible to receive has been assigned to
or pledged for payment of an obligation it incurred with the
Michigan finance authority.
(6) This section does not require the state to make an
appropriation to any school district or intermediate school
district
and shall must not be construed as creating an
indebtedness of the state, and any agreement made pursuant to this
section
shall must contain a statement to that effect.
(7) As used in this section, "trustee of a pooled arrangement"
means the trustee of a trust approved by the state treasurer and,
subject to the conditions and requirements of that approval,
established for the purpose of offering for sale, as part of a
pooled arrangement, certificates representing undivided interests
in notes issued by districts or intermediate districts under
section 1225 of the revised school code, MCL 380.1225.
(8) If a trustee applies to the state treasurer for approval
of a trust for the purposes of this section, the state treasurer
shall approve or disapprove the trust within 10 days after receipt
of the application.
(9) An allocation to a district or intermediate district under
this article is contingent upon the district's or intermediate
district's compliance with this section.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No. 4751 (request no.
01329'19) of the 100th Legislature is enacted into law.
