Bill Text: MI HB5352 | 2017-2018 | 99th Legislature | Introduced

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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 5337'17

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2017-12-13 - Bill Electronically Reproduced 12/12/2017 [HB5352 Detail]

Download: Michigan-2017-HB5352-Introduced.html

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HOUSE BILL No. 5352

 

 

December 12, 2017, Introduced by Rep. Yaroch and referred to the Committee on Local Government.

 

     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. 5337 (request no.

 

03826'17) of the 99th Legislature is enacted into law.