Bill Text: MI SB0356 | 2015-2016 | 98th Legislature | Engrossed

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Bill Title: Education; financing; levy of certain school taxes within territory transferred from dissolved school district to receiving school district; provide for, and provide conditions for demolition of school building owned by certain school districts. Amends secs. 12, 1211 & 1260 of 1976 PA 451 (MCL 380.12 et seq.). TIE BAR WITH: SB 0173'15

Spectrum: Partisan Bill (Republican 1-0)

Status: (Engrossed - Dead) 2015-09-10 - Referred To Committee On Appropriations [SB0356 Detail]

Download: Michigan-2015-SB0356-Engrossed.html

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SB-0356, As Passed Senate, September 10, 2015

 

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

SENATE BILL NO. 356

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1976 PA 451, entitled

 

"The revised school code,"

 

by amending sections 12 and 1211 (MCL 380.12 and 380.1211), section

 

12 as amended by 2013 PA 96 and section 1211 as amended by 2012 PA

 

285.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 12. (1) A school district shall lose its organization and

 

shall be declared dissolved if any of the following conditions are

 

met:

 

     (a) There are not enough persons residing in the school

 

district and qualified under law to hold all of the offices of the

 

school district or who will accept the offices of the school

 

district.

 

     (b) After consultation with the intermediate school district

 

in which the school district is located, the superintendent of

 

public instruction and state treasurer jointly determine that all

 

of the following apply:

 

     (i) The school district was required to submit a deficit

 

elimination plan under the state school aid act of 1979 and the

 

school district either has failed to submit a plan or lacks the

 

capability to both implement a deficit elimination plan and meet

 

the school district's obligations to provide public educational

 

services to pupils and other residents of the school district in a

 

manner that complies with this act, the state school aid act of

 

1979, and rules promulgated by the department.

 

     (ii) The school district is not financially viable and is

 

unable to educate pupils in grades K-12 residing in the school

 

district by operating schools for a full school year and providing

 

the required number of instructional hours under this act and the

 

state school aid act of 1979. As used in this subparagraph,

 

"financially viable" means that a school district has the financial

 

resources to carry out at least the educational program required by

 

law and pay its existing debts as they become due taking into

 

consideration the projected enrollment, cash flow, revenues, and

 

borrowing capability of the school district.

 

     (iii) The school district has at least 300 and not more than

 

2,400 pupils in membership.

 

     (iv) The number of pupils in membership in the school district

 

for the most recently completed school year was at least 10% less

 

than the number of pupils in membership in the school district for

 

the school year immediately preceding the most recently completed

 

school year.

 

     (v) The school district began the school fiscal year ending in

 

the current state fiscal year with an operating fund deficit and is

 

projected to end the school fiscal year ending in the current state

 

fiscal year with a greater operating fund deficit or received a

 

loan approved by the local emergency financial assistance loan

 

board that had the effect of reducing the deficit for the school

 

year ending in the current state fiscal year.

 

     (vi) The school district has not consolidated with another

 

school district during the immediately preceding 12 calendar

 

months.

 

     (2) If a school district meets either or both of subsection

 

(1)(a) or (b), the intermediate school board of the intermediate

 

school district to which the school district is constituent, or the

 

superintendent of public instruction if that intermediate school

 

board requests the superintendent of public instruction to act in

 

its place, shall declare the school district dissolved and

 

immediately order attachment of the territory of the school

 

district, in whole or in part, to 1 or more other organized school

 

districts within the intermediate school district. In attaching the

 

territory of the dissolved school district to other school

 

districts, the intermediate school board or the superintendent of

 

public instruction shall take into account the number of pupils who

 

will become pupils of each of those other school districts relative

 

to the number of pupils already enrolled in the other school

 

district and the numbers of pupils who qualify for free and reduced

 

price lunch, special education services and at-risk funding among

 

the other school districts. For a school district that is declared

 

dissolved in 2013, within 21 days after the school district is

 

declared dissolved, and for a school district that is declared

 

dissolved after 2013, within Within 60 days after the school

 

district is declared dissolved, the dissolved school district shall

 

account to the intermediate school district for all records, funds,

 

and property of the school district and shall make an equitable

 

distribution of the records, funds, and property consistent with

 

the ordered attachment to each receiving school district. A school

 

building or other real property owned by and located in the

 

dissolved school district shall become part of and owned by the

 

receiving school district in which it is located.

 

     (3) If a dissolved school district has outstanding debt, the

 

dissolved school district shall retain a limited separate identity

 

and the territory of the dissolved school district shall continue

 

as a separate taxing unit for the limited purpose of the debt until

 

the debt is retired or refunded. The intermediate school board and

 

other officers of the intermediate school district in which the

 

geographic area of the dissolved school district is located shall

 

perform the functions and satisfy the responsibilities of the board

 

and other officers of the dissolved school district relating to the

 

debt, including, but not limited to, all of the following:

 

     (a) Certifying and levying taxes for satisfaction of the debt

 

in the name of the dissolved school district.

 

     (b) Holding debt retirement funds of the dissolved school

 

district separately from the funds of the receiving school

 

district.

 

     (c) Doing all other things relative to the outstanding debt of

 

the dissolved school district required by law and by the terms of

 

the debt, including, but not limited to, levying or renewing a

 

school operating tax under section 1211. The question of renewal of

 

a school operating tax pledged to the repayment of debt of the

 

dissolved school district shall be submitted only to school

 

electors residing within the geographic area of the dissolved

 

school district and does not require approval by electors of a

 

receiving school district not residing within the geographic area

 

of the dissolved school district.

 

     (4) Upon the attachment of a dissolved school district to

 

another school district, the intermediate school board shall audit

 

the assets and liabilities of the dissolved school district. If a

 

considerable discrepancy is found, the intermediate school board

 

shall order the dissolved school district to pay the discrepancy to

 

1 or more appropriate receiving school districts. After first

 

satisfying debt obligations, the dissolved school district shall

 

repay that amount to 1 or more appropriate receiving school

 

districts from money available to the dissolved school district

 

including voted millage within a time to be determined by the

 

intermediate school board.

 

     (5) Both of the following apply with respect to taxes under

 

this section:

 

     (a) If a tax is authorized within a receiving school district

 

at a rate greater than the rate authorized within the dissolved

 

school district at the time of the dissolution, the tax may not be

 

levied within the geographic area of the dissolved school district

 

until approved by the school electors residing within the

 

geographic area of the dissolved school district or by all school

 

electors within the receiving school district, including any

 

expanded geographic area of the receiving school district resulting

 

from attachment under this section.

 

     (b) If a dissolved school district is no longer authorized to

 

levy a school operating tax under section 1211, the receiving

 

school district may levy school operating taxes under section 1211

 

within the geographic area of the dissolved school district that

 

has been attached to the receiving school district at a rate that

 

does not exceed the rate authorized by the school electors of the

 

receiving district to be levied under section 1211 within the

 

receiving district or the rate authorized to be levied under

 

section 1211 within the dissolved school district at the time of

 

dissolution, whichever is less. If the dissolved school district

 

has outstanding debt, other than bonded debt, the receiving school

 

district shall use tax revenue received from millage levied under

 

this subdivision to pay off that portion of the outstanding debt,

 

other than bonded debt, that is attributable to the territory of

 

the dissolved school district that has been attached to the

 

receiving school district before using that tax revenue for any

 

other purpose. The portion of the outstanding debt, other than

 

bonded debt, that is attributable to the territory of the dissolved

 

school district that has been attached to the receiving school

 

district is considered to be the same percentage of the outstanding

 

debt, other than bonded debt, as the percentage of the taxable

 

value of the dissolved school district at the time of dissolution

 

that was transferred to the receiving school district, as

 

determined by the department. For millage levied by a receiving

 

school district under this subdivision, the local tax collecting

 

unit that is collecting that millage may assess and collect the

 

millage on a schedule and with deadlines that are different than

 

those prescribed under part 26.

 

     (6) If a dissolved school district was authorized to levy a

 

sinking fund tax under section 1212 at the time of dissolution, the

 

identity of the dissolving school district as a legal entity shall

 

not be lost and its territory shall remain as a taxing unit for the

 

limited purpose of levying a sinking fund tax under section 1212

 

until the authorization to levy a sinking fund tax within the

 

dissolved school district expires. For purposes of this subsection,

 

the intermediate school board and other officers of the

 

intermediate school district in which the geographic area of the

 

dissolved school district is located shall perform the functions

 

and responsibilities of the board and other officers of the

 

dissolved school district relating to levying the sinking fund tax

 

and shall distribute the proceeds of the levy to each receiving

 

school district that operates a school building previously operated

 

by the dissolved school district. The proceeds of a sinking fund

 

tax levy under this subsection may be used only within the

 

geographic area of the dissolved school district for purposes

 

authorized under section 1212. A receiving school district may not

 

renew or authorize a new sinking fund tax that is levied only

 

within the geographic area of the dissolved school district.

 

     (7) To the extent permitted under federal law and any

 

applicable waiver approved by the United States department of

 

education, Department of Education, the department shall not

 

include the test scores of pupils from the dissolved school

 

district for determining adequate yearly progress status or for

 

"top-to-bottom" rankings of the receiving school districts for the

 

first 3 school years after dissolution.

 

     (8) For the same number of school years for which test scores

 

of pupils from the dissolved school district are not used under

 

subsection (7), a receiving school district shall not use the test

 

scores of pupils from the dissolved school district as a factor in

 

any performance evaluation of an employee of the receiving school

 

district.

 

     (9) The pupils formerly enrolled in the dissolved school

 

district have all the legal and constitutional rights and

 

privileges of the other pupils enrolled in the receiving school

 

districts.

 

     (10) As used in this section:

 

     (a) "Debt" means that term as defined in section 103 of the

 

revised municipal finance act, 2001 PA 34, MCL 141.2103, and any

 

unpaid amounts payable by a dissolved school district to the

 

Michigan public school employees' retirement board under the public

 

school employees retirement act of 1979, 1980 PA 300, MCL 38.1301

 

to 38.1437.

 

     (b) "Receiving school district" means a school district to

 

which all or part of the territory of a dissolved school district

 

is attached under this section.

 

     Sec. 1211. (1) Except as otherwise provided in this section

 

and section 1211c, the board of a school district shall levy not

 

more than 18 mills for school operating purposes or the number of

 

mills levied in 1993 for school operating purposes, whichever is

 

less. A principal residence, qualified agricultural property,

 

qualified forest property, supportive housing property, property

 

occupied by a public school academy, and industrial personal

 

property are exempt from the mills levied under this subsection

 

except for the number of mills by which that exemption is reduced

 

under this subsection. Except as otherwise provided in subsection

 

(9), the board of a school district that had a foundation allowance

 

for the 1994-95 state fiscal year greater than $6,500.00 may reduce

 

the number of mills from which a principal residence, qualified

 

agricultural property, qualified forest property, supportive

 

housing property, property occupied by a public school academy, and

 

industrial personal property are exempted under this subsection by

 

up to the number of mills, as certified under section 1211a,

 

required to be levied on a principal residence, qualified

 

agricultural property, qualified forest property, supportive

 

housing property, property occupied by a public school academy, and

 

industrial personal property for the school district's combined

 

state and local revenue per membership pupil for the school fiscal

 

year ending in 1995 to be equal to the school district's foundation

 

allowance for the state fiscal year ending in 1995, and the board

 

also may levy in 1994 or a succeeding year that number of mills for

 

school operating purposes on a principal residence, qualified

 

agricultural property, qualified forest property, supportive

 

housing property, property occupied by a public school academy, and

 

industrial personal property.

 

     (2) Subject to subsection (3), if the department of treasury

 

determines that the maximum number of mills allowed to be levied

 

under subsection (1) on all classes of property was not sufficient

 

for a school district's combined state and local revenue per

 

membership pupil for the school fiscal year ending in 1995 to be

 

equal to the school district's foundation allowance for that school

 

fiscal year, the board of the school district may levy in 1994 or a

 

succeeding year additional mills uniformly on all property up to

 

the number of mills required for the school district's combined

 

state and local revenue per membership pupil for the school fiscal

 

year ending in 1995 to be equal to the school district's foundation

 

allowance for the state fiscal year ending in 1995. However, the

 

board of a school district described in this subsection, by board

 

resolution, may elect to exempt each principal residence and all

 

qualified agricultural property, qualified forest property,

 

supportive housing property, property occupied by a public school

 

academy, and industrial personal property located in the school

 

district from some or all of the mills that the board is authorized

 

to levy under this subsection.

 

     (3) After 1994, the number of mills a school district may levy

 

under this section on any class of property shall not exceed the

 

lesser of the number of mills the school district was certified by

 

the department of treasury under section 1211a to levy on that

 

class of property under this section in 1994 or the number of mills

 

required to be levied on that class of property under this section

 

to ensure that the increase from the immediately preceding state

 

fiscal year in the school district's combined state and local

 

revenue per membership pupil, calculated as if the school district

 

had levied the maximum number of mills the school district was

 

allowed to levy under this section regardless of the number of

 

mills the school district actually levied, does not exceed the

 

lesser of the dollar amount of the increase in the basic foundation

 

allowance under section 20 of the state school aid act of 1979, MCL

 

388.1620, from the immediately preceding state fiscal year or the

 

percentage increase in the general price level in the immediately

 

preceding calendar year. If the number of mills a school district

 

is allowed to levy under this section in a year after 1994 is less

 

than the number of mills the school district was allowed to levy

 

under this section in the immediately preceding year, any reduction

 

required by this subsection in the school district's millage rate

 

shall be calculated by first reducing the number of mills the

 

school district is allowed to levy under subsection (2) and then

 

increasing the number of mills from which a principal residence,

 

qualified agricultural property, qualified forest property,

 

supportive housing property, property occupied by a public school

 

academy, and industrial personal property are exempted under

 

subsection (1).

 

     (4) Commercial personal property is exempt from 12 of the

 

mills levied under this section. However, if the number of mills

 

from which industrial personal property is exempted for a specific

 

school district is reduced under this section, then the number of

 

mills from which commercial personal property is exempted for that

 

school district shall be reduced by that same number of mills.

 

     (5) Except as otherwise provided under this subsection,

 

millage levied under this section must be approved by the school

 

electors. For Both of the following apply for the purposes of this

 

section: , millage

 

     (a) Millage approved by the school electors before January 1,

 

1994 for which the authorization has not expired is considered to

 

be approved by the school electors. With the approval of the state

 

treasurer, a school district may pledge millage levied under this

 

section for the repayment of a loan under the emergency municipal

 

loan act, 1980 PA 243, MCL 141.931 to 141.942, money borrowed by

 

the school district under section 1225, or the repayment of

 

advances, overpayments, or other obligations of the school district

 

to this state under section 15 of the state school aid act of 1979,

 

MCL 388.1615.

 

     (b) If the school electors of a school district that is a

 

receiving school district under section 12 have authorized the levy

 

of a millage under this section, if territory of a school district

 

that is a dissolved school district under section 12 has been

 

attached to the receiving school district, and if that dissolved

 

school district is no longer authorized to levy millage under this

 

section, then the receiving school district may levy millage under

 

this section within the geographic area of the dissolved school

 

district that has been attached to the receiving school district at

 

a rate that does not exceed the rate authorized by the school

 

electors of the receiving school district to be levied under this

 

section within the receiving school district or the rate authorized

 

to be levied under this section within the dissolved school

 

district at the time of dissolution, whichever is less. If the

 

dissolved school district has outstanding debt, other than bonded

 

debt, as defined under section 12, the receiving school district

 

shall use tax revenue received from millage levied under this

 

subdivision to pay off that portion of the outstanding debt, other

 

than bonded debt, that is attributable to the territory of the

 

dissolved school district that has been attached to the receiving

 

school district before using that tax revenue for any other

 

purpose. The portion of the outstanding debt, other than bonded

 

debt, that is attributable to the territory of the dissolved school

 

district that has been attached to the receiving school district is

 

considered to be the same percentage of the outstanding debt, other

 

than bonded debt, as the percentage of the taxable value of the

 

dissolved school district at the time of dissolution that was

 

transferred to the receiving school district, as determined by the

 

department. For millage levied by a receiving school district under

 

this subdivision, the local tax collecting unit that is collecting

 

that millage may assess and collect the millage on a schedule and

 

with deadlines that are different than those prescribed under part

 

26.

 

     (6) If a school district levies millage for school operating

 

purposes that is in excess of the limits of this section, the

 

amount of the resulting excess tax revenue shall be deducted from

 

the school district's next regular tax levy.

 

     (7) If a school district levies millage for school operating

 

purposes that is less than the limits of this section, the board of

 

the school district may levy at the school district's next regular

 

tax levy an additional number of mills not to exceed the additional

 

millage needed to make up the shortfall.

 

     (8) A school district shall not levy mills allocated under the

 

property tax limitation act, 1933 PA 62, MCL 211.201 to 211.217a,

 

other than mills allocated to a school district of the first class

 

or a school district that was previously a school district of the

 

first class, for payment to a public library commission under

 

section 11(4) of the property tax limitation act, 1933 PA 62, MCL

 

211.211, after 1993.

 

     (9) Beginning with taxes levied for 2011, if a school district

 

had a foundation allowance for the 1994-95 state fiscal year

 

greater than $6,500.00 and if the school district's foundation

 

allowance for the 2009-2010 state fiscal year was less than the

 

basic foundation allowance prescribed for the 2009-2010 state

 

fiscal year under section 20 of the state school aid act of 1979,

 

MCL 388.1620, the school district may not reduce the number of

 

mills from which certain classes of property are exempted from the

 

levy of millage under subsection (1) and may not levy that number

 

of mills on those classes of property as would otherwise be allowed

 

under subsection (1).

 

     (10) As used in this section:

 

     (a) "Combined state and local revenue per membership pupil"

 

means that term as defined in section 20 of the state school aid

 

act of 1979, MCL 388.1620.

 

     (b) "Commercial personal property" means property classified

 

as commercial personal property under section 34c of the general

 

property tax act, 1893 PA 206, MCL 211.34c.

 

     (c) "Foundation allowance" means a school district's

 

foundation allowance as calculated under section 20 of the state

 

school aid act of 1979, MCL 388.1620.

 

     (d) "General price level" means that term as defined in

 

section 33 of article IX of the state constitution of 1963.

 

     (e) "Industrial personal property" means the following:

 

     (i) Except as otherwise provided in subparagraph (ii),

 

property classified as industrial personal property under section

 

34c of the general property tax act, 1893 PA 206, MCL 211.34c.

 

     (ii) Beginning December 31, 2011, industrial personal property

 

does not include a turbine powered by gas, steam, nuclear energy,

 

coal, or oil the primary purpose of which is the generation of

 

electricity for sale.

 

     (f) "Membership" means that term as defined in section 6 of

 

the state school aid act of 1979, MCL 388.1606.

 

     (g) "Owner", "person", "principal residence", and "qualified

 

agricultural property" mean those terms as defined in section 7dd

 

of the general property tax act, 1893 PA 206, MCL 211.7dd.

 

     (h) "Property occupied by a public school academy" means

 

property occupied by a public school academy, urban high school

 

academy, or school of excellence that is used exclusively for

 

educational purposes.

 

     (i) "Qualified forest property" means that term as defined in

 

section 7jj of the general property tax act, 1893 PA 206, MCL

 

211.7jj[1].

 

     (j) "School operating purposes" includes expenditures for

 

furniture and equipment, for alterations necessary to maintain

 

school facilities in a safe and sanitary condition, for funding the

 

cost of energy conservation improvements in school facilities, for

 

deficiencies in operating expenses for the preceding year or

 

preceding years, including, but not limited to, repayment of an

 

emergency loan under the emergency municipal loan act, 1980 PA 243,

 

MCL 141.931 to 141.942, and for paying the operating allowance due

 

from the school district to a joint high school district in which

 

the school district is a participating school district under former

 

part 3a. Taxes levied for school operating purposes do not include

 

any of the following:

 

     (i) Taxes levied by a school district for operating a

 

community college under part 25.

 

     (ii) Taxes levied under section 1212.

 

     (iii) Taxes levied under section 1356 for eliminating an

 

operating deficit.

 

     (iv) Taxes levied for operation of a library under section

 

1451 or for operation of a library established pursuant to 1913 PA

 

261, MCL 397.261 to 397.262, that were not included in the

 

operating millage reported by the district to the department as of

 

April 1, 1993. However, a district may report to the department not

 

later than April 1, 1994 the number of mills it levied in 1993 for

 

a purpose described in this subparagraph that the school district

 

does not want considered as operating millage and then that number

 

of mills is excluded under this section from taxes levied for

 

school operating purposes.

 

     (v) Taxes paid by a school district of the first class or a

 

school district that was previously a school district of the first

 

class to a public library commission pursuant to section 11(4) of

 

the property tax limitation act, 1933 PA 62, MCL 211.211.

 

     (vi) Taxes levied under former section 1512 for operation of a

 

community swimming pool. In addition, if a school district included

 

the millage it levied in 1993 for operation of a community swimming

 

pool as part of its operating millage reported to the department

 

for 1993, the school district may report to the department not

 

later than June 17, 1994 the number of mills it levied in 1993 for

 

operation of a community swimming pool that the school district

 

does not want considered as operating millage and then that number

 

of mills is excluded under this section from taxes levied for

 

school operating purposes.

 

     (k) "Supportive housing property" means real property

 

certified as supportive housing property under chapter 3B of the

 

state housing development authority act of 1966, 1966 PA 346, MCL

 

125.1459 to 125.1459a.

 

     Enacting section 1. This amendatory act does not take effect

 

unless Senate Bill No. 173 of the 98th Legislature is enacted into

 

law.