Bill Text: MI SB0827 | 2011-2012 | 96th Legislature | Introduced

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Bill Title: School aid; payments; payment of deficit or obligations; require to be paid to the Michigan finance authority. Amends sec. 17a of 1979 PA 94 (MCL 388.1617a). TIE BAR WITH: SB 0828'11

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2011-11-29 - Referred To Committee On Appropriations [SB0827 Detail]

Download: Michigan-2011-SB0827-Introduced.html

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SENATE BILL No. 827

 

 

November 29, 2011, Introduced by Senator JOHNSON and referred to the Committee on Appropriations.

 

 

 

     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 2006 PA 342.

 

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 act 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, or other statutory authority, for financing an

 

outstanding obligation upon which the district or intermediate

 

district defaulted. Amounts withheld shall 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 act to the extent authorized or required under

 

section 15 of the school bond qualification, approval, and loan

 

act, 2005 PA 92, MCL 388.1935.

 

     (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 act to the Michigan

 

municipal bond finance authority or to the trustee of a pooled

 

arrangement or pledging the amount for payment of an obligation it

 

incurred with the Michigan municipal bond finance authority or with

 

the trustee of a pooled arrangement, the state treasurer shall

 

transmit to the Michigan municipal bond finance authority or a

 

trustee designated by the Michigan finance authority or to the

 

trustee of a pooled arrangement the amount of the payment that is

 

assigned or pledged under the agreement. If a district or

 

intermediate district enters into or has entered into an agreement

 

described in this subsection pursuant to section 1225 of the

 

revised school code, MCL 380.1225, whether the obligation was

 

issued before or after the effective date of the 2011 amendatory

 

act that amended this section, the portion of state school aid paid

 

or to be paid 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,

 

immediately upon the later of the effective date of the 2011

 

amendatory act that amended this section or 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 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, 1976 PA 451, 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 to

 

the Michigan finance authority, or trustee designated by the

 

Michigan finance authority, shall be held in trust for the sole

 

benefit of the holders of the obligation issued pursuant to this

 

section or section 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.

 

     (4) Notwithstanding the payment dates prescribed by this act

 

for distributions under this act, 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 municipal bond

 

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 municipal

 

bond finance authority.

 

     (5) This subsection section does not require the state to make

 

an appropriation to any school district or intermediate school

 

district and shall not be construed as creating an indebtedness of

 

the state, and any agreement made pursuant to this subsection

 

section shall contain a statement to that effect.

 

     (6) As used in this subsection, 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, 1976 PA 451, MCL

 

380.1225.

 

     (7) If a trustee applies to the state treasurer for approval

 

of a trust for the purposes of this subsection, section, the state

 

treasurer shall approve or disapprove the trust within 10 days

 

after receipt of the application.

 

     Enacting section 1. This amendatory act does not take effect

 

unless Senate Bill No. 828                                        

 

          of the 96th Legislature is enacted into law.