Bill Text: MI SB0949 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Local government; budgets; uniform budget and accounting procedures; revise. Amends secs. 1, 2c, 5, 14, 15, 16, 17, 18, 19 & 20a of 1968 PA 2 (MCL 141.421 et seq.) & adds sec. 13a. TIE BAR WITH: SB 0952'14, SB 0957'14

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2014-05-21 - Referred To Committee On Appropriations [SB0949 Detail]

Download: Michigan-2013-SB0949-Introduced.html

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Local government; budgets; uniform budget and accounting

procedures; revise.

Local government:  budgets; Education:  financing; State agencies

(existing):  education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1968 PA 2, entitled

 

"Uniform budgeting and accounting act,"

 

by amending sections 1, 2c, 5, 14, 15, 16, 17, 18, 19, and 20a (MCL

 

141.421, 141.422c, 141.425, 141.434, 141.435, 141.436, 141.437,

 

141.438, 141.439, and 141.440a), sections 1, 2c, 14, 15, 17, and 19

 

as amended by 2000 PA 493, section 5 as amended by 1996 PA 146, and

 

sections 16 and 18 as amended by 2013 PA 172, and by adding section

 

13a.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. (1) The state treasurer shall prescribe uniform charts

 

of accounts for all local units of similar size, function, or

 

service designed to fulfill the requirements of good accounting

 

practices relating to general government. Such A uniform chart of

 

accounts shall conform as nearly as practicable to the uniform

 

standards as set forth by the governmental accounting standards

 

board or by a successor organization that establishes national

 

generally accepted accounting standards and is determined

 

acceptable to the state treasurer. The official who by law or

 

charter is charged with the responsibility for the financial

 

affairs of the local unit shall insure ensure that the local unit

 

accounts are maintained and kept in accordance with the uniform

 

chart of accounts. The chief administrative officer for a local

 

unit shall present to the legislative body of the local unit a

 

recommended budget and proposed general appropriations act that

 

conforms to the uniform chart of accounts. The state treasurer may

 

also shall publish standard operating procedures and forms for the

 

guidance of applicable to local units in establishing and

 

maintaining uniform accounting and the uniform chart of accounts in

 

compliance with this act.

 

     (2) A local unit may request the state treasurer to provide

 

assistance, advice, or instruction in establishing or maintaining

 

the uniform chart of accounts required by subsection (1).

 

     (3) The state treasurer may provide assistance, advice, or

 

instruction to a local unit to establish or maintain the uniform

 

chart of accounts required by subsection (1) based on information

 

from 1 or more of the following sources:

 

     (a) Disclosure by the certified public accountant or the

 

department of treasury in an audit report required by section 5 or

 

6 that the local unit has failed to establish or maintain the

 

uniform chart of accounts required by subsection (1).

 

     (b) Disclosure by the department of treasury in a special

 

examination report that the local unit has failed to establish or

 

maintain the uniform chart of accounts required by subsection (1).

 

     (c) Disclosure in an audit report issued under section 5 or 6

 

that the records of the local unit are not auditable because the

 

local unit has failed to establish or maintain the uniform chart of

 

accounts required by subsection (1).

 

     (d) Disclosure from another state agency.

 

     (e) Department of treasury records indicate that the audit

 

required under section 5 has not been performed or filed and is

 

delinquent, and that the local unit is subject to the provisions of

 

section 21 of the Glenn Steil state revenue sharing act of 1971,

 

1971 PA 140, MCL 141.921.

 

     (f) Information provided by the chief administrative officer,

 

member of the legislative body, or other officer of the local unit.

 

     (4) The state treasurer, in performing the services under

 

subsection (2) or (3), may make a determination that the local unit

 

cannot adequately establish or maintain the uniform chart of

 

accounts without additional assistance, advice, or instruction from

 

the state treasurer. The If the state treasurer makes this

 

determination, the state treasurer shall submit a written report of

 

the findings and recommendations to the governing body of the local

 

unit. The local unit shall retain, within 90 days after receipt of

 

this report, the services of a certified public accountant or the

 

state treasurer to perform the needed additional services and shall

 

notify, by resolution of the governing body, the state treasurer of

 

such action. Upon failure of the local unit to respond within the

 

90-day period, the state treasurer shall perform the necessary

 

services to adequately establish or maintain the uniform chart of

 

accounts.

 

     (5) The state treasurer shall charge reasonable and necessary

 

expenses, including per diem and travel expenses, to the local unit

 

for services performed pursuant to subsections (2), (3), and (4),

 

and the local unit shall make payment to the state treasurer for

 

these expenses. The state treasurer shall execute a contract with

 

the local unit or provide monthly billings if a contract is not

 

executed.

 

     Sec. 2c. (1) "Expenditure" means the cost of goods delivered

 

or services rendered, whether paid or unpaid, including expenses,

 

debt retirement not reported as a liability of the fund from which

 

retired, or capital outlay.

 

     (2) "General appropriations act" means the budget as ordinance

 

or resolution adopted for a local unit by the legislative body or

 

as otherwise given legal effect pursuant to a charter provision in

 

effect on the effective date of this section that authorizes

 

expenditures by the local unit consistent with the budget.

 

     Sec. 5. (1) A local unit having a population of less than

 

4,000 shall obtain an audit of its financial records, accounts, and

 

procedures not less frequently than biennially. However, if any

 

audit under this subsection discloses a material deviation by the

 

local unit from generally accepted accounting practices or from

 

applicable rules and regulations of a state department or agency or

 

discloses any fiscal irregularity, defalcation, misfeasance,

 

nonfeasance, or malfeasance, the department of treasury may require

 

an audit to be conducted in the next year.

 

     (1) (2) A For a fiscal year of a local unit ending after June

 

30, 2014, a local unit having a population of 4,000 or more shall

 

obtain an annual audit of its financial records, accounts, and

 

procedures. An audit required under this section shall be completed

 

not less than 150 days after the end of the fiscal year.

 

     (2) If a local unit fails to comply with subsection (1), the

 

department of treasury shall perform or contract for the necessary

 

services to complete the audit on behalf of the local unit.

 

     (3) The department of treasury shall charge the local unit for

 

services performed and related expenses incurred under subsection

 

(2), and the local unit shall pay the state treasurer for these

 

expenses. The state treasurer may execute a contract with the local

 

unit for the payment or, if a contract is not executed, provide

 

monthly invoices to the local unit.

 

     Sec. 13a. (1) For a fiscal year of a local unit ending after

 

June 30, 2014, a local unit shall not adopt or operate under a

 

deficit budget and shall not incur an operating deficit in a fund

 

during a fiscal year.

 

     (2) If a local unit has an existing deficit fund balance,

 

incurs a deficit fund balance in the most recently completed fiscal

 

year, or adopts a budget for a fiscal year that projects a deficit

 

fund balance, the local unit shall immediately notify the state

 

treasurer.

 

     (3) Within 90 days after notifying the state treasurer under

 

subsection (2), the local unit shall formulate and submit to the

 

state treasurer, in a form and manner prescribed by the department

 

of treasury, a deficit elimination plan for evaluation and

 

certification that the plan will assure elimination of the deficit.

 

If requested by a local unit, the department of treasury may assist

 

that local unit in the formulation and implementation of the plan.

 

Upon certification by the state treasurer, the local unit shall

 

implement the plan.

 

     (4) The state treasurer may recognize a financial plan to

 

correct a deficit condition submitted under section 303 of the

 

revised municipal finance act, 2001 PA 34, MCL 141.2303, or section

 

921 of the Glenn Steil state revenue sharing act of 1971, 1971 PA

 

140, MCL 141.921, as satisfying the requirement for a deficit

 

elimination plan under this section.

 

     (5) If a local unit fails to comply with this section, the

 

state treasurer may withhold state funds otherwise payable to the

 

local unit to the extent the state treasurer determines necessary

 

to assure compliance with this section by the local unit.

 

     Sec. 14. (1) Unless otherwise provided by law, charter,

 

resolution, or ordinance, the chief administrative officer shall

 

have in each local unit has final responsibility for budget

 

preparation, presentation of the a recommended budget to the

 

legislative body, and the control of expenditures under the budget

 

and the general appropriations act.

 

     (2) Unless another person is designated by charter, the chief

 

administrative officer in each local unit shall prepare the

 

recommended annual budget for the ensuing fiscal year in the manner

 

provided in sections 15 to 20a. The budgetary centers of the local

 

unit shall provide to the chief administrative officer information

 

which the chief administrative officer considers necessary and

 

essential to the preparation of a budget for the ensuing fiscal

 

period for presentation to the local unit's legislative body. Each

 

administrative officer or employee of a budgetary center shall

 

comply promptly with a request for information which the chief

 

administrative officer makes.

 

     (3) The chief administrative officer shall transmit the

 

recommended budget to the legislative body according to an

 

appropriate time schedule developed by the local unit. The schedule

 

shall allow adequate time for review and adoption by the

 

legislative body before commencement of the budget year. The

 

recommended budget, when transmitted by the chief administrative

 

officer, shall be accompanied by a suggested proposed general

 

appropriations act to implement the budget. The chief

 

administrative officer for a local unit subject to section 1 shall

 

present a recommended budget and proposed general appropriations

 

act that conforms to the uniform chart of accounts. The chief

 

administrative officer for a local unit subject to the requirements

 

of section 622 or 1281 of the revised school code, 1976 PA 451, MCL

 

380.622 and 380.1281, shall present a recommended budget and

 

proposed general appropriations act that conforms to the basic

 

accounting system prescribed by the department of education. The

 

suggested proposed general appropriations act shall fulfill the

 

requirements of section 16. A proposed general appropriations act

 

may not adopt a recommended budget by reference.

 

     (4) The legislative body shall consider the recommended budget

 

and proposed general appropriations act transmitted by the chief

 

administrative officer. shall be considered by the legislative

 

body.

 

     (5) The chief administrative officer shall furnish to the

 

legislative body information the legislative body requires for

 

proper consideration of the recommended budget and proposed general

 

appropriations act. Before final passage of a general

 

appropriations act by the legislative body, the legislative body

 

shall hold a public hearing shall be held as required by 1963 (2nd

 

Ex Sess) PA 43, MCL 141.411 to 141.415, and the open meetings act,

 

1976 PA 267, MCL 15.261 to 15.275.

 

     Sec. 15. (1) The recommended budget shall include at least the

 

following:

 

     (a) Expenditure data for the most recently completed fiscal

 

year and estimated expenditures for the current fiscal year.

 

     (b) An estimate of the expenditure amounts required to

 

conduct, in the ensuing fiscal year, the government of the local

 

unit, including its budgetary centers.

 

     (c) Revenue data for the most recently completed fiscal year

 

and estimated revenues for the current fiscal year.

 

     (d) An estimate of the revenues, by source of revenue, to be

 

raised or received by the local unit in the ensuing fiscal year.

 

     (e) The amount of surplus or deficit that has accumulated from

 

prior fiscal years, together with an estimate of the amount of

 

surplus or deficit expected in the current fiscal year. The

 

inclusion of the amount of an authorized debt obligation to fund a

 

deficit shall be sufficient to satisfy the requirement of funding

 

the amount of a deficit estimated under this subdivision.

 

     (f) An estimate of the amounts needed for deficiency,

 

contingent, or emergency purposes.

 

     (g) Other data relating to fiscal conditions that the chief

 

administrative officer considers to be useful in considering the

 

financial needs of the local unit.

 

     (h) For a school district, intermediate school district, or

 

public school academy required to submit a periodic financial

 

status report under section 1219 of the revised school code, 1976

 

PA 451, MCL 380.1219, or an enhanced deficit elimination plan under

 

section 1220 of the revised school code, 1976 PA 451, MCL 380.1220,

 

other data relating to fiscal conditions that the state treasurer

 

considers to be useful in considering the financial needs of the

 

school district, intermediate school district, or public school

 

academy in the form and manner prescribed by the department of

 

treasury.

 

     (i) For a school district or public school academy, all of the

 

following:

 

     (i) Pupil counts for pupils in membership in the school

 

district or public school academy for the current fiscal year and

 

the 2 prior fiscal years, as determined under the state school aid

 

act of 1979, 1979 PA 94, MCL 388.1601 to 388.1896, and projected

 

pupil counts for pupils in membership in the school district or

 

public school academy for the next 3 fiscal years.

 

     (ii) Projected cash flow for the school district or public

 

school academy for the remainder of the current fiscal year and

 

projected cash flow for the next 3 fiscal years.

 

     (iii) A cash flow borrowing ratio for the current fiscal year,

 

the prior 2 fiscal years, and a projected cash flow borrowing ratio

 

for the next 3 fiscal years. As used in this subparagraph, "cash

 

flow borrowing ratio" means the quotient of the sum of the total

 

amount of any tax anticipation notes issued by the school district

 

or public school academy in the fiscal year and the total amount of

 

any state school aid anticipation notes issued by the school

 

district or public school academy in the fiscal year divided by the

 

total general fund revenue for the fiscal year.

 

     (iv) An operating reserve ratio for the current fiscal year,

 

the prior 2 fiscal years, and a projected operating reserve ratio

 

for the next 3 fiscal years. As used in this subparagraph,

 

"operating reserve ratio" means the quotient of the general fund

 

balance divided by the total general fund expenditures for a fiscal

 

year.

 

     (v) An operating margin ratio for the current fiscal year, the

 

prior 2 fiscal years, and a projected operating margin ratio for

 

the next 3 fiscal years. As used in this subparagraph, "operating

 

margin ratio" means the quotient of the difference between the

 

total general fund revenue and total general fund expenditures for

 

a fiscal year divided by the total general fund revenue for the

 

fiscal year.

 

     (vi) A fund balance change ratio for the current fiscal year,

 

the prior 2 fiscal years, and a projected fund balance change ratio

 

for the next 3 fiscal years. As used in this subparagraph, "fund

 

balance change ratio" means the quotient of the prior fiscal year

 

general fund balance and the current fiscal year general fund

 

balance divided by the prior fiscal year general fund balance.

 

     (2) The total estimated expenditures, including an accrued

 

deficit, in the budget shall not exceed the total estimated

 

revenues, including an available unappropriated surplus and the

 

proceeds from bonds or other obligations issued under the fiscal

 

stabilization act, 1981 PA 80, MCL 141.1001 to 141.1011, and the

 

emergency municipal loan act, 1980 PA 243, MCL 141.931 to 141.942,

 

or the balance of the principal of these bonds or other

 

obligations.

 

     Sec. 16. (1) Unless another method for adopting a budget is

 

provided by a charter provision in effect on April 1, 1980, the

 

legislative body of each local unit shall pass a general

 

appropriations act for all funds except trust or agency, internal

 

service, enterprise, debt service or capital project funds for

 

which the legislative body may pass a special appropriation act.

 

     (2) The If the local unit is authorized to levy ad valorem

 

property taxes, the general appropriations act shall set forth the

 

total number of mills of ad valorem property taxes to be levied and

 

the purposes for which that millage is to be levied. The amendatory

 

act that added this subsection shall be known and may be cited as

 

"the truth in budgeting act".

 

     (3) The general appropriations act shall set forth the amounts

 

appropriated by the legislative body to defray the expenditures and

 

meet the liabilities of the local unit for the ensuing fiscal year,

 

and shall set forth a statement of estimated revenues, by source,

 

in each fund for the ensuing fiscal year. The general

 

appropriations act may not adopt a recommended budget by reference.

 

An appropriation included within a general appropriations act is

 

not a mandate to spend.

 

     (4) The general appropriations act shall be consistent with

 

and may not alter the uniform charts of accounts prescribed by the

 

state treasurer or, for local school districts and intermediate

 

school districts, by the state board department of education.

 

     (5) This act shall not be interpreted to mandate the

 

development or adoption by a local unit of a line-item budget or

 

line-item general appropriations act. If a school district,

 

intermediate school district, or public school academy is subject

 

to an enhanced deficit elimination plan under section 1220 of the

 

revised school code, 1976 PA 451, MCL 380.1220, the enhanced

 

deficit elimination plan may require the school district,

 

intermediate school district, or public school academy to develop

 

or adopt a line-item budget or line-item general appropriations

 

act, or both.

 

     (6) The If the local unit is authorized to levy taxes, the

 

legislative body shall determine the amount of money to be raised

 

by taxation necessary to defray the expenditures and meet the

 

liabilities of the local unit for the ensuing fiscal year , under

 

the general appropriations act, shall order that money to be raised

 

by taxation, within statutory and charter limitations, and shall

 

cause the money raised by taxation to be paid into the funds of the

 

local unit.

 

     (7) Except as otherwise permitted by section 102 of the state

 

school aid act of 1979, 1979 PA 94, MCL 388.1702, or by other law,

 

the legislative body shall not adopt a general appropriations act

 

or an amendment to that act which causes estimated total

 

expenditures, including an accrued deficit, to exceed total

 

estimated revenues, including an available surplus and the proceeds

 

from bonds or other obligations issued under the fiscal

 

stabilization act, 1981 PA 80, MCL 141.1001 to 141.1011, or the

 

emergency municipal loan act, 1980 PA 243, MCL 141.931 to 141.942,

 

or the balance of the principal of these bonds or other

 

obligations.

 

     Sec. 17. (1) Except as otherwise provided in section 19, a

 

deviation from the original general appropriations act shall not be

 

made without amending the general appropriations act. Subject to

 

section 16(2), the legislative body of the local unit shall amend

 

the general appropriations act as soon as it becomes apparent that

 

a deviation from the original general appropriations act then in

 

effect is necessary and the amount of the deviation can be

 

determined. For a school district, intermediate school district, or

 

public school academy subject to an enhanced deficit elimination

 

plan under section 1220 of the revised school code, 1976 PA 451,

 

MCL 380.1220, the legislative body of the school district,

 

intermediate school district, or public school academy shall amend

 

the general appropriations act as soon as the state treasurer

 

notifies the school district, intermediate school district, or

 

public school academy that compliance with the enhanced deficit

 

elimination plan requires a deviation from the general

 

appropriations act then in effect with the amount of the deviation

 

consistent with the amount requested by the state treasurer. An

 

amendment shall indicate each intended alteration in the purpose of

 

each appropriation item affected by the amendment. The legislative

 

body may require that the chief administrative officer or fiscal

 

officer of a local unit shall provide it the legislative body of

 

the local unit with periodic reports, not less than quarterly, on

 

the financial condition of the local unit.

 

     (2) If, during a fiscal year, it appears to the chief

 

administrative officer or to the legislative body that the actual

 

and probable revenues from taxes and other sources in a fund are

 

less than the estimated revenues, including an available surplus

 

upon which appropriations from the fund were based and the proceeds

 

from bonds or other obligations issued under the fiscal

 

stabilization act, 1981 PA 80, MCL 141.1001 to 141.1011, or the

 

emergency municipal loan act, 1980 PA 243, MCL 141.931 to 141.942,

 

or the balance of the principal of these bonds or other

 

obligations, the chief administrative officer or fiscal officer

 

shall present to the legislative body recommendations which, if

 

adopted, would prevent expenditures from exceeding available

 

revenues for that current fiscal year. For a school district,

 

intermediate school district, or public school academy, if during a

 

fiscal year it appears to the chief administrative officer or

 

legislative body of the school district, intermediate school

 

district, or public school academy that actual pupil membership

 

within the school district, intermediate school district, or public

 

school academy during the fiscal year will be less than the

 

projected pupil membership upon which the general appropriations

 

act then in effect was based, the chief administrative officer

 

shall present to the legislative body recommendations that, if

 

adopted, should prevent expenditures from exceeding available

 

revenues for the fiscal year. The recommendations under this

 

subsection shall include proposals for reducing appropriations from

 

the fund for budgetary centers in a manner that would cause the

 

total of appropriations to not be greater than the total of revised

 

estimated revenues of the fund, or proposals for measures necessary

 

to provide revenues sufficient to meet expenditures of the fund, or

 

both. The recommendations shall recognize the requirements of state

 

law and the provisions of collective bargaining agreements.

 

     Sec. 18. (1) A member of the legislative body, chief

 

administrative officer, administrative officer, or employee or

 

other officer of the local unit shall not create a debt or incur a

 

financial obligation on behalf of the local unit unless the debt or

 

obligation is permitted by law.

 

     (2) The chief administrative officer may cause the

 

appropriations made by the legislative body authorized in the

 

general appropriations act for the local unit and its budgetary

 

centers to be divided into allotments if the allotments are based

 

upon the periodic requirements of the local unit and its budgetary

 

centers and consistent with the uniform chart of accounts for the

 

local unit. For a school district, intermediate school district, or

 

public school academy subject to an enhanced deficit elimination

 

plan under section 1220 of the revised school code, 1976 PA 451,

 

MCL 380.1220, the state treasurer may require the chief

 

administrative officer of the school district, intermediate school

 

district, or public school academy to cause appropriations

 

authorized in the general appropriations act for the school

 

district, intermediate school district, or public school academy to

 

be divided into allotments.

 

     (3) Except as otherwise provided in section 19, the chief

 

administrative officer, an administrative officer, or an employee

 

or other officer of the local unit shall not incur expenditures

 

against an appropriation account in excess of the amount

 

appropriated by the legislative body. The Except for transfers

 

authorized under section 19(2) or by charter or law, the chief

 

administrative officer, an administrative officer, or an employee

 

or other officer of the local unit shall not apply or divert money

 

of the local unit for purposes inconsistent with those specified in

 

the appropriations of the legislative body.general appropriations

 

act.

 

     (4) No duties shall be delegated to the chief administrative

 

officer that diminish any charter or statutory responsibilities of

 

an elected or appointed official. No duties of a chief

 

administrative officer under this act or any charter provision or

 

law may be diminished or transferred except as expressly authorized

 

by charter or law.

 

     Sec. 19. (1) A Except for transfers authorized under

 

subsection (2) or by charter or law, a member of the legislative

 

body, the chief administrative officer, an administrative officer,

 

or an employee or other officer of a local unit shall not authorize

 

or participate in the expenditure of funds except as authorized by

 

a general appropriations act. An Except for transfers authorized

 

under subsection (2) or by charter or law, an expenditure shall not

 

be incurred except in pursuance of the authority and appropriations

 

of the legislative body of the local unit.general appropriations

 

act then in effect.

 

     (2) The legislative body in a general appropriations act may

 

permit the chief administrative officer to execute transfers within

 

limits stated in the act between appropriations or budgetary

 

centers within the local unit without the prior approval of the

 

legislative body.

 

     Sec. 20a. (1) The department of treasury shall publish

 

suggested manuals, forms, and operating procedures which may that

 

shall be used by local units in complying with this act. These

 

manuals, forms, and procedures shall be designed to account for the

 

various kinds and sizes of local units, except that the suggested

 

manuals, forms, and operating procedures which may be used by

 

intermediate school districts and local school districts shall be

 

developed by the superintendent of public instruction and shall be

 

promulgated by the superintendent of public instruction pursuant to

 

Act No. 306 of the Public Acts of 1969, as amended, being sections

 

24.201 to 24.315 of the Michigan Compiled Laws.the administrative

 

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

 

     (2) The suggested manuals, forms, and operating procedures

 

described in subsection (1) shall be developed and may be

 

periodically updated by an advisory committee selected by the

 

department of treasury composed of persons from the department of

 

education, other interested state agencies, local units,

 

associations of local units, and other interested or concerned

 

groups.

 

     (3) The department of treasury shall provide, or and shall

 

cooperate in the provision of, training and educational programs to

 

assist local units to comply with this act. The department of

 

education shall provide, and shall cooperate in the provision of,

 

training and educational programs to assist school districts,

 

intermediate school districts, and public school academies to

 

comply with this act.

 

     Enacting section 1. This amendatory act does not take effect

 

unless all of the following bills of the 97th Legislature are

 

enacted into law:

 

     (a) Senate Bill No.957                                       

 

           .

 

     (b) Senate Bill No.952                                       

 

           .