Operating Deficit; Notes or Bonds; Determining Amount of Deficit; Resolution; Pledge of Security; Maturity; Interest; Installments; Redemption; Valid and Binding General Obligations; Payment; Use of Proceeds; Review and Approval of Budget - Mich. Comp. Laws Section 380.1356
Legal Research Home > Michigan Laws > School Code Of 1976 > Operating Deficit; Notes or Bonds; Determining Amount of Deficit; Resolution; Pledge of Security; Maturity; Interest; Installments; Redemption; Valid and Binding General Obligations; Payment; Use of Proceeds; Review and Approval of Budget - Mich. Comp. Laws Section 380.1356
(1) Notwithstanding section 1351, a school district that has an operating or projected operating deficit in excess of $100.00 per membership pupil may borrow and issue its negotiable interest bearing notes or bonds for the purpose of funding the deficit in accordance with this section. This authority is in addition to and not in derogation of any power granted to a school district by any other provision of this act. However, except for the purpose of funding an operating or projected operating deficit resulting from a state tax tribunal order or a court order, a school district shall not initiate the procedures to borrow money or issue notes or bonds under this section after January 1, 1994.
(2) Before a board of a school district issues notes or bonds under this section, the board shall provide by resolution for the submission of the following certified and substantiated information to the department of treasury:
(a) There exists or will exist an operating deficit in the school district in excess of $100.00 per membership pupil.
(b) During or before the fiscal year in which the application is made, the school district has made every available effort to offset the deficit, including submission of a question to the school electors of the district to increase the rate of ad valorem property taxes levied in the school district.
(c) The school district has a plan approved by the school board that outlines actions to be taken to balance future expenditures with anticipated revenues.
(3) The existence of the operating or projected operating deficit and the amount of the operating or projected operating deficit shall be determined by the department of treasury, using normal school accounting practices. If a financial audit is required to arrive at a conclusive determination as to the amount of the deficit, the state treasurer shall charge all necessary expenses for the audit, including per diem and travel expenses, to the school district, and the school district shall make payment to the state treasurer for these expenses. The determination by the department of treasury is final and conclusive as to the existence of an operating or projected operating deficit, the amount of the deficit, and the amount of the deficit per membership pupil.
(4) The notes or bonds may be issued in 1 or more series by resolution adopted by the school board, which resolution in each case shall make reference to the determination of the department of treasury. The amount of a note or bond issued shall not exceed the amount of the operating deficit as shown by the determination.
(5) The school district shall pledge as secondary security for the notes or bonds future state school aid payments, if any, and other funds of the district legally available as security.
(6) The notes or bonds shall mature serially with annual maturities not more than 10 years from their date and shall bear interest, payable annually or semiannually, at a rate or rates not exceeding a rate determined by the school board in the school district's borrowing resolution. The first principal installment on the notes or bonds shall be due not more than 18 months from the date of the notes or bonds, and a principal installment on the notes shall not be less than 1/3 of the principal amount of a subsequent principal installment. The notes or bonds may be made subject to redemption before maturity with or without premium in a manner and at times provided in the resolution authorizing the issuance of the notes or bonds.
(7) Notes or bonds issued under this section are valid and binding general obligations of the school district, it being the intent and purpose that the notes or bonds and the interest on the notes or bonds be promptly paid when due from the first money available to the district not pledged for other indebtedness and except to the extent that the use is restricted by the state constitution of 1963 or the laws of the United States.
(8) Except as otherwise provided in this section, bonds and notes issued under this section are subject to the revised municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.
(9) The proceeds of the sale of notes authorized under this section, after payment of the costs of issuance of the notes or bonds and interest on the notes or bonds for a period not to exceed 9 months, shall be used solely for the purpose of paying necessary operating expenses of the school district, including the payment of principal of and interest on notes or bonds of the school district issued for operating purposes under this or any other act.
(10) A board of a school district that borrows pursuant to subsections (1) to (9) shall submit its budget for review and approval to the department of education. The department of education shall take necessary steps, subject to the school district's contracts and statutory obligations, to assure that the expenditures of a school district that receives money under this part shall not exceed revenues on an annual basis and that the school district maintains a balanced budget.
Section: Previous 380.1347 380.1347.amended 380.1347a 380.1351 380.1351a 380.1351b 380.1352 380.1356 380.1361 380.1362 380.1363 380.1364 380.1371 380.1372 380.1401 Next
Last modified: March 17, 2013