draft legislation - michigan financial review commission
DESCRIPTION
A bill to amend 2014 PA 181.TRANSCRIPT
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DRAFT 1 07/16/2015CONFIDENTIAL
ADVISORY AND PRELIMINARY TO A FINAL DETERMINATION(Michigan Financial Review Commission for Education Districts)
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DRAFT BILL No. _____
________ ____, 2015, Introduced by Rep./Sen. _______________ and referred to the Committee on__________________________________.
A bill to amend 2014 PA 181, entitled
"Michigan financial review commission act,"
by amending sections 2, 3, 4, 5, 6, 7, 8, and 12 (MCL 141.1632,
141.1633, 141.1634, 141.1635, 141.1636, 141.1637, 141.1638, and
141.1642.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. The legislature finds and declares the following:1
(a) It is the public policy of this state to exercise its2
sovereign powers with regard to debt issuance and matters of3
statewide concern in a manner calculated to foster the fiscal4
integrity of all municipal governments AND SCHOOL DISTRICTS to5
assure that those municipalities SCHOOL DISTRICTS provide for the6
health, safety, and welfare of their citizens RESIDENTS; pay7
principal and interest owed on debt obligations when due; meet8
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financial obligations to their existing and former employees,1
vendors, and suppliers; and provide for proper financial planning2
procedures and budgeting practices. The inability of a municipal3
government to provide essential services to its citizens OR A4
SCHOOL DISTRICT TO PROVIDE PUBLIC EDUCATION SERVICES TO ITS5
RESIDENTS as a result of fiscal emergencies is determined to affect6
adversely the health, safety, and welfare of not only that A7
municipality's citizens AND A SCHOOL DISTRICT'S RESIDENTS, but also8
other citizens of this state.9
(b) The police and fire retirement system of certain qualified10
cities and the general retirement system of certain qualified11
cities are currently underfunded, causing communities across the12
state to face higher costs to borrow and invest funds, and have13
caused bondholders, bond insurers, and financial institutions14
anxiety over the financial health of not only certain qualified15
cities, but communities across this state.16
(c) Absent prospective state oversight over qualified cities17
AND QUALIFIED SCHOOL DISTRICTS, there exists a threat of increased18
costs in borrowing, reductions in credit or bond ratings, reduced19
faith from existing creditors of municipalities OR SCHOOL DISTRICTS20
and of this state, and dire financial circumstances from which this21
state and its political subdivisions may never fully recover.22
(d) Qualified cities AND QUALIFIED SCHOOL DISTRICTS have23
complex budgetary and fiscal needs, significant and complicated24
debt management issues, and financial assets and liabilities that25
impact, both positively and negatively, every unit of local26
government AND SCHOOL DISTRICT in this state and this state itself27
such that reasonable and balanced state oversight over qualified28
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cities AND QUALIFIED SCHOOL DISTRICTS is required as a reasonable1
exercise of this state's power for the benefit of residents2
throughout this state.3
(e) There are numerous residents of this state who have4
accrued pension benefits from a qualified city's pension systems,5
and those pensioners may reside throughout this state. The6
settlement of bankruptcy cases involving qualified cities is likely7
to have a substantial positive impact statewide.8
(f) Establishing a commission and execution by the commission9
of its powers granted under this act fulfill in all respects a10
public and governmental purpose for the benefit of the people of11
this state.12
(g) Ongoing fiscal oversight over qualified cities AND13
QUALIFIED SCHOOL DISTRICTS is a reasonable and sufficiently narrow14
regulation and serves a significant and legitimate public purpose15
because it inures to the benefit of all of this state's residents16
and aids in the remedy of a broad and general social problem.17
(h) Fiscal oversight over qualified cities will ensure that18
those QUALIFIED cities AND QUALIFIED SCHOOL DISTRICTS do not engage19
in the financial practices that led to financial emergencies and20
insolvency, and ultimately, entry into receivership and bankruptcy,21
which will ensure that those cities can provide basic and essential22
municipal services to their residents AND THAT THOSE SCHOOL23
DISTRICTS CAN PROVIDE PUBLIC EDUCATION SERVICES TO THEIR RESIDENTS.24
Sec. 3. As used in this act:25
(a) "Applicable contract" means a contract for goods or26
services proposed or entered into by a qualified city OR QUALIFIED27
SCHOOL DISTRICT that either exceeds $750,000.00, or a higher amount28
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as determined by the commission, or is for a term exceeding 21
years. Applicable contract also includes multiple contracts for2
less than $750,000.00, or the higher amount determined by the3
commission, with 1 entity that, in the aggregate, exceed4
$750,000.00, or a higher amount as determined by the commission,5
within a 12-month period.6
(b) "Federal bankruptcy code" means the federal bankruptcy7
code, 11 USC 101 to 1532.8
(c) "Financial review commission" or "commission" means a9
financial review commission created in section 4.10
(d) "Operating expenses" means the reasonable operating11
expenses of the commission, including without limitation the cost12
of preparing accounting and other reports, costs of commission13
meetings or other required activities of the commission, counsel14
fees, including fees of the attorney general, and fees and expenses15
incurred for consultants and fiduciaries required to carry out the16
purposes of this act.17
(e) "Person" means an individual, corporation, limited or18
general partnership, association, joint venture, limited liability19
company, a governmental entity, including this state.20
(f) "Plan for adjustment" means the plan for the adjustment of21
debts of a qualified city approved and entered by a United States22
bankruptcy court under chapter 9 of title 11 of the United States23
Code, 11 USC 901 to 946.24
(g) "Professional services" means services that require a high25
degree of intellectual skill, an advanced degree, or professional26
licensing or certification. Those providing the professional27
services are distinguished based on their specialized knowledge,28
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experience, and expertise. Professional services include, but are1
not limited to, accounting, actuarial, appraisal, auditing,2
investment advisor, and legal services.3
(h) "Qualified city" means a city with a population of more4
than 600,000 that is subject to a plan for adjustment.5
(I) "QUALIFIED SCHOOL DISTRICT" MEANS AN EDUCATION DISTRICT6
FORMED UNDER PART 2A OF THE REVISED SCHOOL CODE, 1976 PA 451, MCL7
380.101 TO 380.110, FOR WHICH THE FUNCTIONS AND RESPONSIBILITIES OF8
A QUALIFYING SCHOOL DISTRICT UNDER SECTION 402 OF THE REVISED9
SCHOOL CODE, 1976 PA 451, MCL 380.402, HAVE BEEN TRANSFERRED UNDER10
THAT SECTION.11
(J) (i) "State treasurer" means the treasurer of this state or12
his or her designee who shall be designated by a written instrument13
signed by the state treasurer and maintained in a permanent file14
and whose signature shall have the same force and effect as the15
signature of the state treasurer for all purposes under this act.16
Sec. 4. (1) EXCEPT AS PROVIDED IN SUBSECTION (2), A A17
financial review commission is created within the department of18
treasury for each qualified city AND EACH QUALIFIED SCHOOL19
DISTRICT. Except as otherwise provided in this act, a commission20
shall exercise its powers, duties, functions, and responsibilities21
under this act independently of the state treasurer. The budgeting,22
procurement, personnel, and related management functions of a23
commission shall be performed under the direction and supervision24
of the state treasurer.25
(2) IF AN EDUCATION DISTRICT CREATED UNDER PART 2A OF THE26
REVISED SCHOOL CODE, 1976 PA 451, MCL 380.100 TO 380.110, BECOMES A27
QUALIFIED SCHOOL DISTRICT UNDER THIS ACT AND THE GEOGRAPHIC28
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BOUNDARIES OF THE QUALIFIED SCHOOL DISTRICT INCLUDES A QUALIFIED1
CITY FOR WHICH A FINANCIAL REVIEW COMMISSION IS OPERATING UNDER2
THIS ACT, ON THE TRANSFER DATE, AS THAT TERM IS DEFINED UNDER3
SECTION 402 OF THE REVISED SCHOOL CODE, 1976 PA 451, MCL 380.402,4
THE FINANCIAL REVIEW COMMISSION FOR THAT QUALIFIED CITY ALSO SHALL5
BE THE FINANCIAL REVIEW COMMISSION FOR THAT QUALIFIED SCHOOL6
DISTRICT AND A SECOND FINANCIAL REVIEW COMMISSION FOR THAT7
QUALIFIED SCHOOL DISTRICT SHALL NOT BE CREATED UNDER THIS ACT.8
Sec. 5. (1) Each commission shall consist of the following 99
members:10
(a) The state treasurer, who shall serve for the duration of11
his or her term of office.12
(b) The director of the department of technology, management,13
and budget or successor agency, or his or her designee, who shall14
serve for the duration of his or her term of office.15
(c) Three members appointed by the governor who have16
knowledge, skill, or experience in the field of business or finance17
and who shall possess knowledge, training, skill, or experience in18
budgeting, revenue forecasting, debt management or borrowing,19
actuarial science, law, or business operations, at least 1 of whom20
is a resident of that qualified city OR QUALIFIED SCHOOL DISTRICT21
OTHER THAN A SCHOOL DISTRICT DESCRIBED IN SECTION 4(2), and at22
least 1 of whom is a resident of this state who is not a resident23
of a qualified city OR QUALIFIED SCHOOL DISTRICT OTHER THAN A24
SCHOOL DISTRICT DESCRIBED IN SECTION 4(2).25
(d) The mayor or chief executive officer of that qualified26
city OR QUALIFIED SCHOOL DISTRICT OTHER THAN A SCHOOL DISTRICT27
DESCRIBED IN SECTION 4(2), or his or her designee, who shall serve28
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for the duration of the mayor's or chief executive officer's term1
of office.2
(e) One member appointed by the governor from a list of 3 or3
more individuals nominated by the senate majority leader who have4
knowledge, skill, or experience in the field of business or5
finance, and who shall possess knowledge, training, skill, or6
experience in budgeting, revenue forecasting, debt management or7
borrowing, actuarial science, law, or business operations, and 1 of8
whom is a resident of that qualified city OR QUALIFIED SCHOOL9
DISTRICT OTHER THAN A SCHOOL DISTRICT DESCRIBED IN SECTION 4(2).10
(f) One member appointed by the governor from a list of 3 or11
more individuals nominated by the speaker of the house of12
representatives who have knowledge, skill, or experience in the13
field of business or finance, and who shall possess knowledge,14
training, skill, or experience in budgeting, revenue forecasting,15
debt management or borrowing, actuarial science, law, or business16
operations, and 1 of whom is a resident of that qualified city OR17
QUALIFIED SCHOOL DISTRICT OTHER THAN A SCHOOL DISTRICT DESCRIBED IN18
SECTION 4(2).19
(g) The president or chairperson of the qualified city's20
governing body or his or her designee OR QUALIFIED SCHOOL21
DISTRICT'S SCHOOL BOARD OTHER THAN A SCHOOL DISTRICT DESCRIBED IN22
SECTION 4(2), who shall serve for the duration of the president's23
or chairperson's term of office.24
(2) The appointed members shall serve for a term of 4 years,25
except that of the 5 members first appointed, the appointees of the26
governor shall serve a term of 1, 2, and 4 years respectively, the27
appointee of the governor who was nominated by the speaker of the28
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house of representatives shall serve a term of 2 years, and the1
appointee of the governor who was nominated by the senate majority2
leader shall serve a term of 3 years. Appointed members serve at3
the pleasure of, and may be removed by, their respective appointing4
official.5
(3) Members of a commission shall serve without compensation6
but may receive reasonable reimbursement for necessary travel and7
expenses incurred in the discharge of their official duties.8
(4) The state treasurer or his or her designee shall serve as9
chairperson of a commission.10
(5) A majority of the members of the commission shall11
constitute a quorum of the commission for the transaction of12
business. The commission shall meet no less than monthly and at13
times and places designated by the chairperson. Actions of the14
commission shall be approved by a majority of the members.15
(6) The commission shall conduct its business at public16
meetings in compliance with the open meetings act, 1976 PA 267, MCL17
15.261 to 15.275. However, members of the commission may attend and18
participate in a meeting of the commission by the use of19
telecommunication or other electronic equipment if their attendance20
and participation by the use of telecommunication or other21
electronic equipment is authorized by the bylaws of the commission22
and that meeting is otherwise conducted in compliance with the open23
meetings act, 1976 PA 267, MCL 15.261 to 15.275.24
(7) A writing prepared, owned, used, in the possession of, or25
retained by the commission in the performance of an official26
function is subject to the freedom of information act, 1976 PA 442,27
MCL 15.231 to 15.246.28
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(8) The commission shall adopt bylaws for governance of the1
commission, which shall, at a minimum, address the procedures for2
conducting meetings, including voting procedures, and the3
requirements of its members to attend meetings. Procedural rules4
required by this section are not subject to the administrative5
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.6
(9) The commission may contract for professional services, as7
it requires, and shall determine the qualifications it considers8
necessary.9
(10) The members of the commission and contractors or agents10
of the commission are subject to 1968 PA 317, MCL 15.321 to 15.330,11
and 1968 PA 318, MCL 15.301 to 15.310.12
(11) A member of the commission, and any person the commission13
contracts with, shall discharge the duties of his or her position14
in a nonpartisan manner, with good faith, and with that degree of15
diligence, care, and skill that an ordinarily prudent person would16
exercise under similar circumstances in a like position. The17
commission shall adopt an ethics policy governing the conduct of18
commission members and officers and employees of the commission.19
(12) Commission members shall take and subscribe to the20
constitutional oath of office under section 1 of article XI of the21
state constitution of 1963. The oath shall be filed with the22
secretary of state.23
Sec. 6. (1) The commission shall provide oversight for a24
qualified city beginning on the effective date of the plan for25
adjustment or of this act, whichever is later. THE COMMISSION SHALL26
PROVIDE OVERSIGHT FOR A QUALIFIED SCHOOL DISTRICT BEGINNING ON THE27
DATE THE SCHOOL DISTRICT BECOMES A QUALIFIED SCHOOL DISTRICT.28
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(2) The commission shall ensure that the qualified city OR1
QUALIFIED SCHOOL DISTRICT is complying with the terms and2
conditions of this act and of the plan for adjustment, if3
applicable. Except as otherwise provided in section 8, the4
commission shall by October 1 each year certify that the qualified5
city OR QUALIFIED SCHOOL DISTRICT is in substantial compliance with6
the provisions of this act.7
(3) The commission shall ensure that, where applicable, a8
qualified city OR QUALIFIED SCHOOL DISTRICT complies with the9
provisions of all of the following and may request verification of10
compliance:11
(a) Section 8 of the publicly funded health insurance12
contribution act, 2011 PA 152, MCL 15.568.13
(b) Sections 4i, 4p, 4s, and 4t of the home rule city act,14
1909 PA 279, MCL 117.4i, 117.4p, 117.4s, and 117.4t.15
(c) The revised municipal finance act, 2001 PA 34, MCL16
141.2101 to 141.2821.17
(d) The uniform budgeting and accounting act, 1968 PA 2, MCL18
141.421 to 141.440a.19
(E) FOR A QUALIFIED SCHOOL DISTRICT, ALL OF THE FOLLOWING:20
(i) THE REVISED SCHOOL CODE, 1976 PA 451, MCL 380.1 TO21
380.1853.22
(ii) ARTICLE I OF THE STATE SCHOOL AID ACT OF 1979, 1979 PA 94,23
MCL 388.1601 TO 388.1772.24
(iii) THE PUBLIC SCHOOL EMPLOYEES RETIREMENT ACT OF 1979, 198025
PA 300, MCL 38.1301 TO 38.1467.26
(4) During the period of oversight FOR A QUALIFIED CITY, the27
commission shall review and approve that qualified city's 4-year28
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financial plan required by section 4t of the home rule city act,1
1909 PA 279, MCL 117.4t. A 4-year financial plan described in this2
subsection shall be submitted at least 100 days prior to the3
commencement of a qualified city's fiscal year. The commission4
shall approve or disapprove the 4-year financial plan within 305
days of receipt. If disapproved, the commission shall provide6
rationale in writing for disapproval and a qualified city shall7
submit a revised plan within 15 days that comports with the8
commission's rationale for rejection. The commission shall approve9
or disapprove that revised plan within 15 days. The commission may10
also require adjustments to the financial plan to modify11
expenditures to satisfy debt service, adjust projected revenues to12
comply with financial controls or accounting practices, and reduce13
expenditures to conform to consensus revenue estimates if required14
in section 7 to comply with the provisions of section 4t of the15
home rule city act, 1909 PA 279, MCL 117.4t. If the qualified city16
fails to submit an acceptable financial plan, the commission may17
adopt and impose upon the qualified city a financial plan18
satisfying the requirements of this act and section 4t of the home19
rule city act, 1909 PA 279, MCL 117.4t, until that time as the20
qualified city submits an acceptable financial plan.21
(5) Subject to a plan for adjustment and any collective22
bargaining agreements still in effect, the commission shall23
establish and maintain programs and requirements for the24
responsible fiscal management of that qualified city OR QUALIFIED25
SCHOOL DISTRICT. The commission's programs and requirements shall26
include all of the following:27
(a) Increased managerial accountability.28
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(b) The streamlining of the provision of city OR SCHOOL1
DISTRICT services.2
(c) Improved collection of outstanding tax revenues.3
(d) Review of the compensation and benefits of city OR SCHOOL4
DISTRICT employees and recommendation of adjustments where5
necessary.6
(6) Notwithstanding any charter provision or local ordinance7
to the contrary, all applicable contracts are subject to review and8
approval by the commission. The commission may consider a number of9
factors when reviewing an applicable contract, including whether10
the applicable contract was subject to a competitive bid process.11
Only applicable contracts that are first approved by the governing12
body and mayor OR CHIEF EXECUTIVE of a qualified city OR SCHOOL13
DISTRICT as required by law, charter, ordinance, or policy are14
subject to review by the commission. If an applicable contract is15
not rejected by the commission within 30 days of its submission,16
that applicable contract shall be considered approved by the17
commission.18
(7) A qualified city OR QUALIFIED SCHOOL DISTRICT, when19
required by the commission, shall present written reports regarding20
its financial stability and shall permit the commission to audit or21
inspect financial statements, actuarial reports, revenue estimates,22
and any and all other documents, data, reports, or findings that23
the commission considers necessary to carry out its purpose under24
this act. The commission may require that qualified city's OR25
QUALIFIED SCHOOL DISTRICT'S chief financial officer to certify in26
writing the accuracy of any documents the commission requests.27
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(8) The commission shall, on June 1 and December 1 of each1
year in which the commission has oversight over a qualified city OR2
A QUALIFIED SCHOOL DISTRICT, file a written report with the3
governor. A copy of the report shall be submitted to the senate4
majority leader and the speaker of the house of representatives and5
posted on the department of treasury website. A copy of the report6
shall be sent to the mayor OR CHIEF EXECUTIVE and governing body of7
the qualified city OR QUALIFIED SCHOOL DISTRICT.8
(9) Except as otherwise provided in this subsection, the9
commission shall approve all collective bargaining agreements,10
including any addendums to those agreements, to which that11
qualified city OR QUALIFIED SCHOOL DISTRICT is a party after12
approval by the governing body and CHIEF EXECUTIVE OR mayor of the13
qualified city OR QUALIFIED SCHOOL DISTRICT as required by charter14
or law. The commission shall approve or reject collective15
bargaining agreements submitted to it within 45 days of submission.16
Collective bargaining agreements submitted to the commission shall17
not be executed unless and until the commission approves those18
agreements. Collective bargaining agreements approved by an19
emergency manager appointed under section 12 of the local financial20
stability and choice act, 2012 PA 436, MCL 141.1552, shall not be21
subject to commission approval under this subsection.22
(10) FOR A QUALIFIED CITY, THE The commission may file23
supplementary information relating to the financial condition of24
the qualified city with an arbitration panel in arbitration25
proceedings in which the qualified city is a party pursuant to 196926
PA 312, MCL 423.231 to 423.247.27
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(11) The mayor OR CHIEF EXECUTIVE OFFICER, governing body, and1
chief financial officer of a qualified city OR QUALIFIED SCHOOL2
DISTRICT shall, at least 45 days prior to the beginning of each3
fiscal quarter, certify in writing to the commission the amount of4
debt service due on bonds, leases, or other municipal OR SCHOOL5
DISTRICT debt. A qualified city OR SCHOOL DISTRICT shall6
specifically report debt service requirements, calculated through7
final maturity, and certify its ability to meet those requirements8
through the end of the current fiscal year.9
Sec. 7. A commission may do 1 or more of the following for its10
qualified city OR QUALIFIED SCHOOL DISTRICT:11
(a) FOR A QUALIFIED CITY, REVIEW Review and approve that12
qualified city's consensus revenue estimate under section 4t of the13
home rule city act, 1909 PA 279, MCL 117.4t. The commission may14
also, after consultation with the qualified city OR QUALIFIED15
SCHOOL DISTRICT, revise a revenue estimate prepared in connection16
with a budget, budget modification, financial plan, or financial17
plan modification, if the commission determines that the revenue18
estimate was not based on assumptions and methods of estimation19
reasonable and appropriate under the circumstances and in view of20
the objectives and purposes of this act. After consultation with21
the qualified city OR QUALIFIED SCHOOL DISTRICT, the commission may22
determine the estimated revenues for the qualified city OR23
QUALIFIED SCHOOL DISTRICT, but any revenue estimate adopted by the24
commission shall be based on the same requirements as the qualified25
city's OR QUALIFIED SCHOOL DISTRICT'S initial revenue estimate.26
(b) FOR A QUALIFIED CITY, REQUIRE THE Require a qualified city27
to submit the 4-year financial plan required in section 4t of the28
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home rule city act, 1909 PA 279, MCL 117.4t, in a form and manner1
the commission considers appropriate. The requirement to submit a2
4-year financial plan is not subject to waiver under section 8.3
(c) Review, modify, and approve proposed and amended4
operational budgets of a qualified city OR QUALIFIED SCHOOL5
DISTRICT. A proposed budget or budget amendment does not take6
effect unless approved by the commission.7
(d) Require the chief financial officer of the qualified city8
OR QUALIFIED SCHOOL DISTRICT to provide the commission with9
information it requests related to the qualified city's OR10
QUALIFIED SCHOOL DISTRICT’S finances. The commission may also11
require the chief financial officer to attend commission meetings.12
If the chief financial officer fails to comply with the provisions13
of this subdivision, the commission may require the qualified city14
OR QUALIFIED SCHOOL DISTRICT to remove the chief financial officer15
and appoint a successor.16
(e) Review and approve requests by a qualified city OR17
QUALIFIED SCHOOL DISTRICT to issue debt under the revised municipal18
finance act, 2001 PA 34, MCL 141.2101 to 141.2821, or any other law19
governing the issuance of bonds or notes. The commission may20
develop rules for the issuance of debt, including limitations that21
are greater than those provided in sections 401 to 405 of the22
revised municipal finance act, 2001 PA 34, MCL 141.2401 to23
141.2405. The debt described in this subdivision may not be issued24
unless and until approved by the commission and the commission's25
approval shall be in addition to any approval of the department of26
treasury as required by law.27
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(f) Review compliance by a qualified city with a deficit1
elimination plan submitted under section 21 of the Glenn Steil2
state revenue sharing act of 1971, 1971 PA 140, MCL 141.921, OR BY3
A QUALIFIED SCHOOL DISTRICT WITH A DEFICIT ELIMINATION PLAN4
SUBMITTED UNDER ARTICLE I OF THE STATE SCHOOL AID ACT OF 1979, 19795
PA 94, MCL 388.1601 TO 388.1772.6
(g) Approve the appointment of a qualified city's OR QUALIFIED7
SCHOOL DISTRICT’S chief financial officer. If that appointment is8
not approved by the commission within 45 days of written submission9
of the appointment by the qualified city OR QUALIFIED SCHOOL10
DISTRICT, the appointment is denied. The commission may require11
that any effort to terminate the chief financial officer be subject12
to commission review and approval.13
(h) Require the development and implementation of financial14
best practices for a qualified city OR QUALIFIED SCHOOL DISTRICT.15
(i) Recommend the adoption or amendment of certain charter16
provisions, bylaws, ordinances, policies, or operating procedures17
for the qualified city OR QUALIFIED SCHOOL DISTRICT, AS APPLICABLE.18
(j) Require the pursuit of financial or managerial training to19
ensure the proper discharge of duties for the qualified city OR20
QUALIFIED SCHOOL DISTRICT.21
(k) Make and execute contracts necessary to carry out the22
purposes of this act.23
(l) Sue or be sued. The commission may retain legal counsel to24
enforce any provisions of this act.25
(m) Require the qualified city OR QUALIFIED SCHOOL DISTRICT26
and the employees or agents of the qualified city OR QUALIFIED27
SCHOOL DISTRICT to timely produce and share all information and28
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documents, and provide access to all information on assets,1
services, records, and any other materials or documents the2
commission determines are necessary to carry out its3
responsibilities under this act. The commission may require the4
officers or employees of the qualified city OR QUALIFIED SCHOOL5
DISTRICT to attend commission meetings for any purpose necessary to6
carry out its responsibilities under this act.7
(n) Perform any duty provided by law that a receivership8
transition advisory board as described in section 23 of the local9
financial stability and choice act, 2012 PA 436, MCL 141.1563, may10
perform.11
(o) Perform any other duties assigned by the governor that are12
not inconsistent with the purposes of this act.13
Sec. 8. (1) Notwithstanding section 6, for its qualified city14
OR QUALIFIED SCHOOL DISTRICT, a commission shall, by resolution,15
waive the requirements designated in sections 6 and 7 as provided16
in subsection (2).17
(2) The commission shall grant a waiver under this section for18
its qualified city OR QUALIFIED SCHOOL DISTRICT if it certifies19
that all of the following conditions are met:20
(a) The commission certifies that a qualified city OR21
QUALIFIED SCHOOL DISTRICT has adopted and adhered to deficit-free22
budgets for 3 consecutive years that comply with generally accepted23
accounting principles and are in accordance with the uniform24
budgeting and accounting act, 1968 PA 2, MCL 141.421 to 141.440a.25
(b) The state treasurer and the qualified city's OR QUALIFIED26
SCHOOL DISTRICT’S chief financial officer, if applicable, certify27
that both of the following are met:28
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(i) All municipal securities or debt obligations sold by or for1
the benefit of that qualified city OR QUALIFIED SCHOOL DISTRICT in2
the general public market during the immediately preceding fiscal3
year and current fiscal year satisfied the capital and other4
financial requirements of the qualified city OR QUALIFIED SCHOOL5
DISTRICT during that period.6
(ii) There is a substantial likelihood that municipal7
securities or debt obligations can be sold BY THE QUALIFIED CITY OR8
QUALIFIED SCHOOL DISTRICT in the general public market during the9
remainder of the current fiscal year and the immediately succeeding10
fiscal year in amounts sufficient to substantially satisfy all of11
the capital and other financial requirements of the qualified city12
OR QUALIFIED SCHOOL DISTRICT during those periods in accordance13
with the qualified city's OR QUALIFIED SCHOOL DISTRICT’S financial14
plan, AS APPLICABLE.15
(c) FOR A QUALIFIED CITY, THE The qualified city's financial16
plan projects a balanced budget for the current and succeeding 317
fiscal years using generally accepted accounting principles and in18
accordance with the uniform budgeting and accounting act, 1968 PA19
2, MCL 141.421 to 141.440a, and section 4t of the home rule city20
act, 1909 PA 279, MCL 117.4t.21
(d) The qualified city OR QUALIFIED SCHOOL DISTRICT has22
demonstrated to the commission's satisfaction that the qualified23
city has sufficient ability to borrow in the municipal securities24
market.25
(e) The qualified city OR QUALIFIED SCHOOL DISTRICT did not26
violate the plan for adjustment in the immediately preceding fiscal27
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year, AS APPLICABLE, and is not in violation in the current fiscal1
year.2
(f) The state treasurer certifies that the qualified city OR3
QUALIFIED SCHOOL DISTRICT is in compliance with the uniform4
budgeting and accounting act, 1968 PA 2, MCL 141.421 to 141.440a.5
(g) The commission certifies that the qualified city OR6
QUALIFIED SCHOOL DISTRICT is in substantial compliance with this7
act.8
(h) FOR A QUALIFIED CITY, THE The qualified city has9
established as part of a system of compensation for employees10
retirement plans in which the qualified city contributes no more11
than 7% of an individual's base pay, excluding payment for overtime12
services, 1-time lump-sum payments, and the cost of fringe13
benefits, to an employee's retirement account. FOR A QUALIFIED14
SCHOOL DISTRICT, THE QUALIFIED SCHOOL DISTRICT HAS FULLY SATISFIED15
ALL OF ITS OBLIGATIONS TO THE SYSTEM CREATED UNDER THE PUBLIC16
SCHOOL EMPLOYEES RETIREMENT ACT OF 1979, 1980 PA 300, MCL 38.130117
TO 38.1467.18
(i) The qualified city OR QUALIFIED SCHOOL DISTRICT has19
implemented a program in which all contracts awarded by the20
qualified city OR QUALIFIED SCHOOL DISTRICT are posted on the21
qualified city's OR QUALIFIED SCHOOL DISTRICT’S public website22
within 30 days of the contract award, including the identity of the23
parties to the contract, the dollar amount of the contract, and a24
brief description of the goods or services provided by the25
contract.26
(3) The commission shall, by resolution, rescind its waiver27
under subsection (2) if it certifies that any of the following,28
______'15 ____
20
where applicable, has occurred or that there is a substantial1
likelihood that any of the following will imminently occur:2
(a) The qualified city OR QUALIFIED SCHOOL DISTRICT fails to3
pay principal of or interest on any municipal securities when due4
or payable.5
(b) The qualified city OR QUALIFIED SCHOOL DISTRICT incurs a6
budget deficit in a fiscal year equal to or more than 5% of the7
total expenditures in that year based on generally accepted8
accounting principles.9
(c) The qualified city OR QUALIFIED SCHOOL DISTRICT issues10
municipal securities without the authorization of the commission or11
in violation of the revised municipal finance act, 2001 PA 34, MCL12
141.2101 to 141.2821.13
(d) The qualified city OR QUALIFIED SCHOOL DISTRICT violates14
this act or any mandatory financial controls in a manner that15
substantially impairs that qualified city's OR QUALIFIED SCHOOL16
DISTRICT’S ability to pay principal of and interest on municipal17
securities OR OTHER DEBT when due and payable or its ability to18
adhere to a balanced budget.19
(e) The qualified city OR QUALIFIED SCHOOL DISTRICT violates20
any provision of the plan for adjustment, if applicable.21
(f) The state treasurer and the qualified city's OR QUALIFIED22
SCHOOL DISTRICT’S chief financial officer, if applicable, fail to23
certify that the criteria in subsection (2)(b) are met.24
(g) If the qualified city's OR QUALIFIED SCHOOL DISTRICT’S25
chief financial officer has resigned, been terminated, or been26
removed, or the office has otherwise become vacant and a successor27
has not been appointed within 180 days of that vacancy.28
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21
(h) The qualified city OR QUALIFIED SCHOOL DISTRICT has not1
satisfied the requirements in subsection (2)(h).2
(4) If the commission finds that the circumstances under which3
it rescinded its waiver of the requirements of sections 6 and 7 as4
provided in subsection (3) no longer exist, the commission shall5
reverse the rescission as provided in subsection (2).6
Sec. 12. (1) EXCEPT AS PROVIDED IN SUBSECTION (2), IF If a7
commission has waived the requirements of sections 6 and 7 under8
section 8 each year for the immediately preceding 10 consecutive9
fiscal years, and the plan for adjustment, IF APPLICABLE, has10
expired, the commission shall, by resolution, dissolve itself. All11
property, funds, and assets of the commission, if any, shall be12
transferred to and vested in this state.13
(2) IF A COMMISSION IS IN PLACE FOR BOTH A QUALIFIED CITY AND14
A QUALIFIED SCHOOL DISTRICT DESCRIBED IN SECTION 4(2) LOCATED15
WITHIN THE QUALIFIED CITY, THE COMMISSION MAY NOT DISSOLVE ITSELF16
UNTIL ALL THE STATE TREASURER CERTIFIES UNDER SECTION 402 OF THE17
REVISED SCHOOL CODE, 1976 PA 451, MCL 380.402, THE PAYMENT IN FULL18
OF ALL OUTSTANDING DEBT OF THE SCHOOL DISTRICT FROM WHICH FUNCTIONS19
AND RESPONSIBILITIES WERE TRANSFERRED TO THE QUALIFIED SCHOOL20
DISTRICT UNDER SECTION 402 OF THE REVISED SCHOOL CODE, 1976 PA 451,21
MCL 380.402.22
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