DR

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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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3

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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