state of michigan
100th Legislature
Regular session of 2020
Introduced by Rep. Miller
ENROLLED HOUSE BILL No. 5470
AN ACT to amend 1976 PA 451, entitled “An act to provide a system of public instruction and elementary and secondary schools; to revise, consolidate, and clarify the laws relating to elementary and secondary education; to provide for the organization, regulation, and maintenance of schools, school districts, public school academies, intermediate school districts, and other public school entities; to prescribe rights, powers, duties, and privileges of schools, school districts, public school academies, intermediate school districts, and other public school entities; to provide for the regulation of school teachers and certain other school employees; to provide for school elections and to prescribe powers and duties with respect thereto; to provide for the levy and collection of taxes; to provide for the borrowing of money and issuance of bonds and other evidences of indebtedness; to establish a fund and provide for expenditures from that fund; to make appropriations for certain purposes; to provide for and prescribe the powers and duties of certain state departments, the state board of education, and certain other boards and officials; to provide for licensure of boarding schools; to prescribe penalties; and to repeal acts and parts of acts,” by amending section 1220 (MCL 380.1220), as added by 2015 PA 111.
The People of the State of Michigan enact:
Sec. 1220. (1) A
school district, intermediate school district, or public school academy shall
not adopt or operate under a deficit budget, and a school district,
intermediate school district, or public school academy shall not incur an
operating deficit in a fund during a school fiscal year. If a school district,
intermediate school district, or public school academy has an existing deficit
fund balance, incurs a deficit fund balance in the most recently completed
school fiscal year, or adopts a current year budget that projects a deficit
fund balance, all of the following apply:
(a) The school
district, intermediate school district, or public school academy shall notify
the superintendent of public instruction and the state treasurer immediately
upon the occurrence of the circumstance. A school district shall provide a copy
of the notice under this subdivision to the intermediate superintendent of the
intermediate school district in which the school district is located. A public
school academy shall provide a copy of the notice under this subdivision to the
authorizing body of the public school academy.
(b) Within 30
days after making notification under subdivision (a), the school district,
intermediate school district, or public school academy shall submit to the
superintendent of public instruction in the form and manner prescribed by the
department an amended budget for the current school fiscal year and a deficit
elimination plan approved by the board of the school district or intermediate
school district or board of directors of the public school academy, with a copy
to the state treasurer. A school district shall transmit a copy of the amended
budget and the deficit elimination plan to the intermediate superintendent of
the intermediate school district in which the school district is located. A
public school academy shall transmit a copy of the amended budget and the
deficit elimination plan to its authorizing body.
(c) The
department may withhold and release some or all of the money payable to the
school district, intermediate school district, or public school academy as
provided under section 102(1) of the state school aid act of 1979, MCL
388.1702.
(d) The
superintendent of public instruction may require a deficit elimination plan to
include an academic plan for the school district, intermediate school district,
or public school academy.
(e) After the
superintendent of public instruction approves a school district’s, intermediate
school district’s, or public school academy’s deficit elimination plan, the
school district, intermediate school district, or public school academy shall
post the deficit elimination plan on the school district’s, intermediate school
district’s, or public school academy’s website.
(2) The following
reporting requirements apply for the purposes of this section and section 1219:
(a) Not later
than March 1 of each year, the department shall prepare a report of deficits
incurred or projected by school districts, intermediate school districts, and
public school academies in the immediately preceding fiscal year and the
progress made in reducing those deficits and submit the report
electronically, by mail, or in person to the standing committees of the legislature
responsible for K-12 education legislation, the appropriations subcommittees of
the legislature responsible for K-12 state school aid appropriations, the house
and senate fiscal agencies, the state treasurer, and the state budget director.
The department also shall submit quarterly interim reports electronically,
by mail, or in person concerning the progress made by school districts,
intermediate school districts, and public school academies in reducing those
deficits to the standing committees of the legislature responsible for K-12
education legislation, the appropriations subcommittees of the legislature
responsible for K‑12 state school aid appropriations, the house and senate
fiscal agencies, the state treasurer, and the state budget director.
(b) Not later
than March 1 of each year, the state treasurer shall prepare a report of school
districts, intermediate school districts, and public school academies that were
required under section 1219 to submit periodic financial status reports in the
immediately preceding state fiscal year or required under this section to
submit an enhanced deficit elimination plan in the immediately preceding state
fiscal year, and the progress made in adhering to that plan, and submit the
report electronically, by mail, or in person to the standing committees of the
legislature responsible for K-12 education legislation, the appropriations
subcommittees of the legislature responsible for K-12 state school aid
appropriations, the house and senate fiscal agencies, the department, and the
state budget director. The state treasurer also shall submit quarterly interim
reports electronically, by mail, or in person concerning school districts,
intermediate school districts, and public school academies that are subject to
periodic financial status reports or are under an enhanced deficit elimination
plan to the standing committees of the legislature responsible for K-12
education legislation, the appropriations subcommittees of the legislature
responsible for K-12 state school aid appropriations, the house and senate
fiscal agencies, the department, and the state budget director.
(3) A school
district, intermediate school district, or public school academy required to
submit a deficit elimination plan under this section shall submit to the
superintendent of public instruction and the state treasurer a monthly monitoring
report on revenue and expenditures in a form and manner prescribed by the
department and shall post these reports on its website. A school district shall
transmit a copy of each report under this subsection to the intermediate
superintendent of the intermediate school district in which the school district
is located. A public school academy shall transmit a copy of each report under
this section to the authorizing body of the public school academy. A school
district may contract with its intermediate school district or another entity
to provide the monthly monitoring report.
(4) If a school
district, intermediate school district, or public school academy is required to
submit a deficit elimination plan under this section, and the deficit
elimination plan is approved by the department, the superintendent of public
instruction may continue allotment and payment of funds as provided under
section 102 of the state school aid act of 1979, MCL 388.1702. When approving a
deficit elimination plan, the superintendent of public instruction shall
establish the period of time within which a school district, intermediate
school district, or public school academy must eliminate its deficit and may
set special conditions that the school district, intermediate school district,
or public school academy must meet while the deficit elimination plan is in
effect. After the department approves a school district’s, intermediate school
district’s, or public school academy’s deficit elimination plan under this
subsection, the school district, intermediate school district, or public school
academy shall post the deficit elimination plan on the school district’s,
intermediate school district’s, or public school academy’s website. The
requirements of this section relating to a deficit elimination plan do not
apply to a school district, intermediate school district, or public school
academy if the school district, intermediate school district, or public school
academy is required to submit an enhanced deficit elimination plan under subsection
(5).
(5) If, based
upon information included in a periodic financial status report required under
section 1219, a deficit elimination plan required under this section, or a
request by the superintendent of public instruction, the state treasurer determines
that a school district, intermediate school district, or public school academy
is subject to rapidly deteriorating financial circumstances, persistently
declining enrollment, or other indicators of financial stress likely to result
in recurring operating deficits or recurring financial stress within the school
district, intermediate school district, or public school academy, the state
treasurer may require the school district, intermediate school district, or
public school academy to submit an enhanced deficit elimination plan in the
form and manner determined by the department of treasury. If the deficit for a
school district, intermediate school district, or public school academy that is
subject to a deficit elimination plan has not been completely eliminated within
5 years after it submitted its initial deficit elimination plan, the state
treasurer shall require the school district, intermediate school district, or
public school academy to submit an enhanced deficit elimination plan under this
subsection. An enhanced deficit elimination plan must provide for the
resolution of the deteriorating financial circumstances, persistently declining
enrollment, or other indicators of recurring operating deficits or recurring
financial stress and is subject to approval by the state treasurer. As a
condition of approving the enhanced deficit elimination plan, the state
treasurer may require a school district, intermediate school district, or
public school academy required to submit an enhanced deficit elimination plan
under this section to enter into a financial recovery agreement with the state
treasurer. A financial recovery agreement may provide for, but is not limited
to, all of the following:
(a) Assistance
and guidance from the department of treasury and other state departments and
agencies.
(b) A financial
and operating plan for the school district, intermediate school district, or
public school academy.
(c) The
appointment of a local auditor or inspector, or both.
(d) Remedial
measures or other action under this act necessary to address the financial
circumstances of the school district, intermediate school district, or public
school academy.
(e) The required
retention by the school district, intermediate school district, or public
school academy of a consultant or 1 or more other experts for the purpose of
assisting the school district, intermediate school district, or public school
academy to achieve the goals and objectives of the financial recovery
agreement.
(6) Before a
school district, intermediate school district, or public school academy submits
an enhanced deficit elimination plan to the state treasurer under subsection
(5), the board of the school district or intermediate school district or board
of directors of the public school academy shall approve the plan. If a school
district, intermediate school district, or public school academy is required to
submit an enhanced deficit elimination plan under subsection (5), some or all
of the money payable to the school district, intermediate school district, or
public school academy under the state school aid act of 1979 may be withheld by
the state treasurer and released as provided under section 102(3) of the state
school aid act of 1979, MCL 388.1702. When approving an enhanced deficit
elimination plan, the state treasurer may establish the period of time within
which a school district, intermediate school district, or public school academy
must eliminate its deficit and may set special conditions that the school
district, intermediate school district, or public school academy must meet
while the enhanced deficit elimination plan is in effect.
(7) To assure
greater coordination and effective partnerships in the development and
implementation of an enhanced deficit elimination plan under subsection (5),
when administering subsections (5), (6), and (9), the department of treasury
shall consult with all of the following:
(a) The
department.
(b) The school
district, intermediate school district, or public school academy required to
submit an enhanced deficit elimination plan under subsection (5).
(c) For a school
district required to submit an enhanced deficit elimination plan under
subsection (5), the intermediate superintendent of the intermediate school
district in which the school district is located.
(d) For a public
school academy required to submit an enhanced deficit elimination plan under
subsection (5), the authorizing body of the public school academy.
(8) After the
state treasurer approves an enhanced deficit elimination plan for a school
district, intermediate school district, or public school academy, the school
district, intermediate school district, or public school academy shall post the
enhanced deficit elimination plan on the school district’s, intermediate school
district’s, or public school academy’s website.
(9) If a school
district, intermediate school district, or public school academy is required to
submit an enhanced deficit elimination plan under subsection (5), the school
district, intermediate school district, or public school academy shall submit
to the superintendent of public instruction and the state treasurer an enhanced
monthly monitoring report on revenue, expenditures, cash flow, debt, other
liabilities, assets, budget amendments, pupil membership, and other data
relating to the finances of the school district, intermediate school district,
or public school academy in a form and manner prescribed by the department of
treasury and shall post these reports on its website.
(10) As used in
this section:
(a) “Authorizing
body” means an authorizing body for a public school academy under this act.
(b) “Deficit
elimination plan” means a plan required under this section for the elimination
of a deficit that sets forth actions to be taken to eliminate the deficit
within the time period prescribed by the department.
(c) “Deficit fund
balance” means that term as defined in the “Michigan Public School Accounting
Manual” published by the department.
(d) “Enhanced
deficit elimination plan” means measures required by the state treasurer under
this section to address the financial conditions within a school district,
intermediate school district, or public school academy and resolve any deficit
within the time period prescribed by the state treasurer.
Clerk of the House of Representatives
Secretary of the Senate
Approved___________________________________________
____________________________________________________
Governor