HB-5627, As Passed House, September 8, 2004

SUBSTITUTE FOR

HOUSE BILL NO. 5627

                                                                             A bill to amend 1979 PA 94, entitled                                              

"The state school aid act of 1979,"                                         

by amending section 18 (MCL 388.1618), as amended by 2003 PA                

158.                                                                        

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1       Sec. 18.  (1) Except as provided in another section of this                 

2   act, each district or other entity shall apply the money received           

3   by the district or entity under this act to salaries and other              

4   compensation of teachers and other employees, tuition,                      

5   transportation, lighting, heating, ventilation, water service,              

6   the purchase of textbooks which are designated by the board to be           

7   used in the schools under the board's charge, other supplies, and           

8   any other school operating expenditures defined in section 7.               

9   However, not more than 20% of the total amount received by a                

10  district under article 2 or intermediate district under article 8           

1   may be transferred by the board to either the capital projects              

2   fund or to the debt retirement fund for debt service.  The money            

3   shall not be applied or taken for a purpose other than as                   

4   provided in this section.  The department shall determine the               

5   reasonableness of expenditures and may withhold from a recipient            

6   of funds under this act the apportionment otherwise due for the             

7   fiscal year following the discovery by the department of a                  

8   violation by the recipient.                                                 

9       (2) For the purpose of determining the reasonableness of                    

10  expenditures and whether a violation of this act has occurred,              

11  the department shall require that each district and intermediate            

12  district have an audit of the district's or intermediate                    

13  district's financial and pupil accounting records conducted at              

14  least annually at the expense of the district or intermediate               

15  district, as applicable, by a certified public accountant or by             

16  the intermediate district superintendent, as may be required by             

17  the department, or in the case of a district of the first class             

18  by a certified public accountant, the intermediate                          

19  superintendent, or the auditor general of the city.  An                     

20  intermediate district's annual financial audit shall be                     

21  accompanied by the intermediate district's pupil accounting                 

22  procedures report.  A district's or intermediate district's                 

23  annual financial audit shall include an analysis of the financial           

24  and pupil accounting data used as the basis for distribution of             

25  state school aid.  The pupil accounting records and reports,                

26  audits, and management letters are subject to requirements                  

27  established in the auditing and accounting manuals approved and             

1   published by the department.  Except as otherwise provided in               

2   this subsection, a district shall file the annual financial audit           

3   reports with the intermediate district not later than 120 days              

4   after the end of each school fiscal year and the intermediate               

5   district shall forward the annual financial audit reports for its           

6   constituent districts and for the intermediate district, and the            

7   pupil accounting procedures report for the pupil membership count           

8   day and supplemental count day, to the department not later than            

9   November 15 of each year.  The annual financial audit reports and           

10  pupil accounting procedures reports shall be available to the               

11  public in compliance with the freedom of information act, 1976 PA           

12  442, MCL 15.231 to 15.246.  Not later than December 1 of each               

13  year, the department shall notify the state budget director and             

14  the legislative appropriations subcommittees responsible for                

15  review of the school aid budget of districts and intermediate               

16  districts that have not filed an annual financial audit and pupil           

17  accounting procedures report required under this section for the            

18  school year ending in the immediately preceding fiscal year.                

19      (3) By November 15 of each year, each district and                          

20  intermediate district shall submit to the center, in a manner               

21  prescribed by the center, annual comprehensive financial data               

22  consistent with accounting manuals and charts of accounts                   

23  approved and published by the department.  For an intermediate              

24  district, the report shall also contain all of the information              

25  required under section 620 of the revised school code, MCL                  

26  380.620.

27      (4) By September 30 of each year, each district and                         

1   intermediate district shall file with the department the special            

2   education actual cost report, known as "SE-4096", on a form and             

3   in the manner prescribed by the department.                                 

4       (5) By October 7 of each year, each district and intermediate               

5   district shall file with the department the transportation                  

6   expenditure report, known as "SE-4094", on a form and in the                

7   manner prescribed by the department.                                        

8       (6) Not later than July 1, 1999, the department shall approve               

9   and publish pupil accounting and pupil auditing manuals.  The               

10  department shall review those manuals at least annually and shall           

11  periodically update those manuals to reflect changes in this                

12  act.  The pupil accounting manuals in effect for the 1996-97                

13  school year, including subsequent revisions issued by the                   

14  superintendent, shall be the interim manuals in effect until new            

15  manuals are approved and published.  However, the clarification             

16  of class-by-class accounting provided in the department's                   

17  April 15, 1998 memorandum on pupil accounting procedures shall be           

18  excluded from the interim manuals.                                          

19      (7) If a district that is a public school academy purchases                 

20  property using money received under this act, the public school             

21  academy shall retain ownership of the property unless the public            

22  school academy sells the property at fair market value.                     

23      (8) If a district or intermediate district does not comply                  

24  with subsection (2), (3), (4), or (5), the department shall                 

25  withhold all state school aid due to the district or intermediate           

26  district under this act, beginning with the next payment due to             

27  the district or intermediate district, until the district or                

1   intermediate district complies with subsections (2), (3), (4),              

2   and (5).  If the district or intermediate district does not                 

3   comply with subsections (2), (3), (4), and (5) by the end of the            

4   fiscal year, the district or intermediate district forfeits the             

5   amount withheld.                                                            

6       Enacting section 1.  This amendatory act takes effect                       

7   January 1, 2005.                                                            

8       Enacting section 2.  This amendatory act does not take                      

9   effect unless House Bill No. 5475 of the 92nd Legislature is                

10  enacted into law.