May 20, 2010, Introduced by Reps. Jackson and Smith and referred to the Committee on Education.
A bill to amend 1990 PA 72, entitled
"Local government fiscal responsibility act,"
by amending sections 40 and 41 (MCL 141.1240 and 141.1241) and by
adding section 41b.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 40. (1) In consultation with the school board, the
emergency financial manager shall develop, and may from time to
time amend, a written financial plan for the school district. A
financial plan or amended financial plan must be approved by the
superintendent of public instruction before it is implemented by
the emergency financial manager. The emergency financial manager
shall submit the financial plan or amended financial plan to the
superintendent of public instruction for approval. Within 30 days
after submission, the superintendent of public instruction shall
approve or reject the financial plan or amended financial plan. The
superintendent of public instruction also may revise components or
elements of the financial plan or amended financial plan. Revisions
by the superintendent of public instruction become part of the
financial plan or amended financial plan. The financial plan shall
serve as the official operational document for the school district
and
shall provide for both all of
the following:
(a) Methodology for stabilization or reversal of declining
revenue associated with declining enrollment, academic achievement,
school infrastructure, and other applicable factors.
(b) (a)
Conducting the operations of the
school district
within the resources available according to the emergency financial
manager's revenue estimate.
(c) (b)
The payment in full of the scheduled
debt service
requirements on all bonds and notes of the school district and all
other uncontested legal obligations.
(2) After the initial development of the financial plan
required by subsection (1), the emergency financial manager in
consultation with the school board shall regularly reexamine the
plan, monthly progress, and priorities, and if the emergency
financial manager reduces his or her revenue estimates, he or she
shall modify the financial plan to conform to revised revenue
estimates or strategies for reversal of declining revenues.
(3) The financial plan shall be in a form, and shall contain
that information for each year the plan is in effect, that the
school district's emergency financial manager specifies.
(4) The emergency financial manager shall make public the plan
or modified plan. The school board may request revisions to the
plan. If 1 or more of the revisions requested by the school board
are not adopted by the emergency financial manager, the school
board may appeal to the superintendent of public instruction to
request the revisions. The superintendent of public instruction, in
his or her sole discretion, may order the emergency financial
manager to adopt 1 or more revisions requested by the school board
if he or she determines that the revision is consistent with school
district stabilization and trend reversal objectives. If the
superintendent of public instruction does not order a revision
requested by the school board, the superintendent of public
instruction shall notify the school board and shall provide a
written explanation to the school board of his or her reasons for
not ordering the revision. This subsection shall not be construed
to mean that the emergency financial manager must receive public
approval before he or she implements the financial plan or any
modification to the plan.
Sec. 41. (1) Upon appointment under section 38, an emergency
financial manager shall immediately assume control over all fiscal
matters of, and make all fiscal decisions for, the school district
for which he or she is appointed.
(2) In implementing this article and performing his or her
functions under this article, an emergency financial manager may
take 1 or more of the following actions:
(a) Examine the books and records of the school district.
(b) Review payrolls or other claims against the school
district before payment.
(c) Negotiate, renegotiate, approve, and enter into contracts
on behalf of the school district.
(d) Receive and disburse on behalf of the school district all
federal, state, and local funds earmarked for the school district.
These funds may include, but are not limited to, funds for specific
programs and the retirement of debt.
(e) Adopt a final budget for the next school fiscal year and
amend any adopted budget of the school district.
(f) Act as an agent of the school district in collective
bargaining and, to the extent possible under state labor law,
renegotiate existing and negotiate new labor agreements.
(g) Analyze factors contributing to the financial condition of
the school district and recommend to the legislature steps that
need to be taken to improve the district's financial condition.
(h) Require compliance with his or her orders, by court action
if necessary.
(i) Require the attendance of witnesses and the production of
books, papers, contracts, and other documents relevant to an
analysis of the financial condition of the school district.
(j) Recommend to the governor, the legislature, and the state
board that the school district be reorganized with 1 or more
contiguous school districts.
(k) Consolidate divisions or transfer functions from 1
division to another division within the school district and
appoint, supervise, and, at his or her discretion, remove, within
legal limitations, heads of divisions of the school district.
(l) Create a new position or approve or disapprove the creation
of any new position or the filling of a vacancy in a permanent
position by an appointing authority.
(m) Seek approval from the state board for a reduced class
schedule in accordance with administrative rules governing the
distribution of state school aid.
(n) Employ or contract for, at the expense of the school
district and with the approval of the superintendent of public
instruction, auditors and other technical personnel considered
necessary to implement this article.
(o) Reduce expenditures in the budget of the school district.
(p) Borrow money on behalf of the school district.
(q) Approve or disapprove of the issuance of obligations of
the school district.
(r) Order, as necessary, 1 or more school millage elections
for
the school district consistent with the revised school code, of
1976,
1976 PA 451, MCL 380.1 to
380.1852, the Michigan
election
law,
Act No. 116 of the Public Acts of 1954, being sections 168.1
to
168.992 of the Michigan Compiled Laws, 1954 PA 116, MCL 168.1 to
168.992, and sections 6 and 25 through 34 of article IX of the
state constitution of 1963.
(s) Sell or otherwise use the assets of the school district to
meet past or current obligations, provided the use of assets for
this purpose does not impair the education of the pupils of the
district.
(t) Examine the causes of declining revenue and structural and
nonstructural deficits.
(u) Assess correlation of academic delivery with higher
education admission standards, market employment standards, and
employer capacity needs.
(v) Implement budget stabilization, student attraction, and
academic delivery strategies.
(w) (t)
Exercise the authority and
responsibilities affecting
the financial condition of the school district that are prescribed
by law to the school board and superintendent of the school
district.
(3) In implementing this article and performing his or her
functions under this article, an emergency financial manager shall
do all of the following:
(a) Implement prompt payment practices to provide incentives
for vendor participation and competitive vendor pricing.
(b) Implement request for proposal schedules that provide
reasonable time for vendor inspection and maximization
of local participation.
(c) Implement procedures for contracts and collective
bargaining agreements that emphasize local participation and
enhance the school district's tax base as part of a strategy for
reversal of declining revenues.
(d) Require any labor agreements associated with projects
funded by school bonds to enhance local employment through the
provision of hiring preferences for qualified unemployed skilled
workers with verifiable residency in the school district of 6
months or more.
(e) Require any request for design and build proposals for
projects funded by school bonds to provide incentives for responses
that contain a local lead contractor, local joint venture lead, or
a contractor participation plan that affords not less than 51%
participation to locally headquartered contractors and seeks to
achieve not less than 70% contract labor participation by local
residents of the school district.
(4) The legislature shall appropriate up to $100,000.00 for an
emergency financial manager appointed under this article for data
collection activities associated with taking action under
subsection (2).
(5) (3)
After giving written notice to the
superintendent of
public instruction, the emergency financial manager may authorize
the
school district to proceed under chapter 9 of title 11 of the
United
States Code, 11 U.S.C. 901 to
904, 921 to 932, and 941 to
946.
the federal bankruptcy code,
11 USC 901 to 946. This section
empowers the school district for which an emergency financial
manager has been appointed to become a debtor under chapter 9 of
title
11 of the United States Code. the
federal bankruptcy code, 11
USC 901 to 946.
Sec. 41b. An emergency financial manager appointed under this
article shall do all of the following:
(a) Beginning 4 months after he or she is appointed, at least
every 4 months shall file with the governor, the senate majority
leader, the speaker of the house of representatives, the
superintendent of public instruction, the school board of the
school district, and the legislative body of the municipality in
which a majority of the territory of the school district is
located, and shall post on the internet on the website of the
school district, a report concerning his or her progress.
(b) In addition to the reports required under subdivision (a),
shall be available to testify before the committees of the
legislature having jurisdiction over education and before the
legislative body of the municipality in which a majority of the
territory of the school district is located not fewer than 3 times
each year.
(c) Beginning 4 months after the date he or she is appointed,
at least every 4 months shall conduct public forums within the
school district to receive input from the community and inform the
community of his or her activities and progress. At these forums,
the emergency financial manager shall hear testimony from the
public.