May 21, 2014, Introduced by Senator CASWELL and referred to the Committee on Appropriations.
A bill to amend 1976 PA 451, entitled
"The revised school code,"
by amending section 12 (MCL 380.12), as amended by 2013 PA 96.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 12. (1) A school district shall lose its organization and
shall be declared dissolved effective at the end of the school
fiscal year if any of the following conditions are met:
(a) There are not enough persons residing in the school
district and qualified under law to hold all of the offices of the
school district or who will accept the offices of the school
district.
(b) After consultation with the intermediate school district
in which the district is located, the superintendent of public
instruction and state treasurer jointly determine that all of the
following apply:
(i) The school district was required to submit a deficit
elimination
plan under the state school aid act of 1979 section
1220 and the school district either has failed to submit a plan or
lacks the capability to both implement a deficit elimination plan
and meet the school district's obligations to provide public
educational services to pupils and other residents of the school
district in a manner that complies with this act, the state school
aid act of 1979, and rules promulgated by the department.
(ii) The school district is not financially viable and is
unable to educate pupils in grades K-12 residing in the school
district by operating schools for a full school year and providing
the required number of instructional hours under this act and the
state school aid act of 1979. As used in this subparagraph,
"financially viable" means that a school district has the financial
resources to carry out at least the educational program required by
law and pay its existing debts as they become due taking into
consideration the projected enrollment, cash flow, revenues, and
borrowing capability of the school district.
(iii) The school district has at least 300 and not more than
2,400 pupils in membership.
(iv) The number of pupils in membership in the school district
for the most recently completed school year was at least 10% less
than the number of pupils in membership in the school district for
the school year immediately preceding the most recently completed
school year.
(v) The school district began the school fiscal year ending in
the current state fiscal year with an operating fund deficit and is
projected to end the school fiscal year ending in the current state
fiscal year with a greater operating fund deficit or received a
loan approved by the local emergency financial assistance loan
board that had the effect of reducing the deficit for the school
year ending in the current state fiscal year.
(vi) The school district has not consolidated with another
school district during the immediately preceding 12 calendar
months.
(c) The school board of the school district adopts a
resolution that the state treasurer, after consultation with the
superintendent of public instruction, approves as being consistent
with this section, that authorizes the voluntary dissolution of the
school district under this section and that states that the school
board has determined that 1 or both of the following apply:
(i) The school district was required to submit a deficit
elimination plan or an enhanced deficit elimination plan under
section 1220 and the school district lacks the capability or is
otherwise unable to both implement the deficit elimination plan or
enhanced deficit elimination plan and meet the school district's
obligations to provide public educational services to pupils and
other residents of the school district in a manner that complies
with this act, the state school aid act of 1979, and rules.
(ii) The school district is not financially viable and lacks
the capability or is otherwise unable to educate pupils in grades
K-12 residing in the school district by operating schools for a
full school year and providing the required number of instructional
hours under this act and the state school aid act of 1979. As used
in this subparagraph, "financially viable" means that a school
district has the financial resources to carry out at least the
educational program required by law and pay its existing debts as
they become due, taking into consideration the projected
enrollment, cash flow, revenues, and borrowing capability of the
school district.
(2)
If a school district meets either or both of subsection
(1)(a)
or (b), 1 or more of
subsection (1)(a), (b), or (c) apply to
a school district, the intermediate school board of the
intermediate school district to which the school district is
constituent, or the superintendent of public instruction if that
intermediate school board requests the superintendent of public
instruction to act in its place, shall declare the school district
dissolved
and immediately order as
of the end of the school fiscal
year in which the circumstance under subsection 1(a), (b), or (c)
occurred and order attachment of the territory of the school
district, in whole or in part, to 1 or more other organized school
districts within the intermediate school district effective on the
first day of the next school fiscal year. In attaching the
territory of the dissolved school district to other school
districts, the intermediate school board or the superintendent of
public instruction shall take into account the number of pupils who
will become pupils of each of those other school districts relative
to the number of pupils already enrolled in the other school
district and the numbers of pupils who qualify for free and reduced
price lunch, special education services and at-risk funding among
the
other school districts. For a school district that is declared
dissolved
in 2013, within 21 days after the school district is
declared
dissolved, and for a school district that is declared
dissolved
after 2013, within 60 days after By
the end of the fiscal
year after the fiscal year during which the school district is
declared dissolved, the dissolved school district shall account to
the intermediate school district for all records, funds, and
property of the school district and shall make an equitable
distribution of the records, funds, and property consistent with
the ordered attachment to each receiving school district. A school
building or other real property owned by and located in the
dissolved
district shall become part of and owned by the receiving
school
district in which it is located.be
disposed of as provided
in subsection (10).
(3) If a dissolved school district has outstanding debt, the
dissolved school district shall retain a limited separate identity
and the territory of the dissolved school district shall continue
as a separate taxing unit for the limited purpose of the debt until
the debt is retired or refunded. The intermediate school board and
other officers of the intermediate school district in which the
geographic area of the dissolved school district is located shall
perform the functions and satisfy the responsibilities of the board
and other officers of the dissolved school district relating to the
debt, including, but not limited to, all of the following:
(a) Certifying and levying taxes for satisfaction of the debt
in the name of the dissolved school district.
(b) Holding debt retirement funds of the dissolved school
district separately from the funds of the receiving school
district.
(c) Doing all other things relative to the outstanding debt of
the dissolved school district required by law and by the terms of
the debt, including, but not limited to, levying or renewing a
school operating tax under section 1211. The question of renewal of
a school operating tax pledged to the repayment of debt of the
dissolved school district shall be submitted only to school
electors residing within the geographic area of the dissolved
school district and does not require approval by electors of a
receiving school district not residing within the geographic area
of the dissolved school district.
(4) Upon the attachment of a dissolved school district to
another school district, the intermediate school board shall audit
the assets and liabilities of the dissolved school district. If a
considerable discrepancy is found, the intermediate school board
shall order the dissolved school district to pay the discrepancy to
1 or more appropriate receiving school districts. After first
satisfying debt obligations, the dissolved school district shall
repay that amount to 1 or more appropriate receiving school
districts from money available to the dissolved school district
including voted millage within a time to be determined by the
intermediate school board.
(5) If a tax is authorized within a receiving school district
at a rate greater than the rate authorized within the dissolved
school district at the time of the dissolution, the tax may not be
levied within the geographic area of the dissolved school district
until approved by the school electors residing within the
geographic area of the dissolved school district or by all school
electors within the receiving school district, including any
expanded geographic area of the receiving school district resulting
from attachment under this section.
(6) If a dissolved school district was authorized to levy a
sinking fund tax under section 1212 at the time of dissolution, the
identity of the dissolving school district as a legal entity shall
not be lost and its territory shall remain as a taxing unit for the
limited purpose of levying a sinking fund tax under section 1212
until the authorization to levy a sinking fund tax within the
dissolved school district expires. For purposes of this subsection,
the intermediate school board and other officers of the
intermediate school district in which the geographic area of the
dissolved school district is located shall perform the functions
and responsibilities of the board and other officers of the
dissolved school district relating to levying the sinking fund tax
and shall distribute the proceeds of the levy to each receiving
school district that operates a school building previously operated
by the dissolved school district. The proceeds of a sinking fund
tax levy under this subsection may be used only within the
geographic area of the dissolved school district for purposes
authorized under section 1212. A receiving school district may not
renew or authorize a new sinking fund tax that is levied only
within the geographic area of the dissolved school district.
(7) To the extent permitted under federal law and any
applicable waiver approved by the United States department of
education, the department shall not include the test scores of
pupils from the dissolved school district for determining adequate
yearly progress status or for "top-to-bottom" rankings of the
receiving school districts for the first 3 school years after
dissolution.
(8) For the same number of school years for which test scores
of pupils from the dissolved district are not used under subsection
(7), a receiving school district shall not use the test scores of
pupils from the dissolved school district as a factor in any
performance evaluation of an employee of the receiving school
district.
(9) The pupils formerly enrolled in the dissolved school
district have all the legal and constitutional rights and
privileges of the other pupils enrolled in the receiving school
districts.
(10) Upon dissolution of a school district under this section,
the ownership of all real property owned by the dissolved school
district transfers to the state land bank authority established
under the land bank fast track act, 2003 PA 258, MCL 124.751 to
124.774. If the state land bank authority receives funding for the
maintenance of the real property, the state land bank authority
shall maintain the real property as necessary to allow it to be
used for public school purposes and in accordance with all local
ordinances. The state land bank authority shall dispose of the
property in accordance with the following:
(a) For the first 90 days that the real property is maintained
by the state land bank authority, the state land bank authority
shall make the real property available to the receiving school
district in which the real property is located. If a receiving
school district intends to take ownership of 1 or more parcels of
real property, the receiving school district shall submit a letter
of intent to the state land bank authority identifying the parcel
or parcels within 30 days after the ownership is transferred to the
state land bank authority. After submitting a letter of intent, the
receiving school district has 60 days after the end of the 30-day
letter of intent period to perform a due diligence review of the
real property and to accept ownership of the real property. If the
receiving school district does not complete this process and accept
ownership of the real property within this 60-day period, the
receiving school district forfeits all rights to the real property.
The state land bank authority shall transfer ownership of the real
property to a school district that accepts the real property under
this subdivision. If more than 1 receiving school district submits
a letter of intent for the same parcel of real property and
indicates a willingness to accept the parcel, the state land bank
authority shall select from among those receiving school districts
giving preference to the school district that has enrolled the
greater number of pupils who had previously been enrolled in the
dissolved school district.
(b) After the 90-day period under subdivision (a), if the
state land bank authority still retains ownership of any real
property from a dissolved school district, the state land bank
authority shall make the remaining real property available to any
school district that is not a receiving school district but is
contiguous to the former territory of the dissolved school
district. If a school district described in this subdivision
intends to take ownership of 1 or more parcels of real property,
the school district shall submit a letter of intent to the state
land bank authority identifying the parcel or parcels within 30
days after the real property is first made available under this
subdivision. After submitting a letter of intent, a school district
has 60 days after the end of the 30-day letter of intent period to
perform a due diligence review of the real property and to accept
ownership of the real property. If the school district does not
complete this process and accept ownership of the real property
within this 60-day period, the school district forfeits all rights
to the real property. The state land bank authority shall transfer
ownership of the real property to a school district that accepts
the real property under this subdivision. If more than 1 school
district submits a letter of intent for the same parcel of real
property under this subdivision and indicates a willingness to
accept the parcel, the state land bank authority shall select from
among those school districts based on the nature and feasibility of
the proposed usage, ability to maintain the real property, and
timeline for usage.
(c) After the 90-day period under subdivision (b), if the
state land bank authority still retains ownership of any real
property from a dissolved school district, the state land bank
authority shall make the remaining real property available to the
intermediate school district in which the real property is located.
If the intermediate school district intends to take ownership of 1
or more parcels of real property, the intermediate school district
shall submit a letter of intent to the state land bank authority
identifying the parcel or parcels within 30 days after the real
property is first made available under this subdivision. After
submitting a letter of intent, the intermediate school district has
60 days after the end of the 30-day letter of intent period to
perform a due diligence review of the real property and to accept
ownership of the real property. If the intermediate school district
does not complete this process and accept ownership of the real
property within this 60-day period, the intermediate school
district forfeits all rights to the real property. The state land
bank authority shall transfer ownership of the real property to an
intermediate school district that accepts the real property under
this subdivision.
(d) After the 90-day period under subdivision (c), if the
state land bank authority still retains ownership of any real
property from a dissolved school district, the state land bank
authority shall make the remaining real property available to the
public at 1 or more public auction sales, which may include an
auction sale conducted using an internet website. The state land
bank authority shall sell the real property to the highest bidder
at the auction sale. If there are no bids submitted on a parcel of
real property under this subdivision within 2 years after the date
the real property was first transferred to the state land bank
authority under this subsection, and if the state land bank
authority receives funding for the demolition, the state land bank
authority promptly shall demolish all buildings on the real
property.
(11) If a school district, intermediate school district,
public school academy, or other public entity conducts a due
diligence review of a parcel of real property that is available
under subsection (10), including, but not limited to, a title
search or other title inquiry, an environmental study, or a site
survey, the school district, intermediate school district, public
school academy, or other public entity shall make all of the
information obtained as a result of that due diligence review
available upon request to any interested person.
(12) If there is outstanding bonded indebtedness on a parcel
of real property that is sold at an auction sale under subsection
(10)(d), the state land bank authority shall transfer any proceeds
from that sale that remain after payment of the administrative
costs of the auction sale to the intermediate school district in
which the geographic area of the dissolved school district is
located to be used for refunding or retiring that bonded
indebtedness.
(13) The legislature shall appropriate funds to the state land
bank authority for the maintenance and demolition of property under
subsection (10).
(14) (10)
As used in this section:
(a) "Debt" means that term as defined in section 103 of the
revised municipal finance act, 2001 PA 34, MCL 141.2103, and any
unpaid amounts payable by a dissolved school district to the
Michigan public school employees' retirement board under the public
school employees retirement act of 1979, 1980 PA 300, MCL 38.1301
to 38.1437.
(b) "Receiving school district" means a school district to
which all or part of the territory of a dissolved school district
is attached under this section.