HB-5385, As Passed House, March 24, 2016HB-5385, As Passed Senate, March 24, 2016

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5385

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:

(a) It is the public policy of this state to exercise its

sovereign powers with regard to debt issuance and matters of

statewide concern in a manner calculated to foster the fiscal

integrity of all municipal governments and school districts to

assure that those municipalities and school districts provide for

the health, safety, and welfare of their ~~citizens;~~ residents; pay

principal and interest owed on debt obligations when due; meet

financial obligations to their existing and former employees,

vendors, and suppliers; and provide for proper financial planning

procedures and budgeting practices. The inability of a municipal

government to provide essential services to its citizens or a

school district to provide public education services to its

residents as a result of fiscal emergencies is determined to affect

adversely the health, safety, and welfare of not only that

municipality's citizens and a school district's residents, but also

other citizens of this state.

(b) The police and fire retirement system of certain qualified

cities and the general retirement system of certain qualified

cities are currently underfunded, causing communities across the

state to face higher costs to borrow and invest funds, and have

caused bondholders, bond insurers, and financial institutions

anxiety over the financial health of not only certain qualified

cities, but communities across this state.

and school districts, there exists a threat of increased costs in

borrowing, reductions in credit or bond ratings, reduced faith from

existing creditors of municipalities or school districts and of

this state, and dire financial circumstances from which this state

and its political subdivisions may never fully recover.

(d) Qualified cities and school districts have complex

budgetary and fiscal needs, significant and complicated debt

management issues, and financial assets and liabilities that

impact, both positively and negatively, every unit of local

government and school district in this state and this state itself

such that reasonable and balanced state oversight over qualified

cities and school districts is required as a reasonable exercise of

this state's power for the benefit of residents throughout this

state.

(e) There are numerous residents of this state who have

accrued pension benefits from a qualified city's pension systems,

and those pensioners may reside throughout this state. The

settlement of bankruptcy cases involving qualified cities is likely

to have a substantial positive impact statewide.

(f) Establishing a commission and execution by the commission

of its powers granted under this act fulfill in all respects a

public and governmental purpose for the benefit of the people of

this state.

(g) Ongoing fiscal oversight over qualified cities and school

districts is a reasonable and sufficiently narrow regulation and

serves a significant and legitimate public purpose because it

inures to the benefit of all of this state's residents and aids in

the remedy of a broad and general social problem.

(h) Fiscal oversight over qualified cities and over school

districts will ensure that those qualified cities and school

districts do not engage in the financial practices that led to

financial emergencies and insolvency, and ultimately, entry into

receivership and bankruptcy, which will ensure that those cities

can provide basic and essential municipal services to their

residents and that those school districts can provide public

education services to their residents.

Sec. 3. As used in this act:

(a) "Applicable contract" means a contract for goods or

services proposed or entered into by a qualified city or school

district that either exceeds $750,000.00, or a higher amount as

determined by the commission, or is for a term exceeding 2 years.

Applicable contract also includes multiple contracts for less than

$750,000.00, or the higher amount determined by the commission,

with 1 entity that, in the aggregate, exceed $750,000.00, or a

higher amount as determined by the commission, within a 12-month

period.

(b) "Federal bankruptcy code" means the federal bankruptcy

code, 11 USC 101 to 1532.

financial review commission created in section 4.

(d) "Operating expenses" means the reasonable operating

expenses of the commission, including without limitation the cost

of preparing accounting and other reports, costs of commission

meetings or other required activities of the commission, counsel

fees, including fees of the attorney general, and fees and expenses

incurred for consultants and fiduciaries required to carry out the

purposes of this act.

(e) "Person" means an individual, corporation, limited or

general partnership, association, joint venture, limited liability

company, a governmental entity, including this state.

(f) "Plan for adjustment" means the plan for the adjustment of

debts of a qualified city approved and entered by a United States

bankruptcy court under chapter 9 of title 11 of the United States

Code, 11 USC 901 to 946.

(g) "Professional services" means services that require a high

degree of intellectual skill, an advanced degree, or professional

licensing or certification. Those providing the professional

services are distinguished based on their specialized knowledge,

experience, and expertise. Professional services include, but are

not limited to, accounting, actuarial, appraisal, auditing,

investment advisor, and legal services.

(h) "Qualified city" means a city with a population of more

than 600,000 that is subject to a plan for adjustment.

(i) "Qualified school district" means a school district with

the same boundaries as a city with a population of 600,000 or more,

unless the functions and responsibilities of that school district

have been transferred to another school district under the revised

school code, 1976 PA 451, MCL 380.1 to 380.1852.

(j) ~~(i)~~ "State treasurer" means the treasurer of this state or

his or her designee who shall be designated by a written instrument

signed by the state treasurer and maintained in a permanent file

and whose signature shall have the same force and effect as the

signature of the state treasurer for all purposes under this act.

Sec. 4. (1) A Except as provided in subsection (2), a

financial review commission is created within the department of

treasury for each qualified city and each qualified school

district. Except as otherwise provided in this act, a commission

shall exercise its powers, duties, functions, and responsibilities

under this act independently of the state treasurer. The budgeting,

procurement, personnel, and related management functions of a

commission shall be performed under the direction and supervision

of the state treasurer.

(2) If a qualified school district is located within the

geographic boundaries of a qualified city for which a financial

review commission is operating under this act, beginning on the

date that school district becomes a qualified school district, the

financial review commission for that qualified city also shall be

the financial review commission for that qualified school district,

and no separate or additional financial review commission for that

qualified school district is created under this act.

Sec. 5. (1) ~~Each~~ Except as otherwise provided in subsection

(2), each commission shall consist of the following 9 members:

(a) The state treasurer, who shall serve for the duration of

his or her term of office.

(b) The director of the department of technology, management,

and budget or successor agency, or his or her designee, who shall

serve for the duration of his or her term of office.

knowledge, skill, or experience in the field of business or finance

and who shall possess knowledge, training, skill, or experience in

budgeting, revenue forecasting, debt management or borrowing,

actuarial science, law, or business operations, at least 1 of whom

is a resident of that qualified city or qualified school district,

and at least 1 of whom is a resident of this state who is not a

resident of a qualified city or qualified school district.

(d) The mayor or chief executive officer of that qualified

city or qualified school district other than a qualified school

district described in section 4(2), or his or her designee, who

shall serve for the duration of the mayor's or chief executive

officer's term of office.

(e) One member appointed by the governor from a list of 3 or

more individuals nominated by the senate majority leader who have

knowledge, skill, or experience in the field of business or

finance, and who shall possess knowledge, training, skill, or

experience in budgeting, revenue forecasting, debt management or

borrowing, actuarial science, law, or business operations, and 1 of

whom is a resident of that qualified city or qualified school

district.

(f) One member appointed by the governor from a list of 3 or

more individuals nominated by the speaker of the house of

representatives who have knowledge, skill, or experience in the

field of business or finance, and who shall possess knowledge,

training, skill, or experience in budgeting, revenue forecasting,

debt management or borrowing, actuarial science, law, or business

operations, and 1 of whom is a resident of that qualified city or

qualified school district.

(g) The president or chairperson of the qualified city's

governing body or ~~his or her designee,~~ qualified school district's

school board other than a qualified school district described in

section 4(2), or his or her designee, who shall serve for the

duration of the president's or chairperson's term of office.

(2) If a financial review commission is the financial review

commission for both a qualified city and a qualified school

district under section 4(2), in addition to the mayor or chief

executive officer of the qualified city or his or her designee

under subsection (1)(d) and the president or chairperson of the

qualified city's governing body or his or her designee under

subsection (1)(g), the financial review commission also shall

include as members the superintendent of the qualified school

district and the chairperson of the school board of the qualified

school district. The superintendent of the qualified school

district and the chairperson of the school board of the qualified

school district shall not have a vote on matters relating to the

qualified city. The mayor or chief executive officer of the

qualified city, or his or her designee under subsection (1)(d) and

the president or chairperson of the qualified city's governing body

or his or her designee under subsection (1)(g), shall not have a

vote on matters relating to the qualified school district.

(3) ~~(2)~~ The appointed members shall serve for a term of 4

years, except that of the 5 members first appointed, the appointees

of the governor shall serve a term of 1, 2, and 4 years

respectively, the appointee of the governor who was nominated by

the speaker of the house of representatives shall serve a term of 2

years, and the appointee of the governor who was nominated by the

senate majority leader shall serve a term of 3 years. Appointed

members serve at the pleasure of, and may be removed by, their

respective appointing official.

(4) ~~(3)~~ Members of a commission shall serve without

compensation but may receive reasonable reimbursement for necessary

travel and expenses incurred in the discharge of their official

duties.

(5) ~~(4)~~ The state treasurer or his or her designee shall serve

as chairperson of a commission.

(6) ~~(5)~~ A majority of the eligible voting members of the

commission shall constitute a quorum of the commission for the

transaction of business. The commission shall meet no less than

monthly and at times and places designated by the chairperson.

Actions of the commission shall be approved by a majority of the

members.

(7) ~~(6)~~ The commission shall conduct its business at public

meetings in compliance with the open meetings act, 1976 PA 267, MCL

15.261 to 15.275. However, members of the commission may attend and

participate in a meeting of the commission by the use of

telecommunication or other electronic equipment if their attendance

and participation by the use of telecommunication or other

electronic equipment is authorized by the bylaws of the commission

and that meeting is otherwise conducted in compliance with the open

meetings act, 1976 PA 267, MCL 15.261 to 15.275.

(8) ~~(7)~~ A writing prepared, owned, used, in the possession of,

or retained by the commission in the performance of an official

function is subject to the freedom of information act, 1976 PA 442,

MCL 15.231 to 15.246.

(9) ~~(8)~~ The commission shall adopt bylaws for governance of

the commission, which shall, at a minimum, address the procedures

for conducting meetings, including voting procedures, and the

requirements of its members to attend meetings. Procedural rules

required by this section are not subject to the administrative

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

(10) ~~(9)~~ The commission may contract for professional

services, as it requires, and shall determine the qualifications it

considers necessary.

(11) ~~(10)~~ The members of the commission and contractors or

agents of the commission are subject to 1968 PA 317, MCL 15.321 to

15.330, and 1968 PA 318, MCL 15.301 to 15.310.

(12) ~~(11)~~ A member of the commission, and any person the

commission contracts with, shall discharge the duties of his or her

position in a nonpartisan manner, with good faith, and with that

degree of diligence, care, and skill that an ordinarily prudent

person would exercise under similar circumstances in a like

position. The commission shall adopt an ethics policy governing the

conduct of commission members and officers and employees of the

commission.

(13) ~~(12)~~ Commission members shall take and subscribe to the

constitutional oath of office under section 1 of article XI of the

state constitution of 1963. The oath shall be filed with the

secretary of state.

Sec. 6. (1) The commission shall provide oversight for a

qualified city beginning on the effective date of the plan for

adjustment or of this act, whichever is later. The commission shall

provide oversight for a qualified school district beginning on the

date the school district becomes a qualified school district.

(2) The commission shall ensure that the qualified city or

qualified school district is complying with the terms and

conditions of this act and of the plan for adjustment, if

applicable. Except as otherwise provided in section 8, the

commission shall by October 1 each year certify that the qualified

city or qualified school district is in substantial compliance with

the provisions of this act.

(3) The commission shall ensure that, where applicable, a

qualified city or qualified school district complies with the

provisions of all of the following, as applicable, and may request

verification of compliance:

(a) Section 8 of the publicly funded health insurance

contribution act, 2011 PA 152, MCL 15.568.

(b) Sections 4i, 4p, 4s, and 4t of the home rule city act,

1909 PA 279, MCL 117.4i, 117.4p, 117.4s, and 117.4t.

141.2101 to 141.2821.

(d) The uniform budgeting and accounting act, 1968 PA 2, MCL

141.421 to 141.440a.

(e) For a qualified school district, all of the following:

(i) The revised school code, 1976 PA 451, MCL 380.1 to

380.1852.

(ii) Article I of the state school aid act of 1979, 1979 PA

94, MCL 388.1601 to 388.1772.

(iii) The public school employees retirement act of 1979, 1980

PA 300, MCL 38.1301 to 38.1437.

(4) During the period of oversight for a qualified city, the

commission shall review and approve that qualified city's 4-year

financial plan required by section 4t of the home rule city act,

1909 PA 279, MCL 117.4t. A 4-year financial plan described in this

subsection shall be submitted at least 100 days prior to the

commencement of a qualified city's fiscal year. The commission

shall approve or disapprove the 4-year financial plan within 30

days of receipt. If disapproved, the commission shall provide

rationale in writing for disapproval and a qualified city shall

submit a revised plan within 15 days that comports with the

commission's rationale for rejection. The commission shall approve

or disapprove that revised plan within 15 days. The commission may

also require adjustments to the financial plan to modify

expenditures to satisfy debt service, adjust projected revenues to

comply with financial controls or accounting practices, and reduce

expenditures to conform to consensus revenue estimates if required

in section 7 to comply with the provisions of section 4t of the

home rule city act, 1909 PA 279, MCL 117.4t. If the qualified city

fails to submit an acceptable financial plan, the commission may

adopt and impose upon the qualified city a financial plan

satisfying the requirements of this act and section 4t of the home

rule city act, 1909 PA 279, MCL 117.4t, until that time as the

qualified city submits an acceptable financial plan.

(5) Subject to a plan for adjustment and any collective

bargaining agreements still in effect, the commission shall

establish and maintain programs and requirements for the

responsible fiscal management of that qualified city or qualified

school district. The commission's programs and requirements shall

include all of the following:

(a) Increased managerial accountability.

(b) The streamlining of the provision of city or qualified

school district services.

(d) Review of the compensation and benefits of city or

qualified school district employees and recommendation of

adjustments where necessary.

(6) Notwithstanding any charter provision or local ordinance

to the contrary, all applicable contracts are subject to review and

approval by the commission. The commission may consider a number of

factors when reviewing an applicable contract, including whether

the applicable contract was subject to a competitive bid process.

Only applicable contracts that are first approved by the governing

body and mayor or chief executive officer of a qualified city or

qualified school district as required by law, charter, ordinance,

or policy are subject to review by the commission. If an applicable

contract is not rejected by the commission within 30 days of its

submission, that applicable contract shall be considered approved

by the commission.

(7) A qualified city , or qualified school district, when

required by the commission, shall present written reports regarding

its financial stability and shall permit the commission to audit or

inspect financial statements, actuarial reports, revenue estimates,

and any and all other documents, data, reports, or findings that

the commission considers necessary to carry out its purpose under

this act. The commission may require that qualified city's or

qualified school district's chief financial officer to certify in

writing the accuracy of any documents the commission requests.

(8) The commission shall, on June 1 and December 1 of each

year in which the commission has oversight over a qualified city or

a qualified school district, file a written report with the

governor. A copy of the report shall be submitted to the senate

majority leader and the speaker of the house of representatives and

posted on the department of treasury website. A copy of the report

shall be sent to the mayor or chief executive officer and governing

body of the qualified city or qualified school district.

(9) Except as otherwise provided in this subsection, the

commission shall approve all collective bargaining agreements,

including any addendums to those agreements, to which that

qualified city or qualified school district is a party after

approval by the governing body and mayor or chief executive officer

of the qualified city or qualified school district as required by

charter or law. The commission shall approve or reject collective

bargaining agreements submitted to it within 45 days of submission.

Collective bargaining agreements submitted to the commission shall

not be executed unless and until the commission approves those

agreements. Collective bargaining agreements approved by an

emergency manager appointed under section 12 of the local financial

stability and choice act, 2012 PA 436, MCL 141.1552, shall not be

subject to commission approval under this subsection.

(10) ~~The~~ For a qualified city, the commission may file

supplementary information relating to the financial condition of

the qualified city with an arbitration panel in arbitration

proceedings in which the qualified city is a party pursuant to 1969

PA 312, MCL 423.231 to 423.247.

(11) The mayor or chief executive officer, governing body, and

chief financial officer of a qualified city or qualified school

district shall, at least 45 days prior to the beginning of each

fiscal quarter, certify in writing to the commission the amount of

debt service due on bonds, leases, or other ~~municipal~~ debt. A

qualified city or qualified school district shall specifically

report debt service requirements, calculated through final

maturity, and certify its ability to meet those requirements

through the end of the current fiscal year.

Sec. 7. A commission may do 1 or more of the following for its

qualified city or qualified school district:

(a) ~~Review~~ For a qualified city, review and approve that

qualified city's consensus revenue estimate under section 4t of the

home rule city act, 1909 PA 279, MCL 117.4t. The commission may

also, after consultation with the qualified city or qualified

school district, revise a revenue estimate prepared in connection

with a budget, budget modification, financial plan, or financial

plan modification, if the commission determines that the revenue

estimate was not based on assumptions and methods of estimation

reasonable and appropriate under the circumstances and in view of

the objectives and purposes of this act. After consultation with

the qualified city or qualified school district, the commission may

determine the estimated revenues for the qualified city or

qualified school district, but any revenue estimate adopted by the

commission shall be based on the same requirements as the qualified

city's or qualified school district's initial revenue estimate.

(b) ~~Require a~~ For a qualified city, require the qualified city

to submit the 4-year financial plan required in section 4t of the

home rule city act, 1909 PA 279, MCL 117.4t, in a form and manner

the commission considers appropriate. The requirement to submit a

4-year financial plan is not subject to waiver under section 8.

operational budgets of a qualified city or qualified school

district. A proposed budget or budget amendment does not take

effect unless approved by the commission.

(d) Require the chief financial officer of the qualified city

or qualified school district to provide the commission with

information it requests related to the qualified city's or

qualified school district's finances. The commission may also

require the chief financial officer to attend commission meetings.

If the chief financial officer fails to comply with the provisions

of this subdivision, the commission may require the qualified city,

or qualified school district to remove the chief financial officer

and appoint a successor.

(e) Review and approve requests by a qualified city or

qualified school district to issue debt under the revised municipal

finance act, 2001 PA 34, MCL 141.2101 to 141.2821, or any other law

governing the issuance of bonds or notes. The commission may

develop rules for the issuance of debt, including limitations that

are greater than those provided in sections 401 to 405 of the

revised municipal finance act, 2001 PA 34, MCL 141.2401 to

141.2405. The debt described in this subdivision may not be issued

unless and until approved by the commission and the commission's

approval shall be in addition to any approval of the department of

treasury as required by law.

(f) Review compliance by a qualified city with a deficit

elimination plan submitted under section 21 of the Glenn Steil

state revenue sharing act of 1971, 1971 PA 140, MCL 141.921, or by

a qualified school district with a deficit elimination plan

submitted under article I of the state school aid act of 1979, 1979

PA 94, MCL 388.1601 to 388.1772.

(g) Approve the appointment of a qualified city's chief

financial officer. If that appointment is not approved by the

commission within 45 days of written submission of the appointment

by the qualified city, the appointment is denied. The commission

may require that any effort to terminate the chief financial

officer be subject to commission review and approval.

(h) Approve the appointment of the qualified school district's

chief financial officer. If that appointment is not approved by the

commission within 45 days of written submission by the qualified

school district, the appointment is denied. A qualified school

district may not terminate its chief financial officer without the

approval of the commission. The superintendent and the chairperson

of the school board of the qualified school district shall not have

a vote on an approval under this subdivision.

(i) ~~(h)~~ Require the development and implementation of

financial best practices for a qualified city or qualified school

district.

(j) ~~(i)~~ Recommend the adoption or amendment of certain charter

provisions, bylaws, ordinances, policies, or operating procedures

for the qualified city or qualified school district, as applicable.

(k) ~~(j)~~ Require the pursuit of financial or managerial

training to ensure the proper discharge of duties for the qualified

city or qualified school district.

(l) ~~(k)~~ Make and execute contracts necessary to carry out the

purposes of this act.

(m) (l) Sue or be sued. The commission may retain legal

counsel to enforce any provisions of this act.

(n) ~~(m)~~ Require the qualified city or qualified school

district and the employees or agents of the qualified city or

qualified school district to timely produce and share all

information and documents, and provide access to all information on

assets, services, records, and any other materials or documents the

commission determines are necessary to carry out its

responsibilities under this act. The commission may require the

officers or employees of the qualified city or qualified school

district to attend commission meetings for any purpose necessary to

carry out its responsibilities under this act.

(o) ~~(n)~~ Perform any duty provided by law that a receivership

transition advisory board as described in section 23 of the local

financial stability and choice act, 2012 PA 436, MCL 141.1563, may

perform.

(p) ~~(o)~~ Perform any other duties assigned by the governor that

are not inconsistent with the purposes of this act.

Sec. 8. (1) Notwithstanding section 6, for its qualified city

or qualified school district, a commission shall, by resolution,

waive the requirements designated in sections 6 and 7 as provided

in subsection (2).

(2) The commission shall grant a waiver under this section for

its qualified city or qualified school district if it certifies

that all of the following conditions are met:

(a) The commission certifies that a qualified city or

qualified school district has adopted and adhered to deficit-free

budgets for 3 consecutive years that comply with generally accepted

accounting principles and are in accordance with the uniform

budgeting and accounting act, 1968 PA 2, MCL 141.421 to 141.440a.

(b) The state treasurer and the qualified city's or qualified

school district's chief financial officer, if applicable, certify

that both of the following are met:

(i) All municipal securities or debt obligations sold by or

for the benefit of that qualified city or qualified school district

in the general public market during the immediately preceding

fiscal year and current fiscal year satisfied the capital and other

financial requirements of the qualified city or qualified school

district during that period.

(ii) There is a substantial likelihood that municipal

securities or debt obligations can be sold by the qualified city or

qualified school district in the general public market during the

remainder of the current fiscal year and the immediately succeeding

fiscal year in amounts sufficient to substantially satisfy all of

the capital and other financial requirements of the qualified city

or qualified school district during those periods in accordance

with the qualified city's or qualified school district's financial

plan, as applicable.

plan projects a balanced budget for the current and succeeding 3

fiscal years using generally accepted accounting principles and in

accordance with the uniform budgeting and accounting act, 1968 PA

2, MCL 141.421 to 141.440a, and section 4t of the home rule city

act, 1909 PA 279, MCL 117.4t.

(d) The qualified city or qualified school district has

demonstrated to the commission's satisfaction that the qualified

city or qualified school district has sufficient ability to borrow

in the municipal securities market or qualified school district.

(e) The qualified city or qualified school district did not

violate the plan for adjustment in the immediately preceding fiscal

year, as applicable, and is not in violation in the current fiscal

year.

(f) The state treasurer certifies that the qualified city or

qualified school district is in compliance with the uniform

budgeting and accounting act, 1968 PA 2, MCL 141.421 to 141.440a.

(g) The commission certifies that the qualified city or

qualified school district is in substantial compliance with this

act.

(h) ~~The~~ For a qualified city, the qualified city has

established as part of a system of compensation for employees

retirement plans in which the qualified city contributes no more

than 7% of an individual's base pay, excluding payment for overtime

services, 1-time lump-sum payments, and the cost of fringe

benefits, to an employee's retirement account, and, for a qualified

school district, the qualified school district has fully satisfied

all of its current obligations to the system created under the

public school employees retirement act of 1979, 1980 PA 300, MCL

38.1301 to 38.1437.

(i) The qualified city or qualified school district has

implemented a program in which all contracts awarded by the

qualified city or qualified school district are posted on the

qualified city's or qualified school district's public website

within 30 days of the contract award, including the identity of the

parties to the contract, the dollar amount of the contract, and a

brief description of the goods or services provided by the

contract.

(3) The commission shall, by resolution, rescind its waiver

under subsection (2) if it certifies that any of the following,

where applicable, has occurred or that there is a substantial

likelihood that any of the following will imminently occur:

(a) The qualified city or qualified school district fails to

pay principal of or interest on any municipal securities when due

or payable.

(b) The qualified city or qualified school district incurs a

budget deficit in a fiscal year equal to or more than 5% of the

total expenditures in that year based on generally accepted

accounting principles.

municipal securities without the authorization of the commission or

in violation of the revised municipal finance act, 2001 PA 34, MCL

141.2101 to 141.2821.

(d) The qualified city or qualified school district violates

this act or any mandatory financial controls in a manner that

substantially impairs that qualified city's or qualified school

district's ability to pay principal of and interest on municipal

securities or other debt when due and payable or its ability to

adhere to a balanced budget.

(e) The qualified city or qualified school district violates

any provision of the plan for adjustment, if applicable.

(f) The state treasurer and the qualified city's or qualified

school district's chief financial officer, if applicable, fail to

certify that the criteria in subsection (2)(b) are met.

(g) ~~If the~~ The qualified city's or qualified school district's

chief financial officer has resigned, been terminated, or been

removed, or the office has otherwise become vacant and a successor

has not been appointed within 180 days of that vacancy.

(h) The qualified city or qualified school district has not

satisfied the requirements in subsection (2)(h).

(4) If the commission finds that the circumstances under which

it rescinded its waiver of the requirements of sections 6 and 7 as

provided in subsection (3) no longer exist, the commission shall

reverse the rescission as provided in subsection (2).

Sec. 12. (1) If Subject to subsections (2) and (3), if a

commission has waived the requirements of sections 6 and 7 under

section 8 each year for the immediately preceding 10 consecutive

fiscal years, and the plan for adjustment, if applicable, has

expired, the commission shall, by resolution, dissolve itself. All

property, funds, and assets of the commission, if any, shall be

transferred to and vested in this state.

(2) The commission for a qualified school district shall not

dissolve itself until the state treasurer certifies that all

outstanding debts of that qualified school district are paid in

full.

(3) If a commission is in place for both a qualified city and

a qualified school district and the requirements of subsection (1)

have been met for a qualified city or the requirements of

subsections (1) and (2) have been met for a qualified school

district, that qualified city or that qualified school district

shall be released from oversight by the commission under this act.

(4) Notwithstanding any other provision of this act, if a

qualified school district is subject to an emergency manager under

the local financial stability and choice act, 2012 PA 436, MCL

141.1541 to 141.1575, then, for the period of time that the

qualified school district is subject to an emergency manager, that

qualified school district is not subject to oversight by the

commission under this act.

Enacting section 1. This amendatory act does not take effect

unless House Bill No. 5296 of the 98th Legislature is enacted into

law.