SB-0711, As Passed Senate, June 8, 2016

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 711

A bill to amend 2014 PA 181, entitled

"Michigan financial review commission act,"

by amending sections 3, 5, and 7 (MCL 141.1633, 141.1635, and

141.1637), as amended by 2016 PA 53.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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) "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. 5. (1) 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 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. This

subsection does not apply to a qualified school district whose

functions and responsibilities have been transferred to another

school district under the revised school code, 1976 PA 451, MCL

380.1 to 380.1852.

(3) 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) 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) The state treasurer or his or her designee shall serve as

chairperson of a commission.

(6) 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) 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) 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) 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) The commission may contract for professional services, as

it requires, and shall determine the qualifications it considers

necessary.

(11) 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) 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) 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. 7. A commission may do 1 or more of the following for its

qualified city or qualified school district:

(a) 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) 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) For a qualified school district, provide that a qualified

school district may not alter the terms and conditions of an

employment contract with or the benefits of its superintendent or

terminate its superintendent 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.

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

financial best practices for a qualified city or qualified school

district.

(k) ~~(j)~~ 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.

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

training to ensure the proper discharge of duties for the qualified

city or qualified school district.

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

purposes of this act.

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

counsel to enforce any provisions of this act.

(o) ~~(n)~~ 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.

(p) ~~(o)~~ 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.

(q) For a qualified school district, approve all reimbursement

to school board members, officials, and employees for travel

outside this state.

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

are not inconsistent with the purposes of this act.

Enacting section 1. This amendatory act does not take effect

unless House Bill No. 5384 of the 98th Legislature is enacted into

law.