SB-0711, As Passed Senate, March 22, 2016

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

SENATE BILL NO. 711

 

 

 

 

 

 

 

 

 

 

 

     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.

 

     (c) Absent prospective state oversight over qualified cities

 

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.

 

     (c) "Financial review commission" or "commission" means a

 

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 community district

 

organized under part 5b of the revised school code, 1976 PA 451,

 

MCL 380.381 to 380.396, to which the functions and responsibilities

 

of a qualifying school district under section 12b of the revised

 

school code, 1976 PA 451, MCL 380.12b, have been transferred under

 

that section.

 

     (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 community district organized under part 5b of the

 

revised school code, 1976 PA 451, MCL 380.381 to 380.396, becomes a

 

qualified school district under this act and that 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 transfer date, as that term is defined

 

under section 12b of the revised school code, 1976 PA 451, MCL

 

380.12b, 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.

 

     (c) Three members appointed by the governor 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, at least 1 of whom

 

is a resident of that qualified city or qualified school district


other than a qualified school district described in section 4(2),

 

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 other

 

than a qualified school district described in section 4(2).

 

     (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 other than a qualified school district described in

 

section 4(2).

 

     (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 other than a qualified school district

 

described in section 4(2).


     (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 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.

 

     (c) The revised municipal finance act, 2001 PA 34, MCL

 

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.

 

     (c) Improved collection of outstanding tax revenues.

 

     (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.

 

     (c) Review, modify, and approve proposed and amended

 

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.

 

     (c) The For a qualified city, the qualified city's financial

 

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. For a qualified

 

school district, the qualified school district has fully satisfied

 

all of its 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.

 

     (c) The qualified city or qualified school district issues


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 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 may not

 

dissolve itself until the state treasurer certifies under section

 

12b of the revised school code, 1976 PA 451, MCL 380.12b, the

 

payment in full of all outstanding debt of the school district from

 

which functions and responsibilities were transferred to the

 

qualified school district under section 12b of the revised school

 

code, 1976 PA 451, MCL 380.12b.

 

     (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

 

subsection (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.

 

     Enacting section 1. This amendatory act does not take effect

 

unless Senate Bill No. 710 of the 98th Legislature is enacted into

 

law.