School Law Primer Michigan School Business Officials. Caution

Transcription

1 School Law Primer Michigan School Business Officials September 22, 2015 Michael D. Gresens Christopher J. Iamarino 2015 Thrun Law Firm, P.C. This document provides information of a general nature regarding judicial, legislative, or other developments. None of this information is intended as legal advice or opinion relative to specific facts, matters, situations, or issues. Additional facts or future legal developments may affect the subjects addressed. This document may not be reproduced or redistributed, in whole or in part, 1 without the express written permission of Thrun Law Firm, P.C. Caution These slides contain edited excerpts and interpretations of general legal standards Without the related presentation, these materials could be misconstrued Legal advice should be obtained about specific situations or issues Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

2 Topics Legal framework for schools School elections Borrowing Construction 3 Supplemental Documents Revised School Code State School Aid Act Laws Relating to Education Rules Relating to Education School Law Notes Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

3 Sources of Law Constitution Statutes Regulations Ordinances Case law (court decisions) Administrative agency Local policies and bylaws 5 Decision-Making Resources Federal and Michigan Law Case law/court decisions Statutes Regulations Administrative agency Ethical standards Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

4 Decision-Making Resources (con't) School District Documents Board policies, bylaws & regulations Collective bargaining agreements Employee/student handbooks 7 Local Documents Board policies & bylaws Administrative regulations Collective bargaining agreements Individual contracts Employee handbooks Student handbooks Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

5 Michigan Law Revised School Code State School Aid Act Laws Relating to Education Rules Relating to Education 9 Revised School Code Effective July 1, 1996 MCL et seq. or MSA et seq. Predecessors School Code of 1976 School Code of 1955 School Code of 1927 Primary School Act of Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

6 Revised School Code 1804 Except as otherwise provided in this act, a... Person who neglects or refuses to do or perform an act requested by this act, or who violates or knowingly permits or consents to a violation of this act, is guilty of a misdemeanor punishable by a fine not more than $500.00, or imprisonment for not more than 3 months, or both. MCL State School Aid Act MCL et seq. Appropriations Conditions Penalties Frequent amendments! Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

7 SSA 1761 A school official or member of a board or other person who neglects or refuses to do or perform an act required by this act or who violates or knowingly permits or consents to the violation of this act is guilty of a misdemeanor, punishable by imprisonment for not more than 90 days, or a fine of not more than $1,500.00, or both. MCL Operations Incompatible Public Offices Freedom of Information Act Open Meetings Act Intergovernmental Contracts Urban Cooperation Act Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

8 Operations (con't) Governmental Liability Act Persons with Disabilities Act Elliott-Larsen Civil Rights Act Employment Public Servant Contracts Whistleblowers Protection Act Political Activities of Public EEs Temporary Assignment of EEs Bullard-Plawecki Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

9 Employment (con't) Teachers Tenure Act Public School EEs Retirement Oath of Teachers Re-employ Teachers (Military) Public Emp. Relations Act Children Youth Employment Act Community Child Watch Child Care Organization Child Protection Law Child Identification Act Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

10 Educational Critical Health Problems Ed Act Parent Cooperative Preschools Assessment of Remedial Assistance Compact for Education Libraries Correspondence School Contracts Transportation Michigan Vehicle Code Vehicles on School Property Public Transportation Act Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

11 Facilities Fire Prevention Code Building Authorities a Barrier Free Design Condemnation Procedures Athletic Services Provider Construction of School Buildings Finance Depositories for Public Dollars Investment of Surplus Funds Budget Hearings Uniform Budget/Accounting Shared Credit Rating Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

12 Finance (con't) Fiscal Responsibility Sales Tax Act a Property Tax Act m 23 RULES RELATING TO EDUCATION (State Agency Rules) Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

13 25 Elections, Borrowing and Construction Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

14 School Elections 27 School Election Coordinator District territory within single city or township City or township clerk District territory in more than 1 city or township County clerk with largest number of registered district electors Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

15 Responsibilities Conducts regular/special election for ballot question/board vacancy Receives Board requests for special election Filing fees, nominating petitions, affidavits of identity for board candidates Referendum petitions for special election Issues absent voter ballots Forwards ballot language to county clerk 29 Regular Election An election held on a regular election date to elect an individual to, or nominate an individual for, elective office in the regular course of the terms of that elective office MCL 168.3(j) Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

16 Special Election An election to elect an individual to, or nominate an individual for, a partial term in office or to submit a ballot question to the electors MCL 168.4(g) 31 Election Dates Regular election dates are: 2nd Tuesday in March of presidential primary years 1st Tuesday after 1st Monday in May 1st Tuesday after 1st Monday in August 1st Tuesday after 1st Monday in November Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

17 Election Costs Joint school and county/city/township election District pays 100% of actual additional costs attributable to its election School election only District pays county/city/township 100% of actual costs 33 Recent Election Changes All board member elections held in November even years Beginning January 1, 2013, school district election coordinator meetings changed from every 2 years to every 4 years Elimination of February elections Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

18 Campaign Finance Act 1976 PA 388 (eff. 12/30/76) Huron Valley Schs v Secretary of State, 266 Mich App 638 (2005) 35 General Property Tax Act 1999 PA 248 (eff. 3/10/00) Requires specific ballot information for: Millage proposal Bond proposal Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

19 Lending Prohibitions Bank Loans Promissory Notes Mortgages 37 Watch Out! Michigan Department of Treasury IRS Local Banks Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

20 Revised Municipal Finance Act 2001 PA 34 (eff. 3/1/02) Notice of Limited Tax Pledge Qualified status? 39 Current Application Process Qualifying statement form File on line each year (by Dec. 31) Qualified status posted online Denied qualified status? Application for each issue if not qualified 30-business day Treasury review Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

21 Audit Issues Timely filing (December 31) References to notes and loans Is your budget updated? 41 Debt Retirement Fund Balance Monitor closely, Treasury is watching! No funds for operating purposes Tailor debt levy to debt payment needs Penalties Denial of qualified status Taxpayer refund May owe arbitrage rebate Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

22 Capital Projects Voted bonds Non-voted bonds Sinking funds Capital improvement tax notes IPAs/lease purchase agreements 43 To Qualify or Not to Qualify What is School Loan Revolving Fund ( SLRF )? Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

23 SLRF Program (2005 PA 92) School Loan Revolving Fund Amended by 2012 PA 437 Requires annual debt millage recalculation Requires additional ballot language Caps future loans until 2016 Watch November 2015! 45 SLRF Program (2005 PA 92) (con't) 2015 PA 96 and 97 Refunding bonds no longer set debt millage levy minimum Refunding bonds to be approved even if MLRD not met Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

24 Advantages State of Michigan s credit rating? Borrow from State for debt service Project scope reviewed Reasonably modest maximum millage rate for all districts, despite property valuation 47 Disadvantages Prevailing wage Lengthy approval process and standards Technology/equipment amortization standards Less flexibility if projects must be altered Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

25 Considerations District s credit rating Future borrowing needs Tax impact if not borrowing from SLRF 49 Current Michigan Ratings Moody s: Aa1 S&P: AA- Improving economy; improved budget AAA rated until November Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

26 Qualified Voted Bonds At least 150 days before election Finalize project scope Notify Treasury days before election Meet with Treasury At least 84 days before election Certify ballot to election coordinator Call election 51 Non-Qualified Voted Bonds At least 90 days before election Finalize project scope Not less than 84 days before election Certify ballot proposition(s) to election coordinator Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

27 Sinking Fund Millage School Code 1212 Purpose Treasury guidelines issued June 28, 1995 (rescinded) Various proposed bills currently in Legislature to expand for school security, buses, and technology 53 Installment Purchase Agreements District may purchase real or personal property for public purpose Can be used for land, equipment, buses, copiers, technology Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

28 Act 99 Limitations PA 99 of 1933 IPA payback period cannot exceed useful life of purchased item 15-year maximum duration Total outstanding balance not to exceed 1.25% of district s taxable value of real and personal property 55 The Life of a Local IPA Contact legal counsel Adopt authorizing resolution Distribute solicitation for bids Take and award bid IPA and closing documents Closing (usually about 2 weeks after sale, depending on vendor) Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

29 Lease Purchase Agreements Usually vendor-proposed Rarely comply with Michigan law Common defects 57 Operating Cash Flow State Aid Notes MFA (formerly MMBA) Public Tax Notes Line of Credit Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

30 State Aid Notes (SANs) Cash flow borrowing School Code 1225 Short-term borrowing 59 SAN Requirements Federal Small or Large Issuer Bank qualified State Within fiscal year, borrowing cannot exceed 70% of state aid Last 4 months of fiscal year only, up to 50% of next year s apportioned state aid Prior approval needed if not qualified Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

31 Borrowing Options Michigan Finance Authority (formerly Michigan Municipal Bond Authority ) MFA Pool Programs Solicit bids from local/national banks Competitive sale 61 MFA SANs MFA Pool Structure August pool Sometimes a spring bridge loan pool Winter pools if critical mass exists Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

32 MFA SANs Prepare cash flows File application with MFA Prior approval if no qualified status MFA forwards purchase contract for District to accept rate 63 Timing Review cash flow Adopt authorizing resolution before MFA application deadline (usually by end of June) Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

33 Cash Flow For sizing Federal tax law MCL Operating cash flow deficit required for State Aid Note 65 Set-Asides Why use? When are they inappropriate? Lump sum payment August for MFA program Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

34 Weekly Cash Flow Beginning/ending balances should Not include Note proceeds Correspond to monthly cash flow balances Timing of greatest deficit and receipt of State Aid payment 67 Public SAN Procedures Notice of Board meeting for limited tax full faith and credit pledge Adopt authorizing resolution Conduct sale Closing documents Receipt of funds Post-issuance filing Fees Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

35 Tax Anticipation Notes (TANs) Similar to state aid notes Pledge tax revenues instead of state aid Not as common for local districts as state aid notes 69 Line of Credit Revised School Code 1225 Less appealing than State Aid Notes Treasury approval (even if qualified ) Costs Treasury filings Sizing restrictions Approval procedure Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

36 School Construction Projects 71 Architect/Engineer Prepares plans/specifications for School building/addition Total construction cost $15,000 or more May supervise construction and verify that it is constructed in workman-like manner consistent with plans/specifications Ensures that building is fire resistant Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

37 School Construction Act Addition: Space adding cubic contents to existing building Remodeling: Alteration, construction, or remodeling of partitions, hallways, stairways, and means of egress, replacement, relocation or reconstruction of heating, ventilating, and sanitary equipment 73 School Construction Act School Building: All buildings used for school purposes All plans subject to State Construction Code and inspection Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

38 Recent Developments Plaintiffs with claims for injury from defective school buildings must give notice per Government Tort Liability Act. Stephens v Ruben Daniels M/S (2013) LARA (formerly DELEG) Public School Site Plan Review Reference Guide (rev'd 7/13/11) Lack of signed contract does not bar contract enforcement. Garrison v Bishop Airport (2010) 75 Contractor Bond Required for any contract over $50,000 for Payment (labor and materials) Performance Furnished at contractor s expense Not less than 25% of contract amount District must verify bond validity Kammer Asphalt v East China Twp Schs, 433 Mich 176 (1993) Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,

39 2015 Thrun Law Firm, P.C. for MSBO Introduction to School Business Conference - September 22,