2005 Senate Bill 406 (Overhaul School Bond Loan Fund; provide new loan subsidies )

Public Act 92 of 2005

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Introduced by Sen. Irma Clark-Coleman (D) on April 21, 2005, to overhaul the School Bond Loan Fund program, essentially replacing it with a state revolving loan fund that school districts can borrow from to finance capital improvement projects (buildings). When introduced, the legislation was linked to a proposal to provide $500 million in school loan subsidies for certain kinds of projects, including creating smaller high schools in big cities, as part of Gov. Jennifer Granholm’s “Jobs Today” public works proposal. Borrowing through the School Bond Loan Fund allows schools to borrow at the same interest rate as the state. The current program does not require schools to repay loans on a regular schedule, which burdens the state with part of a school's interest expense. The bill is part of a legislative package comprised of Senate Bills 407 to 411. This bill would require districts whose millage revenue exceeds minumum debt service levels to repay the state more quickly, which would increase state revenue in the near term.
- Referred to the Senate Appropriations Committee on April 21, 2005.
  - Reported in the Senate on May 31, 2005, with the recommendation that the substitute (S-3) be adopted and that the bill then pass.
- Substitute offered in the Senate on June 7, 2005, to replace the previous version of the bill with one that does not include the "Jobs Today" public works debt proposal, exempts school districts with elections in 2005 from proposed new millage ballot language requirements, and revises penalties for fraud related to school bonds. The substitute also revises other details of proposed school bond revolving fund that do not change its substance as previously described . The substitute passed in the Senate by voice vote on June 7, 2005.
- Amendment offered by Sen. Irma Clark-Coleman (D) on June 8, 2005, to authorize an exception to the restrictions that the new school bond revolving fund would place on new school bond debt assumed by certain school districts, Detroit in particular. The amendment failed in the Senate by voice vote on June 8, 2005.
- Amendment offered by Sen. Valde Garcia (R) on June 8, 2005, to revise provisions related to the transition to the new revolving loan system. The amendment passed in the Senate by voice vote on June 8, 2005.
Passed in the Senate (33 to 5) on June 8, 2005, to overhaul the School Bond Loan Fund program, essentially replacing it with a state revolving loan fund that school districts can borrow from to finance capital improvement projects (buildings). Borrowing through the School Bond Loan Fund allows schools to borrow at the same interest rate as the state. The current program does not require schools to repay loans on a regular schedule, which burdens the state with part of a school's interest expense. The bill is part of a legislative package comprised of Senate Bills 407 to 411. This bill would require districts whose millage revenue exceeds minumum debt service levels to repay the state more quickly. [Vote Details and Comments]
Received in the House on June 8, 2005.
- Referred to the House Appropriations Committee on June 8, 2005.
  - Reported in the House on June 28, 2005, with the recommendation that the substitute (H-1) be adopted and that the bill then pass.
- Substitute offered in the House on June 29, 2005, to replace the previous version of the bill with one that revises details, and strikes out an additional $500 fee proposed for schools applying to use the new loan fund. The substitute passed in the House by voice vote on June 29, 2005.
- Amendment offered by Rep. Bill McConico (D) on June 29, 2005, to authorize an exception to the restrictions that the new school bond revolving fund would place on new school bond debt assumed by certain school districts, Detroit in particular. The amendment failed in the House (51 to 55) on June 29, 2005. [Vote Details and Comments]
- Amendment offered by Rep. John Moolenaar (R) on June 29, 2005, to clarify the definition of "qualified bonds" covered by the bill. The amendment passed in the House by voice vote on June 29, 2005.
- Amendment offered by Rep. John Moolenaar (R) on June 29, 2005, to clarify that schools may pay off certain loans from the proposed fund sooner than the latest allowable date. The amendment passed in the House by voice vote on June 29, 2005.
Passed in the House (106 to 1) on June 29, 2005, to overhaul the School Bond Loan Fund program, essentially replacing it with a state revolving loan fund that school districts can borrow from to finance capital improvement projects (buildings). Borrowing through the School Bond Loan Fund allows schools to borrow at the same interest rate as the state. The current program does not require schools to repay loans on a regular schedule, which burdens the state with part of a school's interest expense. The bill is part of a legislative package comprised of Senate Bills 407 to 411. This bill would require districts whose millage revenue exceeds minumum debt service levels to repay the state more quickly. [Vote Details and Comments]
Received in the Senate on June 30, 2005.
Passed in the Senate (33 to 3) on June 30, 2005, to concur with the House-passed version of the bill. [Vote Details and Comments]
Signed by Gov. Jennifer Granholm on July 20, 2005.

Most Recent Comments

1) Senator Clark-Coleman's "no vote journal explanation" [by Admin003 on June 10, 2005]
Senator Clark-Coleman, under her constitutional right of protest (Art. 4, Sec. 18), protested against the passage of Senate Bill No.406.

Senator Clark-Coleman's statement is as follows:

I rise today to ask that my name be removed as sponsor of Senate Bill No.406. As introduced, the bill was part of the Governor's Jobs Today initiative and included exciting provisions for the creation of small high schools. During the process, however, those new bond initiatives were removed from the bill. It is now a reform of the school bond loan fund.

While I am pleased that this reform will result in additional revenue to the School Aid Fund, certain provisions appear to be very detrimental to the Detroit Public Schools. Efforts to address the issue of the Detroit Public Schools that they may face under this bill have been unsuccessful, and so at this time, I ask that my name me removed as sponsor of this bill.

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2) Lottery money-- [by Anonymous Citizen on June 9, 2005]
Not 'centuries?' Ask someone who is 29 years of age. :) If all the many give-aways in the state were stopped, this shell game would have to stop also!
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3) Shell Game [by Anonymous Citizen on April 26, 2005]
The Michigan lottery, approved by voters not "centuries ago" but during the 1970s (I believe), was to provide funds for school public schools in the state. It did, and does. But the legislature, as it did and does, played an old shell game in which the amount of general fund money allocated to schools was decreased by the amount of lottery money dedicated to that purpose. So there was no net increase in school funding by that means.
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