SB-0861, As Passed House, December 19, 2008
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 861
A bill to authorize the creation of promise authorities and
the implementation of promise zone development plans; to prescribe
the powers and duties of promise zone authorities; to provide for
the capture and disbursement of certain tax revenue; and to
prescribe powers and duties of certain state and local officials.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"Michigan promise zone authority act".
Sec. 3. As used in this act:
(a) "Authority" means a promise zone authority created under
this act.
(b) "Board" means the governing body of an authority.
(c) "Eligible entity" means a city, township, county, local
school district, or intermediate school district, in which the
percentage of families with children under age 18 that are living
at or below the federal poverty level is greater than or equal to
the state average of families with children under age 18 living at
or below the federal poverty level, as determined by the department
of treasury.
(d) "Federal poverty level" means the poverty guidelines
published annually in the federal register by the United States
department of health and human services under its authority to
revise the poverty line under section 673(2) of subtitle B of title
VI of the omnibus budget reconciliation act of 1981, Public Law 97-
35, 42 USC 9902.
(e) "Governing body" means the elected body of an eligible
entity having legislative powers.
(f) "Nonpublic high school" means a high school operated by a
nonpublic school that includes grades 9 to 12 or 10 to 12 and that
awards a high school diploma. Nonpublic high school also includes a
general education development test.
(g) "Nonpublic school" means that term as defined in section 5
of the revised school code, 1976 PA 451, MCL 380.5.
(h) "Promise of financial assistance" means a commitment by an
eligible entity to provide financial resources for public or
private postsecondary education to eligible students living in a
promise zone and who have graduated from a public high school or
nonpublic high school located within that promise zone.
(i) "Promise zone" means that area created by a governing body
under this act.
(j) "Promise zone development plan" means that plan developed
by an authority under this act that will ensure that the financial
resources are available to adequately fund the promise of financial
assistance.
(k) "Public high school" means a public school that includes
grades 9 to 12 or 10 to 12 and that awards a high school diploma.
(l) "Public school" means that term as defined in section 5 of
the revised school code, 1976 PA 451, MCL 380.5.
(m) "School district" means that term as defined in the
revised school code, 1976 PA 451, MCL 380.1 to 380.1852.
(n) "State education tax" means the tax levied under the state
education tax act, 1993 PA 331, MCL 211.901 to 211.906.
Sec. 5. (1) If the department of treasury certifies the
eligibility of a governing body to establish a promise zone and the
governing body, by resolution, establishes a promise zone under the
Michigan promise zone act, the governing body shall, by resolution,
create a promise zone authority.
(2) An authority is a public body corporate that may sue and
be sued in any court of this state. An authority possesses all the
powers necessary to carry out its purpose. The enumeration of a
power in this act shall not be construed as a limitation upon the
general powers of an authority.
(3) An authority shall be under the supervision and control of
a board consisting of 11 members. Nine members shall be appointed
by the chief executive officer of the eligible entity with the
advice and consent of the governing body. One member shall be
appointed by the senate majority leader. One member shall be
Senate Bill No. 861 (H-2) as amended December 19, 2008
appointed by the speaker of the house of representatives. Not more
than [3] members shall be government officials. One member shall be a
representative of the public school community. Of the members first
appointed, an equal number of the members, as near as is
practicable, shall be appointed for 1 year, 2 years, 3 years, and 4
years. A member shall hold office until the member's successor is
appointed. After the initial appointment, each member shall serve
for a term of 4 years. An appointment to fill a vacancy shall be
made by the chief executive officer of the eligible entity for the
unexpired term only. Members of the board shall serve without
compensation, but may be reimbursed for actual and necessary
expenses. The chairperson of the board shall be elected by the
board. As used in this subsection, for a local school district or
an intermediate school district, "chief executive officer" means
the superintendent of the local school district or intermediate
school district.
(4) Before assuming the duties of office, a member shall
qualify by taking and subscribing to the constitutional oath of
office.
(5) The proceedings and rules of the board are subject to the
open meetings act, 1976 PA 267, MCL 15.261 to 15.275. The board
shall adopt rules governing its procedure and the holding of
regular meetings, subject to the approval of the governing body.
Special meetings may be held if called in the manner provided in
the rules of the board.
(6) After having been given notice and an opportunity to be
heard, a member of the board may be removed for cause by the
governing body.
(7) A writing prepared, owned, used, in the possession of, or
retained by the board in the performance of an official function is
subject to the freedom of information act, 1976 PA 442, MCL 15.231
to 15.246.
Sec. 7. (1) A promise zone authority created under section 5
shall prepare a promise zone development plan.
(2) The promise zone development plan shall include, but is
not limited to, all of the following:
(a) A complete description of the proposed promise of
financial assistance. The proposed promise of financial assistance
shall include, but is not limited to, a promise of financial
assistance to all students residing within the promise zone and who
graduate from a public high school or nonpublic high school located
within that promise zone. The proposed promise of financial
assistance shall, at a minimum, provide funding sufficient to
provide an eligible student the tuition necessary to obtain an
associate degree or its equivalent at a community or junior college
in this state or combination of community or junior colleges in
this state and, at most, provide funding sufficient to provide an
eligible student the tuition necessary to obtain a bachelor's
degree or its equivalent at a public postsecondary institution in
this state or combination of public postsecondary institutions in
this state, subject to any limitations authorized under this
section. The proposed promise of financial assistance may also, at
most, provide funding for an eligible student to attend a private
college in this state in an amount not to exceed the average
Senate Bill No. 861 (H-2) as amended December 19, 2008
tuition [necessary to obtain a bachelor's degree] at all public
universities in this state. The proposed
promise of financial assistance may also authorize the expenditure
of funds for educational improvement activities designed to
increase readiness for postsecondary education at public schools
located in the promise zone.
(b) A complete description of any limitation on the promise of
financial assistance; if the promise of financial assistance will
be prorated based on the number of years the student has resided
within the promise zone; if the promise of financial assistance
will be restricted to students who have resided within or attended
a public high school or nonpublic high school within the promise
zone for a minimum number of years; if the promise of financial
assistance is predicated on the student maintaining a minimum
college grade point average and carrying a minimum college credit
hour classload; or if the promise of financial assistance is
restricted to attendance at 1 or more public or private
postsecondary institutions in this state.
(c) A requirement that graduates of a public high school or
nonpublic high school exhaust all other known and available
restricted grants for tuition and fees for postsecondary education
provided by a federal, state, or local governmental entity, as
determined by the board.
(d) How the funds necessary to accomplish the promise of
financial assistance will be raised. Any amount received under the
state school aid act of 1979, 1979 PA 94, MCL 388.1601 to 388.1772,
shall not be included as a method of raising the necessary funds.
The promise zone development plan shall be financed from 1 or more
of the following sources:
(i) Donations.
(ii) Revenues.
(iii) Money obtained from other sources approved by the
governing body or otherwise authorized by law.
(e) An actuarial model of how much the proposed plan is
estimated to cost, based on actuarial formulas developed by the
department of treasury.
(3) The proposed promise of financial assistance under
subsection (2) shall not include funding for attendance at a public
or private postsecondary institution not located in this state.
(4) The board shall submit the promise zone development plan
to the department of treasury promptly after its adoption. The
promise zone development plan shall be published on the website of
the eligible entity that established the promise zone.
(5) The department of treasury shall review the promise zone
development plan submitted under subsection (4). Not more than 60
days after receipt of a promise zone development plan submitted
under subsection (4), the department of treasury shall either
approve the promise zone development plan or provide a written
notice of deficiencies. If the department of treasury does not
approve a promise zone development plan submitted under subsection
(4) or provide a written notice of deficiencies within 60 days, the
promise zone development plan shall be considered approved. If a
promise zone development plan is approved, the department of
treasury shall certify that the promise zone development plan meets
all requirements under this act and is sustainable.
(6) The department of treasury shall review any proposed
amendments to a promise zone development plan. Not more than 60
days after receipt of proposed amendments to a promise zone
development plan, the department of treasury shall either approve
the proposed amendments or provide a written notice of
deficiencies. If the department of treasury does not approve
proposed amendments or provide a written notice of deficiencies
within 60 days, the proposed amendments shall be considered
approved. If proposed amendments are approved, the department of
treasury shall certify that the amendments meet all requirements
under this act.
Sec. 9. The establishment of a promise zone development plan
does not create a cause of action in law or in equity against this
state, an eligible entity, or a promise zone authority, if the
proposed promise of financial assistance set forth in the promise
zone development plan is not paid to an eligible student.
Sec. 11. (1) The board may employ and fix the compensation of
a director. The director shall serve at the pleasure of the board.
A member of the board is not eligible to hold the position of
director. Before beginning his or her duties, the director shall
take and subscribe to the constitutional oath and furnish bond by
posting a bond in the sum determined in the resolution establishing
the authority payable to the authority for use and benefit of the
authority, approved by the board, and filed with the clerk of the
eligible entity. The premium on the bond shall be considered an
operating expense of the authority, payable from funds available to
the authority for expenses of operation. The director shall be the
chief executive officer of the authority.
(2) Subject to the approval of the board, the director shall
supervise and be responsible for implementing the promise zone
development plan and the performance of the functions of the
authority in the manner authorized by this act. The director shall
attend the meetings of the board and shall provide to the board,
the governing body, and the chief executive officer of the eligible
entity a regular report covering the activities and financial
condition of the authority. If the director is absent or disabled,
the board may designate a qualified person as acting director to
perform the duties of the office. Before beginning his or her
duties, the acting director shall take and subscribe to the oath,
and furnish bond, as required of the director. The director shall
furnish the board with information or reports governing the
operation of the authority as the board requires.
(3) The board may employ and fix the compensation of a
treasurer, who shall keep the financial records of the authority
and who, together with the director, shall approve all vouchers for
the expenditure of funds of the authority. The treasurer shall
perform all duties delegated to him or her by the board and shall
furnish a bond in an amount prescribed by the board.
(4) The board may employ and fix the compensation of a
secretary, who shall maintain custody of the official seal and of
records, books, documents, or other papers not required to be
maintained by the treasurer. The secretary shall attend meetings of
the board and keep a record of its proceedings and shall perform
other duties delegated by the board.
(5) The board may retain legal counsel to advise the board in
the proper performance of its duties.
(6) The board may employ other personnel considered necessary
by the board.
(7) Money received by the authority shall immediately be
deposited to the credit of the authority, subject to disbursement
under this act.
(8) The authority shall not expend more than 15% of the
proposed annual budget for administrative costs.
Sec. 13. The board may do any of the following:
(a) Prepare an analysis of the postsecondary educational
opportunities for the residents of the promise zone.
(b) Study and analyze the need for financial resources to
provide postsecondary educational opportunities for residents of
the promise zone.
(c) Acquire by purchase or otherwise, on terms and conditions
and in a manner the authority considers proper, or own, convey, or
otherwise dispose of, or lease as lessor or lessee, land and other
property, real or personal, or rights or interests in the property,
that the authority determines is reasonably necessary to achieve
the purposes of this act, and grant or acquire licenses, easements,
and options.
(d) Fix, charge, and collect fees, rents, and charges for the
use of any facility, building, or property under its control or any
part of the facility, building, or property.
(e) Lease, in whole or in part, any facility, building, or
property under its control.
(f) Solicit and accept grants and donations of money,
property, labor, or other things of value from a public or private
source.
Sec. 15. The director of the authority shall submit a budget
to the board for the operation of the authority for each fiscal
year before the beginning of the fiscal year. The budget shall be
prepared in the manner and contain the information required of
municipal departments. After review by the board, the budget shall
be submitted to the governing body. The governing body must approve
the budget before the board may adopt the budget. Unless authorized
by the governing body, funds of the eligible entity shall not be
included in the budget of the authority.
Sec. 17. (1) The authority shall determine the base year for
calculating the amount of incremental growth for the capture of the
state education tax as provided in this section. The base year is
the amount of revenue received from the collection of the state
education tax in the promise zone in the year immediately preceding
the year in which an authority makes its initial tuition payment in
accordance with the promise of financial assistance or the amount
of revenue received from the collection of the state education tax
in the promise zone in any 1 of the 3 immediately succeeding years,
whichever is less.
(2) If the authority continues to make annual payments in
accordance with the promise of financial assistance, in the year
immediately succeeding the base year determined in subsection (1)
and each year thereafter, this state shall capture 1/2 of the
increase in revenue, if any, from the collection of the state
education tax. This state shall not capture any revenue from the
collection of the state education tax under this act if that
revenue is subject to capture under any other law of this state.
Proceeds from the capture of the state education tax under this
section shall be deposited in the state treasury and credited to a
restricted fund to be used solely for the purposes of this act.
(3) If the authority continues to make annual tuition payments
in accordance with the promise of financial assistance, 2 years
after the authority's initial payment of financial assistance and
each year thereafter, this state shall pay to the authority the
state education tax captured under subsection (2). If the
boundaries of 2 or more promise zones created under this act
overlap, payments under this section shall only be made to the
first authority eligible for payment under this subsection.
(4) If at any time the authority does not make annual tuition
payments in accordance with the promise for financial assistance,
any amount captured from that promise zone in the restricted fund
created under subsection (2) shall be paid into the school aid fund
established in section 11 of article IX of the state constitution
of 1963.
(5) For purposes of this section, payments under this section
shall not be included in determining payments for financial
assistance in the immediately preceding year.
Sec. 19. (1) The department of treasury shall oversee the
operations of any promise zone authority or board created under
this act. If the department of treasury determines that the actions
of a promise zone authority or board are not in accordance with the
Senate Bill No. 861 (H-2) as amended December 19, 2008
promise zone development plan, the department of treasury may
assume operational control of that promise zone authority or board.
(2) An authority that has completed the purposes for which it
was organized shall be dissolved by resolution of the governing
body. The property and assets of the authority remaining after the
satisfaction of the obligations of the authority belong to the
eligible entity.
[Enacting section 1. This amendatory act does not take effect
unless House Bill No. 5375 of the 94th Legislature is enacted into law.
]