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.

 

   

 

                         

 

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