School Loan Revolving Fund Changes Act 437 of 2012

by Miller Canfield

The long debated changes to the State law implementing the School Bond Qualification and Loan Act were enacted in December as part of the Legislature's lame duck session, and became effective on December 27, 2012, as Public Act 437 of 2012 (SB 770).

Key provisions of Act 437 affect all school districts with debt qualified for participation in the School Loan Revolving Fund and those who are contemplating issuing or seeking voter approval for such debt in the future (though the impact on those districts who do not expect to borrow from the Fund is much less extensive):

  • A district's computed millage rate, if it has one, established at the time bonds are issued, or at the time of an initial loan from the Fund to pay debt service must be recalculated annually, starting October 1, 2013. If the recalculation demonstrates that the existing rate will be insufficient, using Treasury's required assumptions and projections, to repay the qualified bonds and associated loans by the district's mandatory loan repayment date, the district must increase its debt millage rate. A district that is not expected to borrow from the Fund will not have a computed millage rate unless and until it needs to borrow.
  • The State may also seek an increase in the district's computed rate at the time of a refunding or new money bond issue.
  • Act 437 expects that for the first calculation, a school district with a computed millage rate will increase that rate by as much as the same percentage by which its taxable value declined since 2008, though not more than the rate necessary to demonstrate an ability to repay its loans on time.
  • Once a computed millage rate is increased, if a subsequent recalculation demonstrates that the increase is no longer required, the rate may be reduced, though not below the greater of 7 mills or the original computed millage rate, while loans remain outstanding.
  • Preliminary Qualification no longer takes into account taxable value per pupil or the age of a district's buildings.
  • Debt service projections must now assume:
    • That a district’s positive or negative taxable value growth rate for the past five years will continue for the five years after the application (unless the State Treasurer concurs in a request by the District to use a different period of time),
    • The district's 20-year historical growth rate will be used for the period beginning more than five years after the application through final loan repayment but not more than 3% nor less than 0% growth.
  • Districts must agree to maintain records detailing the investment and expenditure of proceeds of qualified bonds and produce them to the State within five business days after a request by the State (Note: It is also good idea for federal tax and other reasons to maintain these records in a readily accessible form.)
  • Until June 16, 2016, Act 437 allows the State Treasurer not to pre-qualify a district's  bonds approved by the voters after September 30, 2012, which are expected to require loans from the State, if all State loans under the program exceed $1.8 billion. As of June 30, 2012, outstanding loans totaled $1.443 billion.
  • The State Treasurer has the discretion not to prequalify bonds if a district's outstanding and proposed qualified bonds and loans would exceed 25% of its taxable value as of the time the proposed bonds are issued.
  • Ballot language for proposed qualified bonds must now include the dollar amount estimated to be borrowed from the Fund, the duration of the millage levy, the total amount of outstanding bonds and loans and that the computer millage rate, if there is one, may change.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Miller Canfield | Attorney Advertising

Written by:

Miller Canfield

Miller Canfield on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.