Legislation would cap state loans to school districts

An article by Kirk Pinho    No Comments

With property tax revenues going to school districts in a free-fall over the past few years, many districts haven’t been able to meet the obligations of their existing bond debt. In order to shore up those payments, the state of Michigan has a program that lends school districts money to cover their bond indebtedness shortfalls, one that currently has a liability of about $1.2 billion.

State Sen. John Pappageorge (R-Birmingham) and a few of his Republican colleagues want to cap that amount at $1.5 billion, a ceiling that would be enacted if Senate Bills (SBs) 770, 771 and 772 — which are tie-barred — receive state House and Senate approval.

A joint hearing on the legislation is slated for Tuesday, Dec. 6 by a trio state Senate Appropriations Committee subcommittees, according to staff in Pappageorge’s office, who added that there are roughly nine school districts in Oakland County that currently utilize the state’s assistance in meeting their bond debt obligations, although none of them are located in the lakes area.

“We are looking at this as sort of another one of our long-term liabilities that needs to be addressed,” said Kristen Brown, Pappageorge’s chief of staff. “That’s why we took interest in it. If we don’t address this problem in the near future,” the current rate of $60 per-pupil out of the School Aid Fund that pays for the program could “skyrocket to $128 (per-pupil) in the next decade.”

“If their millages are not bringing in enough money to pay down the debt service on the bonds, that’s what the loan program is for,” Brown said.

Brad Biladeau, associate executive for government relations for the Michigan Association of School Administrators (MASA), said that the association has previously opposed similar legislative efforts but the MASA is still in the process of reviewing the slate of bills under consideration.

The legislation was introduced on Oct. 20.