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Don’t Forget to File Your Qualifying Statement
The importance of obtaining “qualified status” each year from the Michigan Department of Treasury cannot be overemphasized. School districts, intermediate school districts, and public school academies that obtain qualified status are able to issue new bonds and notes more swiftly and pay lower filing fees to the State of Michigan. Schools that do not obtain qualified status may experience significant delays in issuing bonds and notes during calendar year 2016. Those delays may be especially problematic for cash flow borrowings such as state aid notes (“SANs”) and tax anticipation notes (“TANs”).
The Revised Municipal Finance Act requires that before a school district, ISD, or PSA issues certain types of debt (including bonds, SANs, and TANs), it either must have qualified status or apply to Treasury for prior approval if qualified status was denied. Treasury has up to 30 business days (or six calendar weeks) to evaluate a prior approval application. The 30 business day review period begins on the date that Treasury deems the application “received,” as opposed to the date the application is filed. Because of internal procedures at Treasury, actual receipt may occur up to one week after an application is filed. Consequently, a borrower without qualified status must plan well ahead and build additional time into the schedule to accommodate Treasury’s application process.
School officials should ensure that a proper application for qualified status is submitted annually to avoid the time-consuming and more costly “prior approval” process. A Municipal Finance Qualifying Statement form must be completed and filed electronically with Treasury by December 31 each year. This filing can be accomplished through Thrun Law Firm’s website (www.thrunlaw.com). Go to the “Links” page and select “Michigan Department of Treasury - Municipal Finance” under the “Bond and Finance Links” heading. Then select “Online Qualifying Statement” and follow the instructions for online filing.
Treasury will not grant qualified status unless a school district, ISD, or PSA first files a copy of its annual audit. A school that fails to file its annual audit with Treasury by December 31 will be denied qualified status the next calendar year. Consequently, school officials should ensure that the audit is filed with Treasury before filing a Qualifying Statement. We recommend that the audit be filed electronically or via certified mail or overnight carrier to confirm timely delivery.
The State of Michigan now accepts a single electronic filing to satisfy the audit filing obligation with both Treasury and the Department of Education. This procedure requires electronic filing of the audit with MDE. For the fiscal year that ended June 30, 2015, MDE requires that the audit be filed by November 1, 2015, which is an earlier date than Treasury requires. Details for audit submission are available on the “Links” page of our website.
Some of the questions on the Municipal Finance Qualifying Statement form (such as those related to taxes levied and delinquent taxes) can be confusing. Please complete the form carefully. At a client’s request and without charge, Thrun Law Firm’s finance attorneys will review a Qualifying Statement before it is filed.