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File Your Qualifying Statement!
For a school that wants to borrow money, obtaining “qualified status” each year from the Michigan Department of Treasury is critical. Before a school issues most types of debt, it must either have qualified status or Treasury’s prior approval.
The costlier and more time-consuming prior approval process often causes significant delays, which can be a hurdle if the need to borrow is unexpected. Treasury has up to 30 business days (i.e., six calendar weeks) to evaluate a prior approval application which, without qualified status, must be submitted each time a school wants to borrow. The 30 business-day review period begins on the date Treasury deems the application “received.” With Treasury’s online filing system, schools should receive confirmation of receipt shortly after submitting the application. Accordingly, a borrower without qualified status must plan ahead and build additional time into its schedule to accommodate Treasury’s application process.
Obtaining qualified status is a better option. It allows a school to borrow in the upcoming year without further Treasury approval, which means a quicker and easier transaction. To obtain qualified status, school officials must complete and electronically file a Municipal Finance Qualifying Statement with Treasury by December 31 each year. This filing can be accomplished through Thrun Law Firm’s website (thrunlaw.com). Go to the “Links” page and select “Michigan Department of Treasury - Municipal Finance” under the “Bond and Finance Links” heading. Then select “Municipal Finance Forms” and follow the instructions for the “Qualifying Statement.” New users must request a username and password from Treasury to access the online filing interface.
Treasury will not grant qualified status unless a school 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 for the next calendar year. Consequently, school officials should ensure that the audit has been 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 MDE. This procedure requires electronic filing of the audit with MDE which, for this year only, has been adjusted. School officials may now file the June 30, 2020 audit with MDE by December 1, 2020, which is still earlier than Treasury’s deadline. Details for audit submission are available on our website’s “Links” page. MDE’s filing information is available here.
Some questions on the Municipal Finance Qualifying Statement form (such as those related to taxes levied and delinquent taxes) may be confusing. Please read and complete the form carefully. At a retainer client’s request and without charge, Thrun Law Firm’s finance attorneys will review a client’s Qualifying Statement before it is filed. Treasury’s online filing interface means that a client must send a screenshot of the completed form. Please provide the screenshot to your finance attorney by early December to allow adequate time for review.