The importance of obtaining “qualified” status each year from the Michigan Department of Treasury (“Treasury”) cannot be overemphasized. School districts, intermediate school districts, and public school academies that do not obtain qualified status may experience significant delays in issuing bonds and notes during calendar year 2013, which 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. The Department of Treasury has up to 30 business days, or 6 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 with Treasury. 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 ahead and build additional time into the schedule to accommodate the Treasury application process.
School officials should ensure that the necessary steps are taken to apply to Treasury each year for qualified status 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 of each year. Click here to be linked to instructions for online submission.
Some of the questions on the Municipal Finance Qualifying Statement form (such as those related to taxes levied and delinquent taxes) have proven to be confusing. Please exercise care when completing the form to avoid an erroneous denial of qualified status. As part of our service to our retainer and regular finance clients, the Thrun Law Firm’s finance attorneys will, at the client’s request and without additional charge, review a Qualifying Statement before its filing.
Treasury will not grant qualified status unless a school district, ISD, or PSA first files a copy of its annual audit. A school district, ISD, or PSA that fails to file a copy of the annual audit with Treasury by December 31 will be denied qualified status for the duration of the next calendar year. Consequently, school officials should ensure that a copy of the audit is filed with Treasury before filing for qualified status. If your school is relying on the school auditor or another third party for that task, it is critical that you verify proper and timely filing.
We advise that the audit be filed electronically or via certified mail or overnight carrier so that delivery may be proven if an issue arises as to timely filing. Please be aware that the State of Michigan will now accept a single electronic filing to satisfy the duty to file the audit with both the Department of Treasury and the Department of Education. This procedure requires that the audit be filed electronically with the Department of Education (see http://www.michigan.gov/documents/mde/Audit_Submission_333250_7.pdf for more details).
However, if audits are filed in “hard copy” form, the form must be filed separately with both the Department of Treasury and the Department of Education.