The Michigan Finance Authority (MFA) 2019 state aid note program materials, including the loan application, cash flow form, instructions, and calendar, are now available on the MFA’s website at www.michigan.gov/mfa. For general powers school districts and ISDs, click on “State Aid Note Program (SAN)” located under the “Finance Programs” heading on the MFA’s homepage. The filing deadline to submit the application materials is Friday, June 28, 2019.
For public school academies, click on “Public School Academy State Aid Note (PSA SAN)” under the same heading. The PSA deadline for filing application materials is Monday, July 15, 2019. PSAs should contact their note counsel for additional details.
As in the past, the MFA requires schools to adopt a resolution authorizing the state aid note, which must be prepared by nationally recognized note counsel. The MFA recently approved the forms of resolution for the 2019 state aid note programs. Accordingly, schools should begin preparing cash flow and application materials and contact note counsel to review the draft application materials and prepare the resolution.
General powers school districts (and ISDs) will have the option to participate in the “set-aside pool,” the “no set-aside pool,” or both. With the set-aside pool, a school district is required to make monthly payments on the note before the note matures, as set forth below:
3 set-asides – May 2020 through July 2020
5 set-asides – March 2020 through July 2020
7 set-asides – January 2020 through July 2020
Set-aside payments will be invested by the MFA on behalf of districts participating in the set-aside pool. Those investments will help offset accrued interest, reducing overall borrowing costs for participating districts.
With the no set-aside pool, however, a district will pay off the principal and interest on the note as a lump-sum payment when the note matures.
For general powers school districts and ISDs, the MFA’s borrowing parameters are unchanged from 2018 and include the following:
Regardless of whether your school plans to participate in the MFA SAN program, if your school expects to issue a state aid note or tax anticipation note this summer, please contact the Thrun Law Firm attorney who assists you with finance matters to begin the process.