The Michigan Finance Authority (MFA) 2020 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 application materials is Thursday, July 2, 2020.
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 13, 2020. 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 2020 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.
With some exceptions, 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 district is required to make monthly payments on the note before the note matures, as set forth below:
3 set-asides – May 2021 through July 2021
5 set-asides – March 2021 through July 2021
7 set-asides – January 2021 through July 2021
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.
When preparing the cash flow for a state aid note borrowing, school officials are encouraged to be liberal as to anticipated expenditures and conservative with respect to anticipated revenues.
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 attorney who assists you with finance matters to begin the process.