The Michigan Finance Authority (MFA) August 2021 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 general powers school district and ISD filing deadline to submit application materials is Thursday, July 1, 2021.
For public school academies (“PSAs”), click on Public School Academy State Aid Note (PSA SAN) under the same heading. The PSA deadline for filing application materials is Monday, July 12, 2021. PSAs should contact their note counsel for additional details.
As in the past, the MFA requires that schools adopt a resolution authorizing the state aid note, and the resolution must be prepared by nationally recognized note counsel. The form of resolution for the August 2021 state aid note program is now available. Accordingly, schools should begin preparing cash flow materials and provide those materials to your Thrun finance attorney for preparation of the school’s 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 district must make monthly payments on the note before the note matures, as set forth below:
3 set-asides – May 2022 through July 2022
5 set-asides – March 2022 through July 2022
7 set-asides – January 2022 through July 2022
In contrast, the no set-aside pool allows a district to pay the principal and interest on the note as a lump-sum payment when the note matures in August 2022.
The MFA’s borrowing parameters are largely unchanged from 2020.
As always, to participate in the MFA’s SAN program, schools must reasonably project a cash flow deficit. If your cash flow does not show a deficit (for example, due to certain federal COVID-19 funding), but you still want to borrow for operating purposes, please contact your Thrun finance attorney to discuss other options.
A school district that has been denied qualified status by the Michigan Department of Treasury will need to file its “prior approval” application with Treasury at least 30 business days (i.e., six weeks) before approval is needed. For a school district participating in the MFA SAN program, the prior approval application will need to be filed with Treasury no later than Thursday, June 10, 2021. The authorizing resolution must also be adopted by that date, so it can be filed with Treasury in conjunction with the prior approval application.
Regardless of whether your school plans to participate in the MFA SAN program, if you expect to issue a state aid note or tax anticipation note this summer, please contact the Thrun Law Firm attorney who assists your school with finance matters to begin the process.
Jeffrey J. Soles – (517) 374-8835
Michael D. Gresens – (517) 374-8838
Christopher J. Iamarino – (517) 374-8862
Mathew F. Hiser – (248) 533-0737
Ian F. Koffler – (517) 374-8865
Fredric G. Heidemann – (517) 374-4535
Ryan J. Nicholson – (517) 374-8863