EAST LANSING: 517.484.8000 | NOVI: 248.533.0741 | WEST MICHIGAN: 616.588.7700
The Haunting Effects of Failing to File Your Qualifying Statement
If a school wants to borrow money, obtaining “qualified status” each year from the Michigan Department of Treasury is critical. Before issuing most types of debt, a school must either have: (1) qualified status; or (2) Treasury’s prior approval. This article provides a brief overview of the two processes and describes the steps a school must take to ensure it obtains qualified status.
Obtaining Treasury’s prior approval is the more costly and time-consuming option. This process often causes significant delays, which can be a major hurdle if the need to borrow is unexpected and/or urgent. If a school has not obtained qualified status, then it must submit a prior approval application to Treasury each time it wants to borrow. Treasury has up to 30 business days (i.e., six calendar weeks) to evaluate the application. The 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 uploading the application. For prior approval applications, a school must plan ahead and allot additional time to accommodate Treasury’s application process.
Because of the expense and processing time required with Treasury’s prior approval application process, obtaining qualified status is by far the better option for schools. It allows a school to borrow during the upcoming year without further Treasury approval. 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 by following Treasury’s instructions for the “Qualifying Statement,” found online here. New users must request a username and password from Treasury to file online.
Treasury will not grant qualified status unless a school first files its annual audit. Consequently, school officials should ensure that the audit has been filed with Treasury before filing the Qualifying Statement. We recommend that the audit be filed electronically or via certified mail or overnight carrier to provide proof of filing.
The State of Michigan now accepts a single electronic filing to satisfy a school’s audit filing obligation with both Treasury and MDE. This procedure requires electronic filing of the audit with MDE. A school’s June 30, 2021 audit must be filed with MDE by November 1, 2021, which is 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.