Bendle Public Schools - Raymond James Financial

Transcription

This Preliminary Official Statement and the information contained herein is subject to completion and amendment. These securities may not be sold nor may an offer to buy be accepted prior to the time the Official Statement is delivered in final form. Under no
circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. As of its date, this Preliminary Official Statement has been “deemed final” by the School District for purposes of SEC Rule 15c2-12(b)(1) except for the information permitted to be omitted by SEC Rule 15c2-12(b)(1).
PRELIMINARY OFFICIAL STATEMENT DATED July 30, 2015
NEW ISSUE
Book-Entry-Only
Ratings ¹†: Standard & Poor’s: __
TAX STATUS: In the opinion of Thrun Law Firm, P.C., Bond Counsel, assuming continued compliance by the School District with certain requirements of the
Internal Revenue Code of 1986, as amended (the “Code”), interest on the Bonds is excluded from gross income for federal income tax purposes, as described in the
opinion, and the Bonds and interest thereon are exempt from all taxation in the State of Michigan, except inheritance and estate taxes and taxes on gains realized
from the sale, payment or other disposition thereof.
$12,750,000*
BENDLE PUBLIC SCHOOLS
County of Genesee
State of Michigan
2015 Refunding Bonds
(General Obligation - Unlimited Tax)
Date of Sale: August 10, 2015
The time and location of the sale are fully described in the section INFORMATION FOR BIDDERS herein.
PURPOSE AND SECURITY: The Bonds are being issued by Bendle Public Schools, County of Genesee, State of Michigan, 2015 Refunding Bonds (General
Obligation - Unlimited Tax) (the “School District”) for the purpose of refunding certain prior outstanding obligations of the School District (the “Refunded Bonds”). The
Bonds will pledge the full faith, credit and resources of the School District for payment of the principal and interest thereon, and will be payable from ad valorem taxes,
which may be levied without limitation as to rate or amount as provided by Article IX, Section 6, and Article IX, Section 16, of the Michigan Constitution of 1963. The rights
or remedies of bondholders may be affected by bankruptcy, insolvency, fraudulent conveyance or other laws affecting creditors’ rights generally, now existing or hereafter
enacted, and by the application of general principles of equity including those relating to equitable subordination.
STATE QUALIFICATION: The Bonds are expected to be fully qualified as of delivery pursuant to Act 92, Public Acts of Michigan, 2005, as amended, enacted pursuant
to Article IX, Section 16, of the Michigan Constitution of 1963. Under the terms of said constitutional and statutory provisions, if for any reason the School District will be
or is unable to pay the principal and interest on the Bonds when due, then the School District shall borrow, and the State of Michigan shall lend to it, an amount sufficient
to enable the School District to make the payment.
BOOK-ENTRY-ONLY: The Bonds are issuable only as fully registered bonds without coupons, and when issued, will be registered in the name of Cede & Co., as
Bondholder and nominee for The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the Bonds. Purchases of beneficial
interests in the Bonds will be made in book-entry only form, in the denominations of $5,000 or any integral multiple thereof. Purchasers will not receive certificates
representing their beneficial interest in Bonds purchased. So long as Cede & Co. is the Bondholder, as nominee of DTC, references herein to the Bondholders or registered
owners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the Bonds. See BOOK-ENTRY ONLY SYSTEM herein.
PAYMENT OF BONDS: Interest on the Bonds will be payable semiannually on May 1 and November 1 of each year, commencing on May 1, 2016. The Bonds will be
registered Bonds, of the denomination of $5,000 or multiples thereof not exceeding for each maturity the principal amount of such maturity. The principal and interest shall
be payable at the corporate trust office of The Huntington National Bank, Grand Rapids, Michigan (the “Paying Agent”) or such other Paying Agent as the School District
may hereafter designate by notice mailed to the registered owner not less than sixty (60) days prior to any interest payment date. So long as DTC or its nominee, Cede &
Co., is the Bondholder, such payments will be made directly to such Bondholder. Disbursement of such payments to the Beneficial Owners is the responsibility of DTC
Participants and Indirect Participants, as more fully described herein. Interest shall be paid when due by check or draft mailed to the registered owner as shown on the
registration books as of the fifteenth day of the month preceding the payment date for each interest payment.
Principal Due: May 1 of each year as shown below
Dated: Date of Delivery
MATURITY SCHEDULE*
(Base CUSIP§: _______)
Year
2017
2018
2019
2020
2021
2022
2023
2024
2025
Amount*
$490,000
505,000
520,000
540,000
560,000
590,000
615,000
640,000
660,000
PURCHASE PRICE:
MULTIPLES:
Interest
Rate
Yield
CUSIP§
Year
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Amount*
$680,000
705,000
730,000
755,000
780,000
810,000
810,000
795,000
785,000
780,000
Not less than 101% nor more than 104% of the par value
1/8 or 1/20 of 1% or both
Interest
Rate
Yield
CUSIP§
MAXIMUM INTEREST RATE:
4%
MAXIMUM INTEREST SPREAD:2%
TERM BOND OPTION: Bidders shall have the option of designating Bonds as serial bonds or term bonds, or both. The bidder must designate whether each of the
principal amounts shown above represent a serial maturity or a mandatory redemption requirement for a term bond maturity. There may be more than one term bond
maturity. In any event, the above principal amount schedule shall be represented by either serial bond maturities or mandatory redemption requirements, or a combination
of both. Any such designation must be made within twenty-four (24) hours of the Bond sale.
RESTRICTION: THE INTEREST RATE BORNE BY BONDS MATURING IN ANY YEAR SHALL NOT BE LESS THAN THE INTEREST RATE BORNE BY
BONDS MATURING IN THE PRECEDING YEAR.
PRIOR REDEMPTION: Bonds of this issue maturing in the years 2017 through 2025, shall not be subject to redemption prior to maturity as described herein. See “PRIOR
REDEMPTION - Optional Redemption” herein.
CREDIT RATINGS: Ratings relative to this issue have been requested of Standard & Poor’s Rating Credit Market Services (“Standard & Poor’s”,) however, as of the date
of the printing of this Preliminary Official Statement, the ratings had not been announced.
BOND COUNSEL: The Bonds will be offered when, as and if issued by the School District subject to the approving legal opinion of Thrun Law Firm P.C., Novi, Michigan.
This cover page contains information for a quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential
to the making of an informed investment decision.
Additional information relative to this Bond issue may be obtained from
Stauder, BARCH & ASSOCIATES, Inc.
Municipal Bond Financial and Marketing Consultants
3989 Research Park Drive
Ann Arbor, Michigan 48108
734-668-6688
Official Statement Dated: ________ ___, 2015
¹ For an explanation of ratings, see “CREDIT RATING” herein.
† As of the date of delivery
* Preliminary, subject to change.
§Copyright 2015, American Bankers Association. CUSIP data herein is provided by Standard & Poor’s CUSIP Service Bureau, a division of the McGraw-Hill Companies, Inc. The School District
shall not be responsible for the selection of CUSIP numbers, nor any representation made as to their correctness on the Bonds or as indicated above.$12,750,000*
Bendle Public Schools
3420 Columbine Avenue
Burton, MI 48529
Phone: 810-591-2501
Fax: 810-591-2210
BOARD OF EDUCATION
PRESIDENT
Dave Wallace
Term Expires 12/31/16
VICE PRESIDENT
Dale Dunsmore
SECRETARY
Janis Bugbee
TREASURER
Debbie Dunsmore
TRUSTEES
David Love
Bard Scott
Rodney Winters
SUPERINTENDENT
John Krolewski
PROFESSIONAL SERVICES
PAYING AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Huntington National Bank
BOND COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thrun Law Firm, P.C.
FINANCIAL CONSULTANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stauder, BARCH & ASSOCIATES, Inc.
ii
TABLE OF CONTENTS
Page
INFORMATION FOR BIDDERS . . . . . . . . . . . . . . . . . 1
MATURITY ADJUSTMENT . . . . . . . . . . . . . . . . . 1
ADJUSTMENT TO PURCHASE PRICE . . . . . . . 2
TERM BOND OPTION . . . . . . . . . . . . . . . . . . . . . 2
PURPOSE AND SECURITY . . . . . . . . . . . . . . . . . 2
QUALIFICATION BY THE STATE OF
MICHIGAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PRIOR REDEMPTION . . . . . . . . . . . . . . . . . . . . . 2
NOTICE OF SALE . . . . . . . . . . . . . . . . . . . . . . . . . 3
BIDCOMP/PARITY BIDDING . . . . . . . . . . . . . . . 3
BOOK-ENTRY ONLY SYSTEM . . . . . . . . . . . . . 3
TAX PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . 5
TRANSFER OUTSIDE BOOK-ENTRY-ONLY
SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SOURCES OF SCHOOL OPERATING
REVENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
MICHIGAN PROPERTY TAX REFORM . . . . . . . 7
LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
State of Michigan . . . . . . . . . . . . . . . . . . . . . . . 8
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Original Issue Discount . . . . . . . . . . . . . . . . . . 8
Original Issue Premium . . . . . . . . . . . . . . . . . . 9
Future Developments . . . . . . . . . . . . . . . . . . . . 9
QUALIFIED BY THE MICHIGAN DEPARTMENT
OF TREASURY . . . . . . . . . . . . . . . . . . . . . . . 9
CONTINUING DISCLOSURE . . . . . . . . . . . . . . 10
BOND COUNSEL’S RESPONSIBILITY . . . . . . 10
FINANCIAL CONSULTANT’S OBLIGATION . 10
CREDIT RATING . . . . . . . . . . . . . . . . . . . . . . . . 11
PLAN OF REFUNDING . . . . . . . . . . . . . . . . . . . 11
ESTIMATED SOURCES AND
USES OF FUNDS . . . . . . . . . . . . . . . . . . . . . 12
GENERAL FINANCIAL INFORMATION . . . . . . . .
AREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
POPULATION . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTY VALUATIONS . . . . . . . . . . . . . . . .
Historical Valuations . . . . . . . . . . . . . . . . . . .
Per Capita Valuation . . . . . . . . . . . . . . . . . . .
Downtown Development Authority (DDA) . .
TAX BASE COMPOSITION . . . . . . . . . . . . . . . .
MAJOR TAXPAYERS . . . . . . . . . . . . . . . . . . . . .
CONSTITUTIONAL MILLAGE ROLLBACK . .
TAX RATES - (Per $1,000 of Valuation) . . . . . . .
Bendle Public Schools . . . . . . . . . . . . . . . . .
Other Major Taxing Units . . . . . . . . . . . . . . .
STATE AID PAYMENTS . . . . . . . . . . . . . . . . . .
TAX LEVIES AND COLLECTIONS . . . . . . . . .
LABOR FORCE . . . . . . . . . . . . . . . . . . . . . . . . . .
PENSION FUND . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER POST-EMPLOYMENT BENEFITS . . . 19
DEBT STATEMENT . . . . . . . . . . . . . . . . . . . . . . 19
DIRECT DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
OVERLAPPING DEBT . . . . . . . . . . . . . . . . . . . . 19
DEBT RATIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
DEBT HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . 20
FUTURE FINANCING . . . . . . . . . . . . . . . . . . . . 20
OTHER BORROWING . . . . . . . . . . . . . . . . . . . . 20
LEGAL DEBT MARGIN . . . . . . . . . . . . . . . . . . . 20
SCHOOL BOND QUALIFICATION AND LOAN
PROGRAM . . . . . . . . . . . . . . . . . . . . . . . . . . 20
GENERAL ECONOMIC INFORMATION . . . . . . . .
LOCATION AND AREA . . . . . . . . . . . . . . . . . . .
POPULATION BY AGE . . . . . . . . . . . . . . . . . . .
INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMPLOYMENT CHARACTERISTICS . . . . . . .
EMPLOYMENT BREAKDOWN . . . . . . . . . . . .
UNEMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . .
BANKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
21
21
21
22
22
23
23
GENERAL SCHOOL INFORMATION . . . . . . . . . . .
DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . .
BOARD OF EDUCATION . . . . . . . . . . . . . . . . .
SCHOOL ENROLLMENT . . . . . . . . . . . . . . . . . .
Historical Enrollment . . . . . . . . . . . . . . . . . . .
Enrollment by Grade . . . . . . . . . . . . . . . . . . .
Projected Enrollment . . . . . . . . . . . . . . . . . . .
EXISTING SCHOOL FACILITIES . . . . . . . . . . .
OTHER SCHOOLS . . . . . . . . . . . . . . . . . . . . . . .
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . .
24
24
24
24
24
24
24
25
25
26
APPENDIX A - BUDGET . . . . . . . . . . . . . . . . . . . . . A-1
13
13
13
13
13
14
14
15
15
16
16
16
16
16
17
17
18
APPENDIX B - AUDIT . . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C - STATE QUALIFICATION . . . . . . . C-1
APPENDIX D - FORM OF CONTINUING
DISCLOSURE AGREEMENT . . . . . . . . . . . . . . D-1
APPENDIX E - DRAFT LEGAL OPINION . . . . . . . E-1
APPENDIX F - DRAFT OFFICIAL
NOTICE OF SALE . . . . . . . . . . . . . . . . . . . . . . . F-1
BID FORM . . . . . . . . . . . . . . . . . . . INSIDE BACK COVER
iii
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INFORMATION FOR BIDDERS
$12,750,000*
County of Genesee
State of Michigan
DATE OF SALE:
Monday, August 10, 2015
TIME OF SALE:
1:30 o’clock p.m., prevailing Eastern Time
TIME OF AWARD:
7:00 o’clock p.m., prevailing Eastern Time, on the same date
LOCATION OF SALE:
Superintendents Office
Burton, MI 48529
Fax (810) 591-2210
or
Municipal Advisory Council
Buhl Building, 535 Griswold, Suite 1850
Detroit, Michigan 48226
Fax (313) 963-0943
BIDS MAY BE SUBMITTED ELECTRONICALLY VIA BIDCOMP/PARITY OR FAXED
DATED:
Date of Delivery
MAXIMUM INTEREST RATE:
4%
FIRST INTEREST:
May 1, 2016
MAXIMUM INTEREST SPREAD:
2%
DENOMINATIONS:
$5,000 or any integral
multiple thereof not exceeding
for each maturity the principal
amount of such maturity.
MULTIPLES:
REGISTRATION:
PURCHASE PRICE:
Not less than 101% nor more than 104% of the par value
PAYING AGENT:
The Huntington National Bank, Grand Rapids, Michigan
1/8 or 1/20 of 1% or both
Principal and Interest
GOOD FAITH DEPOSIT: $255,000* Cashier’s or Certified Check or Wire Transfer, see “APPENDIX F-DRAFT
OFFICIAL NOTICE OF SALE,” for further information regarding this issue.
TAX DESIGNATION:
NOT QUALIFIED TAX - EXEMPT OBLIGATIONS
QUALIFICATION:
EXPECTED TO BE QUALIFIED FOR MICHIGAN SCHOOL LOAN
REVOLVING FUND as of delivery pursuant to Act 92, Public Acts of Michigan, 2005,
as amended.
RESTRICTION:
THE INTEREST RATE BORNE BY BONDS MATURING IN ANY YEAR SHALL
NOT BE LESS THAN THE INTEREST RATE BORNE BY BONDS MATURING
IN THE PRECEDING YEAR.
PRINCIPAL DUE:
May 1, annually as shown the front cover
MATURITY ADJUSTMENT
The aggregate principal amount of this issue is believed to be the amount necessary to provide, in part, adequate
funds to retire the Refunded Bonds and transactional costs. The School District reserves the right to increase or decrease
the aggregate principal amount of the Bonds by not more than $700,000 after receipt of the bids and prior to final award.
Such adjustment, if necessary, will be made in increments of $5,000, will not exceed $50,000 per maturity and may be
made in any maturity.
1
ADJUSTMENT TO PURCHASE PRICE
The purchase price of the Bonds will be adjusted proportionately to the adjustment in principal amount of the
Bonds and in such manner as to maintain as comparable an underwriter spread as possible to the winning bid.
TERM BOND OPTION
Bidders shall have the option of designating bonds maturing in any year as serial bonds or term bonds, or both.
The bidder must designate whether each of the principal amounts shown above represent a serial maturity or a mandatory
redemption requirement for a term bond maturity. There may be more than one term bond maturity. In any event, the
above principal amount schedule shall be represented by either serial bond maturities or mandatory redemption
requirements, or a combination of both. Any such designation must be made within twenty-four (24) hours of the Bond
sale
PURPOSE AND SECURITY
The Bonds are being issued by Bendle Public Schools, County of Genesee, State of Michigan, 2015 Refunding
Bonds (General Obligation - Unlimited Tax) (the "School District") for the purpose of refunding certain prior outstanding
obligations of the School District (the "Refunded Bonds"). The Bonds will pledge the full faith, credit and resources of
the School District for payment of the principal and interest thereon, and will be payable from ad valorem taxes, which
may be levied without limitation as to rate or amount as provided by Article IX, Section 6, and Article IX, Section 16,
of the Michigan Constitution of 1963. The rights or remedies of bondholders may be affected by bankruptcy, insolvency,
fraudulent conveyance or other laws affecting creditors' rights generally, now existing or hereafter enacted, and by the
application of general principles of equity including those relating to equitable subordination
QUALIFICATION BY THE STATE OF MICHIGAN
The Bonds are expected to be fully qualified as of the date of delivery of the Bonds pursuant to Act 92, Public
Acts of Michigan, 2005, as amended (“Act 92 ”), the purpose of which is to implement Article IX, Section 16, of the
Michigan Constitution of 1963 (the “State Constitution”). Under the terms of said constitutional and statutory
provisions, if for any reason the School District will be or is unable to pay the principal of and interest on the Bonds
when due, then the School District shall borrow and the State of Michigan (the “State”) shall lend to it from the School
Loan Revolving Fund (the “School Loan Revolving Fund”) established by the State an amount sufficient to enable the
School District to make the payment. Article IX, Section 16, of the State Constitution, as also implemented by Act 112,
Public Acts of Michigan, 1961, as amended, authorizes the State, without approval of its electors, to borrow from time
to time such amounts as shall be required, to pledge its faith and credit and to issue its notes or bonds therefor, for the
purpose of making loans to school districts as provided under such Section. Loans to school districts for such purposes
are made from the proceeds of such State borrowings. See also “APPENDIX C - STATE QUALIFICATION,” in this
Official Statement.
Complete financial statements of all of the State’s funds as included in the State’s Comprehensive Annual
Financial Report (“CAFR”) prepared by the State’s Department of Management and Budget are available upon request
from the Department of Management and Budget, Office of Financial Management, P. O. Box 30026, Lansing, Michigan
48909, Telephone: (517) 373-1011. The State has agreed to file its CAFR with the Nationally Recognized Municipal
Securities Information Repositories and the State Information Depository (as described in Rule 15c2-12(b)(5) of the
Securities and Exchange Commission) annually, so long as any bonds qualified for participation in the School Loan
Revolving Fund remain outstanding.
PRIOR REDEMPTION
A.
Mandatory Redemption.
Principal amounts designated by the original purchaser of the Bonds as part of a term maturity shall be subject
to mandatory redemption, in part, by lot, at par and accrued interest on redemption dates corresponding to the maturity
schedule included in the Notice of Sale. When term Bonds are purchased by the School District and delivered to the
Paying Agent for cancellation or are redeemed in a manner other than by mandatory redemption, the principal amount
of the term Bonds affected shall be reduced by the principal amount of the Bonds so redeemed or purchased in the order
determined by the School District.
2
B.
Optional Redemption.
Bonds of this issue maturing in the years 2017 through 2025, shall not be subject to redemption prior to
maturity. Bonds or portions of Bonds in multiples of $5,000 of this issue maturing in the year 2026 and thereafter shall
be subject to redemption prior to maturity, at the option of the School District, in such order as the School District may
determine and by lot within any maturity, on any date occurring on or after May 1, 2025, at par and accrued interest to
the date fixed for redemption.
C.
Notice of Redemption and Manner of Selection.
Notice of redemption of any Bond shall be given not less than thirty (30) days and not more than sixty (60) days
prior to the date fixed for redemption by mail to the registered owner at the registered address shown on the registration
books kept by the Paying Agent. The Bonds shall be called for redemption in multiples of $5,000 and Bonds of
denominations of more than $5,000 shall be treated as representing the number of Bonds obtained by dividing the face
amount of the Bond by $5,000 and such Bonds may be redeemed in part. The notice of redemption for Bonds redeemed
in part shall state that upon surrender of the Bond to be redeemed a new Bond or Bonds in an aggregate face amount
equal to the unredeemed portion of the Bond surrendered shall be issued to the registered owner thereof.
If less than all of the Bonds of any maturity shall be called for redemption prior to maturity, unless otherwise
provided, the particular Bonds or portions of Bonds to be redeemed shall be selected by lot by the Paying Agent, in the
principal amounts designated by the School District. Any Bonds selected for redemption will cease to bear interest on
the date fixed for redemption, whether presented for redemption or not, provided funds are on hand to redeem said
Bonds. Upon presentation and surrender of such Bonds at the corporate trust office of the Paying Agent, such Bonds
shall be paid and redeemed.
So long as the book-entry-only system remains in effect, in the event of a partial redemption the Paying Agent
will give notice to Cede & Co., as nominee of DTC, only, and only Cede & Co. will be deemed to be a holder of the
Bonds. DTC is expected to reduce the credit balances of the applicable DTC Participants in respect of the Bonds and
in turn the DTC Participants are expected to select those Beneficial Owners whose ownership interests are to be
extinguished or reduced by such partial redemption, each by such method as DTC or such DTC Participants, as the case
may be, deems fair and appropriate in its sole discretion.
NOTICE OF SALE
See “APPENDIX F - DRAFT OFFICIAL NOTICE OF SALE,” for further information regarding this issue.
BIDCOMP/PARITY BIDDING
Notice is hereby given that electronic proposals will be received via BIDCOMP/PARITY, in the manner
described below, until 1:30 p.m., Prevailing Eastern Time, on Monday, August 10, 2015.
Bids may be submitted electronically via BIDCOMP/PARITY pursuant to the Notice of Sale until 1:30 p.m.,
Prevailing Eastern Time, but no bid will be received after the time for receiving bids specified above. To the extent any
instructions or directions set forth in BIDCOMP/PARITY conflict with the Official Notice of Sale for the Bond, the terms
of the Official Notice of Sale for the Bonds, shall control. For further information about BIDCOMP/PARITY, potential
bidders may contact the Financial Consultant at (734) 668-6688 or BIDCOMP/PARITY at (212) 849-5021.
BOOK-ENTRY ONLY SYSTEM
The information in this section has been furnished by The Depository Trust Company, New York, New York
("DTC"). No representation is made by The Huntington National Bank, Grand Rapids, Michigan (the “Paying Agent”)
as to the completeness or accuracy of such information or as to the absence of material adverse changes in such information
subsequent to the date hereof. No attempt has been made by the School District or the Paying Agent to determine whether
DTC is or will be financially or otherwise capable of fulfilling its obligations. Neither the School District nor the Paying
Agent will have any responsibility or obligation to Direct Participants, Indirect Participants (both as defined below) or the
persons for which they act as nominees with respect to the Bonds, or for any principal, premium, if any, or interest payment
thereof.
3
The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the
"Securities"). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's
partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered
Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and
will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate
will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect
to any remaining principal amount of such issue.
DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and
provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues,
and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC.
DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in
deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants'
accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S.
and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations.
DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding
company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are
registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also
available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing
corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are
on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive
a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to
be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that
use of the book-entry system for the Securities is discontinued.
To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the
name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative
of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee
do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities;
DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may
or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of
their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners
of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect
to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example,
Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed
to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names
and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed,
DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless
authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an
Omnibus Proxy to School District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
4
Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such
other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants'
accounts upon DTC's receipt of funds and corresponding detail information from School District or Agent, on payable date
in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will
be governed by standing instructions and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC,
Agent, or School District, subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be
requested by an authorized representative of DTC) is the responsibility of School District or Agent, disbursement of such
payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial
Owners will be the responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant,
to Tender/ Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the
Participant's interest in the Securities, on DTC's records, to Tender/Re marketing Agent. The requirement for physical
delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the
ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book-entry
credit of tendered Securities to Tender/Remarketing Agent's DTC account.
DTC may discontinue providing its services as depository with respect to the Securities at any time by giving
reasonable notice to the School District or Agent. Under such circumstances, in the event that a successor depository is not
obtained, Security certificates are required to be printed and delivered.
The School District may decide to discontinue use of the system of book-entry-only transfers through DTC (or
a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC's book-entry system has been obtained from sources
that the School District believes to be reliable, but the School District takes no responsibility for the accuracy thereof.
TAX PROCEDURES
Article IX, Section 3, of the Michigan Constitution provides that the proportion of true cash value at which
property shall be assessed shall not exceed 50% of true cash value. The Michigan Legislature by statute has provided that
property shall be assessed at 50% of its true cash value, except as described below. The Michigan Legislature or the
electorate may at some future time reduce the percentage below 50% of true cash value.
On March 15, 1994, the electors of the State approved an amendment to the Michigan Constitution permitting
the Legislature to authorize ad valorem taxes on a non-uniform basis. The legislation implementing this constitutional
amendment added a new measure of property value known as "Taxable Value." Beginning in 1995, taxable property has
two valuations -- State equalized valuation ("SEV") and Taxable Value. Property taxes are levied on Taxable Value.
Generally, Taxable Value of property is the lesser of (a) the Taxable Value of the property in the immediately preceding
year, adjusted for losses, and increased or reduced by the lesser of the inflation rate or 5%, plus additions, or (b) the
property's current SEV. Under certain circumstances, therefore, the Taxable Value of property may be different from the
same property's SEV.
When property is sold or transferred, Taxable Value is adjusted to the SEV, which under existing law is 50% of
the current true cash value. The Taxable Value of new construction is equal to current SEV. Taxable Value and SEV of
existing property are also adjusted annually for additions and losses.
Responsibility for assessing taxable property rests with the local assessing officer of each township and city. Any
property owner may appeal the assessment to the local assessor, to the local board of review and ultimately to the Michigan
Tax Tribunal.
The Michigan Constitution also mandates a system of equalization for assessments. Although the assessors for
each local unit of government within a county are responsible for actually assessing at 50% of true cash value, adjusted
for Taxable Value purposes, the final SEV and Taxable Value are arrived at through several steps. Assessments are
established initially by the municipal assessor. Municipal assessments are then equalized to the 50% levels as determined
by the county's department of equalization. Thereafter, the State equalizes the various counties in relation to each other.
SEV is important, aside from its use in determining Taxable Value for the purpose of levying ad valorem property taxes,
because of its role in the spreading of taxes between overlapping jurisdictions, the distribution of various State aid
programs, State revenue sharing and in the calculation of debt limits.
5
Property that is exempt from property taxes, e.g., churches, government property, public schools, is not included
in the SEV and Taxable Value data in the Official Statement. Property granted tax abatements under Act 198, Public Acts
of Michigan, 1974, amended, is recorded on a separate tax roll while subject to tax abatement. The valuation of tax-abated
property is based upon SEV but is not included in either the SEV or Taxable Value data in the Official Statement except
as noted. Under limited circumstances, other state laws permit the partial abatement of certain taxes for other types of
property for periods of up to 12 years.
TRANSFER OUTSIDE BOOK-ENTRY-ONLY SYSTEM
In the event that the book-entry-only system is discontinued, the following provisions would apply to the Bonds.
The Paying Agent shall keep the registration books for the Bonds (the Bond Register) at its corporate trust office. Subject
to the further conditions contained in the Resolutions, the Bonds may be transferred or exchanged for one or more Bonds
in different authorized denominations upon surrender thereof at the corporate trust office of the Paying Agent by the
registered owners or their duly authorized attorneys; upon surrender of any Bonds to be transferred or exchanged, the
Paying Agent shall record the transfer or exchange in the Bond Register and shall authenticate replacement bonds in
authorized denominations; during the fifteen (15) days immediately preceding the date of mailing (Record Date) of any
notice of redemption or any time following the mailing of any notice of redemption, the Paying Agent shall not be required
to effect or register any transfer or exchange of any Bond which has been selected for such redemption, except the Bonds
properly surrendered for partial redemption may be exchanged for new Bonds in authorized denominations equal in the
aggregate to the unredeemed portion; the School District and Paying Agent shall be entitled to treat the registered owners
of the Bonds, as their names appear in the Bond Register as of the appropriate dates, as the owners of such Bonds for all
purposes under the Resolutions. No transfer or exchange made other than as described above and in the Resolutions shall
be valid or effective for any purposes under the Resolutions.
SOURCES OF SCHOOL OPERATING REVENUE
On March 15, 1994, the electors of the State of Michigan approved a ballot proposition to amend the State
Constitution of 1963, in part, to increase the State sales tax from 4% to 6% as part of a complex plan to restructure the
source of funding of public education (K-12) in order to reduce reliance on local property taxes for school operating
purposes and to reduce the per pupil finance resource disparities among school districts. The Legislature has
appropriated funds to establish a base foundation allowance in 2015/16 ranging from $7,391 to $8,169 per pupil,
depending upon the district's 1993/94 revenue. In the future, the foundation allowance may be adjusted annually by an
index based upon the change in revenues to the State school aid fund and change in the total number of pupils statewide
and the spread between the high and low per pupil allowance is reduced. The foundation allowance is funded by locally
raised property taxes plus State aid. The revenues for the State's contribution to the foundation allowance are derived
from a mix of taxing sources, including, but not limited to, a statewide property tax of 6 mills on all taxable property¹,
a State sales and use tax, a real estate transfer tax and a cigarette tax. See "STATE AID PAYMENTS" in this Official
Statement for further information.
School districts are required to levy a local property tax of not more than 18 mills or the number of mills levied
in 1993 for school operating purposes, whichever is less, on non-homestead properties² in order for the school district
to receive its per pupil foundation allowance. An intermediate school district may seek voter approval for three
enhancement mills for distribution to local constituent school districts on a per pupil basis. Proceeds of the enhancement
mills are not counted toward the foundation allowance. Furthermore, school districts whose per pupil foundation
allowance in 2015/16 calculates to an amount in excess of $8,169 are authorized to levy additional millage to obtain the
foundation allowance, first by levying such amount of the 18 mills against homestead property³ as is necessary to hold
themselves harmless and, if the 18 mills is insufficient, to then levy such additional mills against all property uniformly
as is necessary to obtain the foundation allowance. The School District's per pupil foundation allowance does not exceed
$8,169, and the School District does not levy such additional millage. State aid appropriations and the payment schedule
for state aid may be changed by the Legislature at any time. See “STATE AID PAYMENTS” in this Official Statement
for further information.
¹
“Taxable property” does not include industrial personal property.
²
“Non-homestead property” includes all taxable property other than principal residence, qualified agricultural property, qualified forestry
property, supportive housing property, property occupied by a public school academy and industrial personal property. Commercial personal
property is exempt from the first 12 mills of not more than 18 mills levied by school districts.
³
“Homestead property”, in this context, means principal residence, qualified agricultural property, qualified forestry property, supportive housing
property, property occupied by a public school academy, industrial personal property and commercial personal property.
6
Public Act 196 of 2014 ("Act 196") amended the State School Aid Act for the 2014/15 fiscal year and increased
the School District's per pupil foundation allowance to $7,251. Act 196 included a one-time equity per pupil funding of
$125.00 per pupil that the School District is receiving because its foundation allowance would otherwise be below $7,126.
Act 196 included an additional payment to the School District to partially offset increases in the retirement plan
contribution rate for the period October 1, 2014 to September 30, 2015. Act 196 also included grant funding equal to
$50.00 per pupil a $2.00 decline in the per pupil amount as compared to 2013/14) for school districts if they satisfy 7 out
of 9 "best practices" relating to health and other benefits coverage, competitive bidding for certain vendor services, schools
of choice, online instruction programs or blended learning opportunities, a dashboard/report card of the School District's
financial management efforts, compensation methods for teachers and administrators that significantly factor performance
and accomplishments, use of collective bargaining agreements that omit statutorily prohibited subjects of bargaining,
implementation of a comprehensive guidance and counseling program, and opportunities for K to 8 pupils to complete
coursework or other learning experiences equivalent to 1 credit in a language other than English. The Board and
Administration satisfied such "best practices" requirements and included such grant funding in the School District's 2014/15
General Fund Budget.
Public Act 85 of 2015 ("Act 85") amended the State School Aid Act for the 2015/16 fiscal year and increased the
School District's per pupil foundation allowance to $7,391. The 2015/16 per pupil foundation allowance is calculated
based upon the 2014/2015 per pupil foundation allowance, plus the 2014/15 per pupil equity payment, plus $140. The
prior fiscal year's per pupil equity payment and "best practices" and "performance based" grants are eliminated. Act 85
also increased funding for at risk students and appropriated new funds for early literacy, career and technical education
middle college, and college and career preparation programs for eligible school districts. The Board and Administration
anticipate that the School District will be eligible for said additional funding and the School District has included such
funding in its 2015/16 General Fund Budget.
THE SOURCES OF THE SCHOOL DISTRICT'S OPERATING REVENUE DO NOT IMPACT THE TAXING
AUTHORITY OF THE SCHOOL DISTRICT FOR PAYMENT OF GENERAL OBLIGATION UNLIMITED TAX
SCHOOL BONDS AND DO NOT AFFECT THE OBLIGATION OF THE SCHOOL DISTRICT TO LEVY TAXES FOR
PAYMENT OF DEBT SERVICE ON GENERAL OBLIGATION UNLIMITED TAX BONDS OF THE SCHOOL
DISTRICT, INCLUDING THE BONDS OFFERED HEREIN.
MICHIGAN PROPERTY TAX REFORM
On November 5, 2013, March 28, 2014, and April 1, 2014, Governor Snyder signed into law a package of bills
amending and replacing legislation enacted in 2012 to phase-out most personal property taxes in Michigan. The bills were
contingent on Michigan voters approving a ballot question authorizing a new municipal entity, the Local Community
Stabilization Authority ("LCSA"), to levy a local component of the statewide use tax and distribute that revenue to local
units of government to offset their revenue losses resulting from the personal property tax reform. On August 5, 2014,
voters approved that ballot question.
The bill package, together with the original 2012 legislation, created two new exemptions from the personal
property tax. Under the "small taxpayer exemption," the commercial and industrial personal property of each owner with
a combined true cash value in a local tax collecting unit of less than $80,000 is exempt from ad valorem taxes in that
collecting unit beginning in 2014. For businesses that do not qualify for the "small taxpayer exemption," all "eligible
manufacturing personal property" (personal property used more than 50% of the time in industrial processing or direct
integrated support) purchased and placed into service before 2006 or during or after 2013 becomes exempt beginning in
2016. Taxation on "eligible manufacturing personal property" placed into service after 2006 but before 2013 will be
phased-out over time; with the exemption taking effect after the property has been in service for the immediately preceding
10 years. The legislation extends certain personal property tax exemptions and tax abatements for technology parks,
industrial facilities and enterprise zones that were to expire after 2012, until the voter-approved personal property tax
exemptions take effect.
Pursuant to voter approval in August 2014, the legislation also includes a formula to reimburse school districts
for 100% of their lost operating millage revenue and lost sinking fund millage revenue. To provide the reimbursement, the
legislation reduces the state share of the use tax and authorizes the LCSA to levy a local component of the use tax and
distribute that revenue to qualifying local units. However, the reimbursement for the school district's operating millage will
come from the state use tax component, which is deposited into the school state aid fund.¹ While the legislation provides
reimbursement for prospective school operating losses, school districts will only be reimbursed for debt losses attributable
to debt obligations that voters approved before January 1, 2013 or were incurred before January 1, 2013. For the 2014-2015
and 2015-2016 fiscal years, the State of Michigan will appropriate sufficient funds to the LCSA to reimburse school
districts for such debt losses.
7
Because the Bonds are associated with debt obligations that received voter approval before January 1, 2013,
the School District will be reimbursed for debt millage revenue it could have otherwise generated, without the
exemptions, to make payments on the Bonds.
LITIGATION
The School District has not been served with any litigation, administrative action or proceeding, nor, to the
knowledge of the School District, is there threatened any litigation restraining or enjoining the issuance or delivery of
the Bonds or in any manner questioning the proceedings and authority under which the Bonds are to be issued or
affecting the validity of the Bonds.
TAX MATTERS
State of Michigan
In the opinion of Thrun Law Firm, P.C., Novi, Michigan (“Bond Counsel”), based on its examination of the
documents described in its opinion, under existing State statutes, regulations and court decisions, the Bonds and the
interest thereon are exempt from all taxation in the State of Michigan, except inheritance and estate taxes and taxes on
gains realized from the sale, payment or other disposition thereof.
Federal
In the opinion of Bond Counsel based upon its examination of the documents described in its opinion, under
existing statutes, regulations, rulings and court decisions, the interest on the Bonds is excluded from gross income for
federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax
imposed on individuals and corporations. It should be noted, however, that certain corporations must take into account
interest on the Bonds in determining adjusted net current earnings for the purpose of computing the alternative minimum
tax imposed on such corporations. The opinions set forth in the preceding sentences are subject to the condition that the
School District comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must
be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from
gross income for federal income tax purposes. Failure to comply with certain of such requirements may cause the
inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of
issuance of the Bonds. Bond Counsel will express no opinion regarding other federal tax consequences arising with
respect to the Bonds.
There are additional federal tax consequences relative to the Bonds and the interest thereon. The following is
a general description of some of these consequences but is not intended to be complete or exhaustive and investors
should consult with their tax advisors with respect to these matters. Prospective purchasers of the Bonds should be aware
that (i) interest on the Bonds is included in the effectively connected earnings and profits of certain foreign corporations
for purposes of calculating the branch profits tax imposed by Section 884 of the Code, (ii) interest on the Bonds may
be subject to a tax on excess net passive income of certain S Corporations imposed by Section 1375 of the Code, (iii)
interest on the Bonds is included in the calculation of modified adjusted gross income for purposes of determining the
taxability of social security or railroad retirement benefits, (iv) the receipt of interest on the Bonds by life insurance
companies may affect the federal tax liability of such companies, (v) in the case of property and casualty insurance
companies, the amount of certain loss deductions otherwise allowed is reduced by a specific percentage of, among other
things, interest on the Bonds, and (vi) holders of the Bonds may not deduct interest on indebtedness incurred or continued
to purchase or carry the Bonds, and (vii) commercial banks, thrift institutions and other financial institutions may not
deduct their costs of carrying certain obligations such as the Bonds.
¹ Because the reimbursement funds are deposited into the state school aid fund, the legislature may, in the future, change the funding formulas in the
State School Aid Act of 1979 or appropriate funds therein for other purposes.
Original Issue Discount*
The initial public offering prices of certain Bonds, as set forth on the cover page of this Official Statement, may
be less than the stated redemption prices at maturity (hereinafter referred to as the “OID Bonds”), and, to the extent
properly allocable to each owner of such OID Bond, the original issue discount is excludable from gross income for
federal income tax purposes with respect to such owner. Original issue discount is the excess of the stated redemption
price at maturity of an OID Bond over the initial offering price to the public (excluding bondhouses and brokers) at
8
which price a substantial amount of the OID Bonds were sold. Under Section 1288 of the Code, original issue discount
on tax-exempt Bonds accrues on a compound basis. For an owner who acquires an OID Bond in this offering, the
amount of original issue discount that accrues during any accrual period generally equals (i) the issue price of such OID
Bond plus the amount of original issue discount accrued in all prior accrual periods, multiplied by (ii) the yield to
maturity on such OID Bond (determined on the basis of compounding at the close of each accrual period and properly
adjusted for the length of the accrual period), less (iii) any interest payable on such OID Bond during such accrual period.
The amount of original issue discount so accrued in a particular accrual period will be considered to be received ratably
on each day of the accrual period, will be excluded from gross income for federal income tax purposes, and will increase
the owner’s tax basis in such OID Bond. Any gain realized by an owner from a sale, exchange, payment or redemption
of an OID Bond would be treated as gain from the sale or exchange of such OID Bond. Owners of OID Bonds should
consult with their individual tax advisors to determine whether the application of the original issue discount federal
regulations will require them to include, for state and local income tax purposes, an amount of interest on the OID Bonds
as income even though no corresponding cash interest payment is actually received during the tax year.
Original Issue Premium*
For federal income tax purposes, the difference between the initial offering prices to the public (excluding
bondhouses and brokers) at which certain Bonds, as set forth on the cover of this Official Statement, are sold and the
amounts payable at maturity thereof (the “Premium Bonds”), constitutes for the original purchasers of the Premium
Bonds an amortizable bond premium. Such amortizable bond premium is not deductible from gross income but is taken
into account by certain corporations in determining adjusted current earnings for the purpose of computing the alternative
minimum tax, which may also affect liability for the branch profits tax imposed by Section 884 of the Code. The amount
of amortizable bond premium allocable to each taxable year is generally determined on the basis of a taxpayer’s yield
to maturity determined by using the taxpayer’s basis (for purposes of determining loss on sale or exchange) of such
Premium Bonds and compounding at the close of each six-month accrual period. The amount of amortizable bond
premium allocable to each taxable year is deducted from the taxpayer’s adjusted basis of such Premium Bonds to
determine taxable gain upon disposition (including sale, redemption or payment on maturity) of such Premium Bonds.
Future Developments
No assurance can be given that any future legislation or clarifications or amendments to the Code, if enacted
into law, will not contain proposals which could cause the interest on the Bonds to be subject directly or indirectly to
federal or state income taxation, adversely affect the market price or marketability of the Bonds, or otherwise prevent
bondholders from realizing the full current benefit of the status of the interest thereon.
Furthermore, no assurance can be given that the impact of any future court decisions will cause the interest on
the Bonds to be subject directly or indirectly to federal or state income taxation, adversely affect the market price or
marketability of the Bonds, or otherwise prevent bondholders from realizing the full current benefit of the status of the
interest thereon.
It is to be understood that the rights of the holders of the Bonds and the enforceability thereof may be subject
to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or
hereafter enacted to the extent constitutionally applicable and that their enforcement may also be subject to the exercise
of judicial discretion in appropriate cases.
INVESTORS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE TAX CONSEQUENCES
OF THEIR ACQUISITION, HOLDING OR DISPOSITION OF THE BONDS, INCLUDING THE TREATMENT OF
ORIGINAL ISSUE DISCOUNT AND ORIGINAL ISSUE PREMIUM, IF ANY.
QUALIFIED BY THE MICHIGAN DEPARTMENT OF TREASURY
The School District has received a letter from the Department of Treasury of the State of Michigan stating that
the School District is in material compliance with the criteria of the Revised Municipal Finance Act, Act No. 34, Public
Acts of Michigan, 2001 (“Act 34”) for a municipality to be granted “qualified status” to issue municipal securities
without further approval by the Michigan Department of Treasury.
9
CONTINUING DISCLOSURE
Prior to delivery of the Bonds the School District will execute a Continuing Disclosure Agreement (the
“Agreement”) for the benefit of the holders of the Bonds and Beneficial Owners to send certain information annually
and to provide notice of certain events to certain information repositories pursuant to the requirements of Rule 15c212(b)(5) (the “Rule”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934.
The information to be provided on an annual basis, the events which will be noticed on an occurrence basis, and the other
terms of the Agreement are set forth in “APPENDIX D - FORM OF CONTINUING DISCLOSURE AGREEMENT.”
Additionally, the School District shall provide certain annual financial information and operating data, generally
consistent with the information in the tables under the headings “PROPERTY VALUATIONS - Historical Valuations”
“MAJOR TAXPAYERS”, “TAX RATES - Bendle Public Schools”, “STATE AID PAYMENTS”, “TAX LEVIES AND
COLLECTIONS”, “LABOR FORCE”, “PENSION FUND”, “DEBT STATEMENT - DIRECT DEBT”, “SCHOOL
BOND QUALIFICATION AND LOAN PROGRAM”, “SCHOOL ENROLLMENT” and “GENERAL FUND BUDGET
SUMMARY” herein.
A failure by the School District to comply with the Agreement will not constitute an event of default under the
Resolutions authorizing issuance of the Bonds and holders of the Bonds or Beneficial Owners are limited to the remedies
described in the Agreement. A failure by the School District to comply with the Agreement must be reported in
accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before
recommending the purchase or sale of the Bonds in the secondary market. Consequently, such failure may adversely
affect the transferability and liquidity of the Bonds and their market price.
Except as disclosed below, the School District has not in the previous five years, failed to comply, in any
material respects, with any previous continuing disclosure agreements executed by the School District pursuant to the
Rule. While the School District filed its audited financial statements and annual disclosure information timely over the
past five years in compliance, in all material respects, with the previous continuing disclosure agreements executed by
the School District, the School District filed late material event notices of credit rating changes affecting the School
District’s underlying rating, the Michigan School Bond Qualification and Loan Program (the “SBQLP”), and the bond
insurer for certain prior bond issues of the School District (the “Outstanding Bonds”). To the best of the School District’s
knowledge, the School District did not receive any notification from the bond insurer or the SBQLP of the rating changes
related to the Outstanding Bonds. All material event notices have been filed by the School District at this time. The
School District is in the process of putting systems in place to identify and file material event notices in a timely manner
in the future.
BOND COUNSEL’S RESPONSIBILITY
The fees of Thrun Law Firm, P.C., Novi, Michigan (“Bond Counsel”) for services rendered in connection with
its approving opinion are expected to be paid from Bond proceeds. Except to the extent necessary to issue its approving
opinion as to the validity of the Bonds and tax matters relating to the Bonds and the interest thereon, and except as stated
below, Bond Counsel has not been retained to examine or review, and has not examined or reviewed any financial
documents, statements or materials that have been or may be furnished in connection with the authorization, issuance
or marketing of the Bonds and accordingly will not express any opinion with respect to the accuracy or completeness
of any such financial documents, statements or materials.
Bond Counsel has reviewed the statements made in this Official Statement on the cover page and under the
heading "Information for Bidders", insofar as such statements summarize the language and effect of the Resolutions, the
Bonds, the Continuing Disclosure Agreement, the Constitution of the State of Michigan, the laws of the State of
Michigan and federal income tax laws, and the statements under such headings are fair and accurate summaries thereof
in all material respects. Except as otherwise disclosed on pages herein, Bond Counsel has not been retained to review
and has not reviewed any other portion of this Official Statement for accuracy or completeness, and has not made inquiry
of any official or employee of the School District or any other person and has made no independent verification of such
other portions hereof, and further has not expressed and will not express an opinion as to any portions hereof.
FINANCIAL CONSULTANT’S OBLIGATION
Stauder, BARCH & ASSOCIATES, Inc., Ann Arbor, Michigan (the “Financial Consultant”) has been retained
by the School District to provide certain financial consultant services including, among other things, preparation of the
deemed “final” Preliminary Official Statement and the final Official Statement (the “Official Statements”). The
10
information contained in the Official Statements was prepared in part by the Financial Consultant and is based on
information supplied by various officials from records, statements and reports required by various local county or state
agencies of the State of Michigan in accordance with constitutional or statutory requirements.
To the best of the Financial Consultant’s knowledge, all of the information contained in the Official Statements,
which it assisted in preparing, while it may be summarized is (i) complete and accurate; (ii) does not contain any untrue
statement of material fact; and (iii) does not omit any material fact, or make any statement which would be misleading
in light of the circumstances under which these statements are being made. However, the Financial Consultant has not
and will not independently verify the completeness and accuracy of the information contained in the Official Statement.
The Financial Consultant’s duties, responsibilities and fees arise solely from that as financial consultant to the
School District and they have no secondary obligations or other responsibility. The Financial Consultants’s fees are
expected to be paid from Bond proceeds.
Further information concerning the Bonds may be secured from Stauder, BARCH & ASSOCIATES, Inc., 3989
Research Park Drive, Ann Arbor, Michigan 48108. Telephone: (734) 668-6688.
CREDIT RATING
Standard & Poor’s will assign, as the of the date of delivery of the Bonds, its underlying municipal bond rating
of “__”, to the Bonds.
Standard & Poor’s will also assign, as the of the date of delivery of the Bonds, its municipal bond rating of
“___”, to the Bonds based upon the fact that the Bonds will be fully qualified for participation in the School Loan
Revolving Fund as of their date of delivery.
The aforementioned rating will reflect the sole view of the rating agency and there is no assurance that such
rating will be continued for any period of time, or that it will not be revised upwards or downwards or be withdrawn;
a revision, suspension, or withdrawal of the rating may have an effect on the market price of these securities and should
be noted.
A brief description of the Standard & Poor’s rating definitions reads as follows:
Standard & Poor’s Ratings Services
Bonds rated “AAA” have the highest rating assigned. Capacity to pay interest and repay
principal is extremely strong.
Bonds rated “AA” qualify as high quality debt obligations. Capacity to pay principal and
interest is very strong, and in the majority of instances they differ from “AAA” issues only in a small
degree.
Bonds rated “A” have a strong capacity to pay principal and interest, although they are
somewhat more susceptible to the adverse effects of change in circumstances and economic
conditions.
Bonds rated “BBB” are regarded as having an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions
or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
Plus (+) or Minus (-): To provide more detailed indications of credit quality, the ratings from
“AA” to “BBB” may be modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
PLAN OF REFUNDING
A portion of the proceeds of the Bonds, together with other available funds of the School District, will be used
to refund all or part of that portion of the School District's outstanding 2006 School Building and Site Bonds dated
11
February 9, 2006, in the original amount of $15,455,000, which are callable May 1, 2016, and are due and payable May
1, 2017 through May 1, 2026, inclusive, May 1, 2028, May 1, 2030, and May 1, 2035 (the “Prior Bonds”) and to
establish an escrow fund (the “Escrow Fund”) composed of cash and non-callable direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the United States of America or other
obligations the principal of and interest on which are fully secured by the foregoing. The Escrow Fund will be held by
The Huntington National Bank, Grand Rapids, Michigan as escrow agent (the “Escrow Agent”) and will be used to pay
the principal of and interest on the Prior Bonds when due or at call for redemption. The Escrow Fund will be held by
the Escrow Agent pursuant to an escrow agreement (the “Escrow Agreement”) which irrevocably directs the Escrow
Agent to make the payment of the principal of and interest on the Prior Bonds when due or at call for redemption. The
Escrow Fund will be such that the cash and the principal and interest payments received on the investments will be
sufficient, without reinvestment, except as may be provided in the Escrow Agreement, to pay the principal of and interest
on the Prior Bonds as they become due or are called for earlier redemption, as set forth in the table below:
Principal of and Interest on the
Prior Bonds to paid from the Escrow Fund
Date
11/01/2015
05/01/2016
TOTAL
Principal
$0.00
12,150,000.00
$12,150,000.00
Interest
$275,559.38
275,559.38
$551,118.76
Total
$275,559.38
12,425,559.38
$12,701,118.76
The accuracy of (i) the mathematical computations of the adequacy of cash and certain obligations to be held
in the Escrow Fund and used, together with the earnings thereon, to pay the principal of and interest on the Prior Bonds
and (ii) the computations of the yield on the Prior Bonds as originally issued and the yield of such obligations in the
Escrow Fund purchased with the contribution from the Prior Bond’s Debt Retirement Fund, supporting the conclusion
of Bond Counsel that the interest on the Bonds is excluded from gross income for federal income tax purposes as
indicated under the caption “TAX MATTERS” below, will be verified by Grant Thornton, Minneapolis, Minnesota.
Such verification of the accuracy of the computations shall be based upon information supplied by the School District’s
Financial Advisor and on interpretations of Section 148 of the Internal Revenue Code of 1986, as amended, as provided
by Bond Counsel.
ESTIMATED SOURCES AND USES OF FUNDS*
Sources of Funds
Par Amount of Bonds
Contribution from Debt Fund
Total Sources
$12,750,000.00
98,000.00
$12,848,000.00
Uses of Funds
Deposit to Escrow Account
Underwriter’s Discount
Costs of Issuance
Total Uses
$12,687,658.00
63,750.00
96,592.00
$12,848,000.00
12
GENERAL FINANCIAL INFORMATION¹
AREA
The areas encompassed by the School District and by the City of Burton are as follows:
School
District
4
Area in square miles
City of
Burton
23.5
POPULATION
The estimated population totals for the School District and the U.S. Census reported for the City of Burton
are as follows:
School
District*
6,172
6,545
3,875
Year
2010
2000
1990
City of
Burton
29,999
30,308
27,617
* Estimated based on an extrapolation of the U.S. Census figures of the local units within the School District.
PROPERTY VALUATIONS
In accordance with Act 539, Public Acts of Michigan, 1982, as amended, and Article IX, Section 3 of the
Michigan Constitution, the ad valorem State Equalized Valuation (SEV) represents 50% of true cash value. SEV does
not include any value of tax exempt property (e.g. churches, governmental property) or property granted tax abatements
under Act 198, Public Acts of Michigan, 1974, as amended. As a result of Proposal A, ad valorem property taxes
are assessed on the basis of taxable value, which is subject to assessment caps. SEV is used in the calculation
of debt margin and true cash value. See “TAX PROCEDURES” herein for more information.
Taxable property in the School District is assessed by the local municipal assessor and is subject to review
by the County Equalization Department.
Historical Valuations*
Year
2015
2014
2013
2012
2011
Principal
Residence
$26,876,617
27,073,712
28,265,461
29,656,196
33,905,523
Non-Principal
Residence
$41,814,201
41,666,162
42,114,502
42,943,604
47,628,148
Total
Taxable Value
$68,690,818
68,739,874
70,379,963
72,599,800
81,533,671
State Equalized
Valuation
$72,476,200
70,210,900
71,260,575
73,450,000
82,850,209
* See "MICHIGAN PROPERTY TAX REFORM" herein for information regarding tax changes taking effect in the 2014 and 2016 tax years.
¹ Information included in this Official Statement under the headings “General Financial Information, “General Economic Information,” and “General
School Information” was obtained from the School District, unless otherwise noted.
13
H is t o ric a l V a lu a t io n s
M illio n s
90
80
70
60
50
40
30
20
10
0
201 1
201 2
201 3
201 4
201 5
Y ear
T a x a b le V a l u a t i o n
2015 Taxable Value
Less: 2015 DDA Captured Valuation*
Total 2015 Net Valuation
*
S t a te E q u a li z e d V a lu a ti o n
$68,690,818
(17,246,082)
$51,444,736
See “PROPERTY VALUATIONS - Downtown Development Authority (DDA)”.
Per Capita Valuation
2015 Per Capita Taxable Value
2015 Per Capita State Equalized Valuation
2015 Per Capita Estimated True Cash Valuation
$11,129.43
$11,742.74
$23,485.48
Downtown Development Authority (DDA)
The Downtown Development Authority enabling legislation, Act No. 197, Public Acts of Michigan, 1975, as
amended, enables downtown development authorities to undertake a broad range of downtown improvement activities
which will contribute to the economic growth and the halting of deterioration of property values in a designated
downtown district.
In order to provide an authority with the means of financing the planning and implementation of development
proposals, the statute affords the opportunity to undertake tax increment financing of development programs. These
programs must be identified in a tax increment financing plan which has been approved by the governing body of a
municipality.
Simply stated, tax increment financing permits an authority to capture tax revenues attributable to increases
in value of real and personal property located within an approved development area. The increases in property value
may be attributable to new construction, rehabilitation, remodeling, alterations, additions or to such other factors as the
assessor may deem appropriate.
14
TAX BASE COMPOSITION†
A breakdown of the School District’s 2015 Taxable Value by municipality, class and use are as follows:
Municipality
City of Burton
Principal¹
Residence
$26,876,617
Non-Principal¹
Residence
$41,814,201
Total Taxable
Value
$68,690,818
Percent of
Total
100.00%
TOTAL
$26,876,617
$41,814,201
$68,690,818
100.00%
¹ See “SOURCES OF SCHOOL OPERATING REVENUE” in this Official Statement for further details.
Taxable
Value
$60,752,418
7,938,400
Class
Real Property
Personal Property
Percent of
Total
88.44%
11.56
TOTAL
$68,690,818
100.00%
Use
Commercial
Industrial
Residential
Personal Commercial
Personal Industrial
Personal Utility
$18,443,076
4,907,522
37,401,820
1,911,700
1,083,700
4,943,000
26.85%
7.14
54.45
2.78
1.58
7.20
TOTAL
$68,690,818
100.00%
Taxable Valuation by Use
Personal Utility
7.20%
Personal Industrial
1.58%
Commercial
26.85%
Personal Commercial
2.78%
Residential
54.45%
Industrial
7.14%
† See "MICHIGAN PROPERTY TAX REFORM" herein for information regarding tax changes taking effect in the 2014 and 2016 tax years.
Source: Genesee County
MAJOR TAXPAYERS
The ten largest taxpayers in the School District and their 2015 Taxable Value totals are as follows:
Taxpayer
Consumer Energy
Ameriguard Grand Blanc LLC
Mid State Bolt & Screw
Michigan Electric Transmission
Arends, Edward
Goldberg LLC
FWAS I, LLC
RJB & M, LLC
Storage Pros Burton, Inc.
Judd Road Real Estate LLC
Product/Service
Utility
Storage
Wholesaler
Utility
Manufacturing
Commercial retail
Office warehouse
Commercial/storage units
Storage
Real estate
TOTAL
Taxable
Value
$4,136,638
1,695,100
1,300,800
1,221,700
828,267
753,546
605,418
558,800
520,083
516,128
$12,136,480
The Taxable Valuations of the major taxpayers represent 17.67% of the School District's 2015 Taxable
Valuation of $68,690,818.
15
CONSTITUTIONAL MILLAGE ROLLBACK
Article IX, Section 31 of the Michigan Constitution (also referred to herein as the “Headlee Rollback”)
requires that if the total value of existing taxable property (State Equalized Valuation) in a local taxing unit, exclusive
of new construction and improvements, increases faster than the U.S. Consumer Price Index from one year to the next,
the maximum authorized tax rate for that local taxing unit must be reduced through a Millage Reduction Fraction unless
new millage is authorized by a vote of the electorate of the local taxing unit.
TAX RATES - (Per $1,000 of Valuation)†
Each school district, county, township, special authority and city has a geographical definition which
constitutes a tax district. Since local school districts and the county overlap either a township or a city, and intermediate
school districts overlap local school districts and county boundaries, the result is many different tax rate districts.
Operating Non-Principal Residence
Sinking Fund
Debt
2015
18.0000
2.0000
13.0000
2014
18.0000
2.0000
9.7500
2013
18.0000
2.0000
7.1000
2012
18.0000
2.0000
7.1000
2011
17.7775
1.8794
7.1000
TOTAL PRINCIPAL RESIDENCE
TOTAL NON-PRINCIPAL RESIDENCE
15.0000
33.0000
11.7500
29.7500
9.1000
27.1000
9.1000
27.1000
8.9794
26.7569
The School District levies 18.00 mills (currently rolled back from 18 mills) for operating purposes on nonprincipal residence property and authorized debt and sinking fund millage on all principal residence and non-principal
residence property located within the School District. The School District’s sinking fund and the operating millage
expires with the December 2021 levy. See “SOURCES OF SCHOOL OPERATING REVENUE” in this Official
Statement.
† See "MICHIGAN PROPERTY TAX REFORM" herein for information regarding tax changes taking effect in the 2014 and 2016 tax years.
Other Major Taxing Units
State Education Tax¹
Genesee County
City of Burton
Burton DDA
Bishop Airport Authority
Genesee County I/S/D
C.S. Mott Community College
2014
6.0000
8.7819
14.1946
1.8673
0.4847
3.5341
2.8596
2013
6.0000
8.2766
7.6946
1.8673
0.4847
3.5341
2.8596
¹ The State of Michigan levies 6.00 mills for school operating purposes on all principal residence and non-principal residence property located
within the School District.
STATE AID PAYMENTS
The School District's primary source of funding for operating costs is the State School Aid per pupil foundation
allowance. The base foundation allowance has been set from $7,391 to $8,169 per pupil for fiscal year 2015/2016. In
future years, this allowance may be adjusted by an index based upon the change in revenues to the state school aid fund
and the change in the total number of pupils statewide. The State may reduce State School Aid appropriations at any time
if the State's revenues do not meet budget expectations. See "SOURCES OF SCHOOL OPERATING REVENUE" herein
for additional information.
The following table shows a history and current estimates of the School District's total State School Aid
revenues, including categoricals and other amounts, the State Amount Received per Pupil and the Foundation
Allowance per Pupil.
16
Year
2015/16 (Estimate)
2014/15 (June Estimate)
2013/14
2012/13
2011/12
State Amount
Received
per Pupil
$6,685
6,499
6,354
6,593
6,429
Total
$9,709,907
9,485,219
9,081,187
16,142,690
15,345,506
Foundation
Allowance
per Pupil
$7,391
7,126*
7,026
6,966
6,846
* The School District also received a $125 per pupil one-time equity payment for the 2014/15 fiscal year.
Source: Michigan Department of Education
TAX LEVIES AND COLLECTIONS
The School District’s fiscal year begins July 1 and ends June 30. School District property taxes are due July
1 and December 1 of each fiscal year and are payable without interest on or before the following September 14 and
February 14, respectively, and without penalty on or before the following February 14. All real property taxes
remaining unpaid on March 1st of the fiscal year following the levy are turned over to the County Treasurer for
collection. Genesee County (the “County”) annually pays from its Tax Payment Fund delinquent taxes on real
property to all taxing units in the County, including the School District, shortly after the date delinquent taxes are
returned to the County Treasurer for collection.
A history of tax levies and collections for the School District are as follows:
Levy
Year
2014
2013
2012
2011
2010
Operating
Tax Levy
$738,790
754,322
784,018
842,413
924,184
Collections to
March 1 of Following Year
$629,361
85.22%
639,406
84.77
657,703
83.89
698,516
82.92
740,283
80.10
Collections Plus Funding
To June 30 of Following Year
$733,328
99.26%
735,243
97.47
781,953
99.74
839,396
99.64
889,939
96.29
The Tax Payment Fund is financed through the issuance of General Obligation Limited Tax Notes (GOLTNs)
by the County. Although the School District anticipates the continuance of this program by the County, the ability of
the County to issue such GOLTNs is subject to market conditions at the time of offering. In addition, Act 206, Public
Acts of Michigan, 1893, as amended, provides in part that: “The primary obligation to pay to the county the amount
of taxes and interest on the taxes shall rest with the local taxing units and the state for the state education tax under the
state education tax act... If the delinquent taxes that are due and payable to the county are not received by the county
for any reason, the county has full right of recourse against the taxing unit or to the state for the state education tax...
to recover the amount of the delinquent taxes and interest...” On the third Tuesday in July in each year, a tax sale is
held by the County at which lands delinquent for taxes assessed in the third year preceding the sale, or in a prior year,
are sold for the total of the unpaid taxes of those years. Pursuant to Act 123, Public Acts of Michigan, 1999, as
amended, property owners with taxes that are two years delinquent will be foreclosed and the property will be sold at
public auction. For example, property owners who fail to pay their 2015 delinquent property taxes will lose their
property in March 2018.
LABOR FORCE
A breakdown of the number of salaried employees of the School District and their affiliations with organized
groups are as follows:
Contract
Number
Bargaining Unit
Expiration
Employees
Administrators
7
Non-Affiliated
N/A
Teachers
66
MEA
6/30/2016
Secretaries
8
Bendle Clerical Assn.
6/30/2016
Transportation
4
Service Employees Int’l. Union
6/30/2017
Aides
11
Non-Affiliated
N/A
Non-Affiliated
N/A
Other
43
TOTAL STAFF
139
The School District has not experienced a strike by any of its bargaining units within the past ten years.
17
PENSION FUND
For the period October 1 through September 30, the School District pays an amount equal to a percentage of its
employees' wages to the Michigan Public School Employees Retirement System ("MPSERS"), which is administered by
the State of Michigan. These contributions are required by law and are calculated by using the contribution rates and
periods provided in the table below of the employees' wages. The employer contribution rate for employees who first
worked July 1, 2010 or later (Pension Plus members) for the time period July 1, 2010 to September 30, 2010 was 15.44%.
For other employees, the rate was 16.94% through September 30, 2010. Effective October 1, 2010, the employer
contribution rate for all employees except Pension Plus members increased to 19.41%. For Pension Plus members, the
employer contribution rate was 17.91%.
On June 28, 2010, the Michigan Court of Claims issued an injunction in response to a challenge to the authority
of the State to require employees who began working before July 1, 2010, to contribute 3% of reportable wages to the
retiree health care trust at MPSERS. As a result, the State has adjusted the contribution rate due on employees wages paid
between November 1, 2010 and September 30, 2011 to 20.66% for members who first worked prior to July 1, 2010 and
19.16% for Pension Plus members. In March 2011, the Court of Claims granted the plaintiffs' motions for summary
disposition finding that the mandatory 3% contribution violated both the U.S. and Michigan Constitutions. The State
appealed the ruling to the Michigan Court of Appeals. In August of 2012, the Court of Appeals affirmed the decision
of the Court of Claims. The State of Michigan has filed an Application for Leave to Appeal with the Michigan Supreme
Court.
On September 4, 2012, the governor signed Public Act 300 of 2012 ("Act 300") to reform MPSERS. The Act
makes changes to employee contributions to their pensions and retiree health benefits, shifting the 3% pension
contribution to retiree health benefits. Act 300 increases the amount retirees contribute to their health insurance, and
employees are required to choose to increase contributions to their pension plan, maintain current contribution rates and
freeze existing benefits, or freeze existing pension benefits and move into a defined contribution plan. In addition, the
legislation ended retiree health benefits for new hires. On November 29, 2012, the Ingham County Circuit Court, sitting
as the Court of Claims, ruled that the substantive provisions of the Act 300 were constitutional except for one particular
provision relating to an "election window" for healthcare benefits. The Legislature promptly adopted legislation which
was signed into law by the Governor addressing the constitutional concerns of the election window raised by the Court
of Claims. Two public school employee unions appealed the Court of Claims decision to the Michigan Court of Appeals,
which affirmed the Court of Claims' ruling on January 14, 2014. The unions appealed the matter to the Michigan Supreme
Court. On April 8, 2015, the Michigan Supreme Court upheld Act 300 by ruling that the required employee elections
to participate and contribute to retiree healthcare and defined benefit pension plans are constitutional under both the
Michigan and United States Constitutions. It is unknown at this time if Plaintiffs will appeal this decision to the federal
court. The Michigan Supreme Court has not yet ruled on the mandatory 3% retiree health contributions made by members
from July 2010 to September 2012 before Act 300 took effect.
The School District's estimated contribution to MPSERS for 2014/15 and the contributions for the previous four
years are shown below.
Contribution Rate
25.78 - 27.27%
24.79 - 26.96
24.32 - 26.96
25.36
24.46
20.66
Contribution Period
Oct. 1, 2014-Sept. 30, 2015
Oct. 1, 2013-Sept. 30, 2014
Feb. 1, 2013-Sept. 30, 2013
Oct. 1, 2012-Jan. 31, 2013
Oct. 1, 2011-Sept. 30, 2012
Nov. 1, 2010-Sept. 30, 2011
Fiscal Year Ending
June 30
2015 (estimate)
2014
2013
2012
2011
Source: Audited financial statements.
Pension Plus
25.70 - 27.19%
25.56 - 26.63
25.13 - 26.20
24.13
23.23
19.16
Contributions to
MPSERS
$1,822,489
1,779,062
1,825,765
1,653,589
1,441,487
Note: Effective for fiscal years beginning after June 15, 2014, GASB Statement 68 requires all reporting units in a multi-employer cost sharing
pension plan to record a balance sheet liability for their proportionate share of the net pension liability of the plan. The School District will be
18
required to implement GASB 68 in their year ended June 30, 2015 financial statements. Preliminary unaudited estimates from the State for fiscal
year 2013 indicate a potential pension liability of approximately $19,443,857. (Net pension liability 8% discount rate per ORS)
OTHER POST-EMPLOYMENT BENEFITS
MPSERS is a cost-sharing, multi-employer, statewide plan. Pension benefits and retiree health benefits are
established by law and funded through employer contributions. The cost of retiree health benefits is funded annually
on a pay-as-you-go basis, with retirees paying some of the costs. Current year liability for retiree health benefits is
reflected in the figures provided above. Further information regarding MPSERS, including retiree health benefits, can
be found at: www.michigan.gov/orsschools.
DEBT STATEMENT (As of July 14, 2015 and including the Bonds described herein)
DIRECT DEBT
Dated
Purpose
Date
02/09/2006 Building & Site
03/01/2010 Energy Con. Bonds
Interest
Spread
4.00 - 5.00
0.00
Type
UTQ
LTNQ
Maturities
05/01/16-35
03/01/2025
TOTAL DIRECT DEBT
Amount
Outstanding
$12,575,000
2,208,000
$14,783,000
Less: Prior Bonds - UTQ
Plus: 2015 Refunding Bonds - UTQ
NET DIRECT DEBT
($12,150,000)*
12,750,000*
$600,000*
$15,383,000*
OVERLAPPING DEBT
Percent
12.76%
0.80
0.75
0.75
0.80
Municipality
City of Burton
Genesee County
Genesee I/S/D
Mott Community College
Bishop Airport Authority
Amount
Outstanding
$13,437,470
105,569,980
8,000,000
43,450,000
10,255,000
NET OVERLAPPING DEBT
NET DIRECT AND OVERLAPPING DEBT
District
Share
$1,714,621
844,555
60,000
325,875
82,040
$3,027,091
$18,410,091*
Source: Municipal Advisory Council of Michigan.
DEBT RATIOS*
Per Capita (6,172)
Net Direct Debt
Net Direct and Overlapping Debt
$2,492.38
$2,982.84
Ratio to 2015 Taxable Valuation ($68,690,818)
Net Direct Debt
22.39%
26.80%
Ratio to 2015 State Equalized Valuation ($72,476,200)
Net Direct Debt
21.22%
25.40%
Ratio to 2015 Estimated True Cash Valuation ($144,952,400)
Net Direct Debt
10.61%
12.70%
19
DEBT HISTORY
The School District has no record of default.
FUTURE FINANCING
The School District does not anticipate additional capital financing in the foreseeable future.
OTHER BORROWING
The School District has no other borrowing outstanding.
LEGAL DEBT MARGIN
2015 State Equalized Valuation
Debt Limit (15% of 2015 State Equalized Valuation)
Debt Outstanding, including Bonds described herein
Less Bonds not subject to Debt Limit**
$72,476,200
$10,871,430
$15,383,000*
($13,175,000)*
Total Subject to Debt Limit
Additional Debt Which Could Be Legally Incurred
2,208,000
$8,663,430*
** Section 1351(3) of Act 451, Public Acts of Michigan, 1976, as amended, provides that the bonded indebtedness of a school district shall not
exceed 15% of the total assessed valuation of the district. Bonds not included in the computation of the legal debt margin are (1) any bond
qualified under Article IX, Section 16 of the Michigan Constitution of 1963, and (2) deficit budget bonds as authorized under Section 1356. In
addition, Section 605 of Act 34, Public Acts of Michigan, 2001, as amended, provides, in relevant part, that debt evidenced by a refunding
security shall not be deemed to be within any statutory or charter limitation of outstanding debt limit.
SCHOOL BOND QUALIFICATION AND LOAN PROGRAM
As of July 2, 2015, the School District had a School Loan Revolving Fund balance borrowing under the School
Bond Qualification and Loan Program of $3,391,190.
Source: State of Michigan Department of Treasury
20
GENERAL ECONOMIC INFORMATION
LOCATION AND AREA
Bendle Public Schools encompasses an area of four square miles and is located entirely within the City of
Burton. The School District is 60 miles northwest of Detroit.
The School District is located the following distances from these commercial and industrial areas:
36
50
67
104
Adjacent to Flint
miles south of Bay City
miles north of Ann Arbor
miles west of Port Huron
miles east of Grand Rapids
POPULATION BY AGE
The 2010 U.S. Census estimate of population by age for Genesee County are as follows:
Total Population
0 through 19 years
20 through 64 years
65 years and over
Number
425,790
118,971
248,630
58,189
Median Age
38.5 years
Percent
100.00%
27.94
58.39
13.67
INCOME
The 2010 U.S. Census estimate of household income for Genesee County are as follows:
Number
168,984
16,729
9,970
20,616
20,954
26,530
31,600
18,419
17,236
4,394
2,535
HOUSEHOLDS BY INCOME
Less than $10,000
$10,000 to $14,999
$15,000 to $24,999
$25,000 to $34,999
$35,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $149,999
$150,000 to $199,999
$200,000 or more
Median Income
Mean Income
$43,483
$56,094
Source: www.census.gov
21
Percent
100.00%
9.90
5.90
12.20
12.40
15.70
18.70
10.90
10.20
2.60
1.50
EMPLOYMENT CHARACTERISTICS*
The following employers located within the School District’s boundaries and surrounding communities offer
employment opportunities.
Product/Service
Employer
Within the School District (30 or more employees)
Webcor Packaging Corp. (HQ)
Meijer Inc.
Landaal Packaging Sys./Flint Packaging Div.
Home Depot
Wal-Mart
SOROC Products, Inc.
Mid-States Boalt & Screw Company (HQ)
Genesee Ceramic Tile (HQ)
Boxes
Department store
Contract packaging
Home center
Education
Department store
Plastic thermoforming
Fasteners, tools
Ceramic, marble & granite
Within Genesee County (600 or more employees)
General Motors Corp.
Genesys Health Care System
Hurley Medical Center
McLaren Health Care Corporation
Flint Metal Fabrication
United States Postal Service
Wal-Mart Supercenter (4 stores)
Flint, City of
Genesee County (full time employees)
Delphi Automotive Systems
Flint Community Schools
Meijer Inc. (3 stores)
Charles Stewart Mott Community College
JPMorgan Chase Bank
Genesee Intermediate School District
FirstMerit Bank
Nu Vision Inc.
Carman-Ainsworth Community Schools
Peregrine
Sears, Roebuck & Co.
United Retired Govt. Employees
Automotive
Health care
Medical center
Hospital & other health care
Metal stampings
US postal service
Department store
Municipality
Government
Spark plugs & odometers
Educational services
Department store
Higher education
Finance
Education
Banking
Optical goods retail
Education
Manufacturing
Retail sales
Labor organizations
Approx. No.
Employed
300
250
250
200
139
130
100
65
30
5,945
3,265
2,650
2,500
1,400
1,200
1,200
1,100
1,093
1,000
1,000
1,000
949
800
795
780
766
706
684
600
600
*The approximate number of employees listed above are as reported in the sources indicated below. Because of reporting time lags and other factors
inherent in collecting and reporting such information, the numbers may not reflect recent changes in employment levels, if any.
Source: 2015 Michigan Manufacturers Directory, 2014 Crain’s Book of Lists, Manta Company Intelligence website, the Michigan Economic
Development Council (“MEDC”), and individual employers.
EMPLOYMENT BREAKDOWN
The 2010 U. S. Census reports the occupational breakdown of persons 16 years and over for Genesee County
are as follows:
Percent
Number
PERSONS BY OCCUPATION
169,980
100.00%
Professional Specialty Occupations
50,884
29.94
Service Occupations
34,076
20.05
Sales & Office Occupations
42,758
25.15
Natural Resources, Construction, and Maintenance Occupations 13,845
8.15
Transportation & Material Moving Occupations
28,417
16.72
22
The breakdown by industry for persons 16 years and over in Genesee County are as follows:
PERSONS BY INDUSTRY
Agriculture, Forestry, Fishing, Hunting & Mining
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation
Information
Finance, Insurance, & Real Estate
Professional & Management Services
Educational, Health & Social Services
Arts, Entertainment, Recreation and Food Services
Other Professional and Related Services
Public Administration
Number
169,980
727
9,046
28,559
4,502
23,056
6,994
2,717
9,094
13,155
42,646
15,548
8,064
5,872
Percent
100.00%
0.43
5.32
16.80
2.65
13.56
4.11
1.60
5.35
7.74
25.09
9.15
4.74
3.45
Source: www.census.gov
UNEMPLOYMENT*
The Michigan Department of Technology, Management & Budget Information, reports unemployment
averages for Genesee County as compared to the State of Michigan are as follows:
County of
Genesee
6.4%
7.7
9.7
9.5
11.5
2015 Year to Date (May)
2014 Annual Average
2013 Annual Average
2012 Annual Average
2011 Annual Average
State of
Michigan
5.9%
7.2
8.8
9.1
10.4
*not seasonally adjusted
BANKING
The following banks have branches located within the School District’s boundaries. Deposits are as reported
in the Accuity American Financial Directory, July - December 2015.
Bank
JPMorgan Chase Bank
Bank of America
Fifth Third Bank
Main Office
Columbus, OH
Charlotte, NC
Cincinnati, OH
23
Total State-Wide
Deposits
N/A
N/A
N/A
GENERAL SCHOOL INFORMATION
DESCRIPTION
The School District currently operates two elementary and one middle/high school. The School District’s
2014/15 student enrollment is 1,347. A staff of 66 teachers, seven administrators and 66 support personnel are
employed by the School District.
BOARD OF EDUCATION
The Board of Education consists of seven members who are elected at large for six-year overlapping terms.
The Board annually elects a President, Vice President, Treasurer and Secretary. The Board is responsible for the
selection and appointment of the Superintendent of Schools. The Board meets as a single body to set or amend policy,
develop long range educational goals and act upon recommendations of the Superintendent of Schools. The Board is
also responsible for adopting and periodically amending the operating budget and evaluating school programs in
accordance with governing laws.
SCHOOL ENROLLMENT
Historical Enrollment
The School District’s historical enrollment totals (Fall Pupil Count Day) are as follows:
School Year
2014/15
2013/14
2012/13
2011/12
2010/11
Enrollment
1,347
1,164
1,197
1,189
1,131
School Year
2009/10
2008/09
2007/08
2006/07
2005/06
Enrollment
1,204
1,209
1,237
1,270
1,246
Enrollment by Grade
The enrollment by grade for the school year 2014/15 (Fall Pupil Count Day) are as follows:
Kindergarten
First
Second
Third
Fourth
Fifth
Sixth
Seventh
Eighth
99
104
87
79
94
81
99
95
103
Ninth
Tenth
Eleventh
Twelfth
Sub Total
Special Ed.
113
102
100
84
1,240
107
TOTAL
1,347
Projected Enrollment
The projected enrollment totals for 2019/20 are as follows:
K-6
7-8
9-12
Special Ed. Included
TOTAL
590
170
390
1,150
Note: The projected enrollment totals provided by the School District.
24
EXISTING SCHOOL FACILITIES
School
Elementary
West
South
Middle School
Bendle
High School
Bendle
Additional Facilities
Alternative Education
Grades
Year
Completed
Remodeling/
Additions
Type of
Construction
3-5
K-2
1949
1958
1957
2002
Masonry
Masonry
6-8
1955
1964
Masonry
9-12
2008
2008
Masonry
9-12
N/A
N/A
N/A
OTHER SCHOOLS
There are several private and parochial schools within the City of Burton’s boundaries.
Grades
Served
Pre K-12
Pre K-12
9-12
K-12
School
Faithway Christian School
Genesee Christian School
Madison Academy
St. Thomas More Academy
Approximate
Enrollment
100
380
227
110
DISCONTINUED ROLE AS PROGRAM FISCAL AGENT
Prior to 2014 the District acted as fiscal agent for several programs including an alternative high school, adult
education, collaborative community education, Mott Middle College and Genesee Early College. Services provided
involved students from neighboring schools and for some programs, across the entire Genesee Intermediate School
District. At its peak, Bendle held the student count for approximately 900 such students. In addition to accounting for
the typical Kindergarten through 12th grade students, as fiscal agent the additional revenue and expenses from these
programs flowed through the District's financial statements. At the end of the 2013 fiscal year, the District discontinued
as fiscal agent for these programs which were assumed by other school districts in the Genesee Intermediate School
District. From 2014 and forward, the District's financial statements reflect provision of services largely to the traditional
K-12 student population and as a result, exhibit significantly reduced revenue and expenditures.
25
OTHER MATTERS
All information contained in this Official Statement is subject, in all respects, to the complete body of
information contained in the original source thereof and no guaranty, warranty or other representation is made
concerning the accuracy or completeness of the information herein. In particular, no opinion or representation is
rendered as to whether any projection will approximate actual results, and all opinions, estimates and assumptions,
whether or not expressly identified as such, should not be considered statements of fact.
The School District certifies that to its best knowledge and belief, this Official Statement, insofar as it pertains
to the School District and its economic and financial condition, is true and correct as of the date of this Official
Statement, and does not contain, nor omit, any material facts or information which would make the statements
contained herein misleading.
/s/ ______ _____________________
JOHN J. KROLEWSKI, SUPERINTENDENT
26
APPENDIX A - BUDGET
B EN D LE P LUB IC S C HO O LS
Ge n e r al Fu n d B u dg e t S u m m ar i e s
For Fi s c al Ye ar s En di n g J u n e 3 0 , 2 0 1 5 an d J u n e 3 0 , 2 0 1 6
R EV EN UE
Lo c a l S o u rc e s
S t a t e S o u rc e s
F e d e ra l S o u rc e s
O t h e r S o u rc e s
T O TA L R EV EN UE
EX P EN D ITUR ES
IN S T R U C T IO N :
Ba s ic P ro g ra ms
2014/ 15
A me n d e d
Bu d g et
$ 1,016,361
9,712,597
1,050,914
131,239
11,911,111
2015/ 16
A d o p ted
Bu d g et
$ 970,000
9,434,285
960,000
71,690
11,435,975
$
5,289,025
1,566,992
$ 5,234,930
1,332,000
25,000
0
6,881,017
6,566,930
A dded Needs
A d u lt / C o n t in u in g Ed u c a t io n
T O T A L IN S T RU CT IO N
S U P P O RT IN G S ERVICES :
P u p il
In s t ru c t io n a l
Ge n e ra l A d min is t ra t io n
S c h o o l A d min is t ra t io n
Bu s in e s s S e rv ic e s
O p e ra t io n s / M a in t e n a n c e
P u p il T ra n s p o rt a t io n
S u p p o rt S e rv ic e s Ce n t ra l
S u p p o rt S e rv ic e s O t h e r
Co mmu n it y S e rv ic e s
P mt . T o O t h e r Go v t . U n it s
O t h e r F in a n c in g U s e s
T O T A L S ERVICES
$
$
802,200
407,000
595,900
1,072,573
52,000
1,140,100
226,100
170,000
255,000
1,000
0
147,172
4,869,045
11,676,322
11,435,975
234,789
4,011,339
$ 4,246,128
$0
4,246,128
$ 4,246,128
T O TA L EX P EN D ITUR ES
R EV EN UE O V ER (UN D ER ) EX P EN D ITUR ES
B EGIN N IN G FUN D B A LA N C E, J ULY 1
ES T IM A TED EN D IN G FUN D B A L A N C E, J UN E 3 0
832,161
448,214
421,869
1,064,929
52,000
1,119,390
239,215
214,000
247,808
0
8,547
147,172
4,795,305
$
Note: Approximately $1,765,000 of the FY 2014/15 ending balance was reserved for a QZAB bond repayment and
about $1,912,000 of the FY 2015/16 ending balance will be reserved for the same.
A-1
The auditor has not examined or reviewed any financial documents, statements or materials that have been or may be
furnished in connection with the authorization, issuance or marketing of the Bonds and accordingly will not express any
opinion with respect to the accuracy or completeness of any such financial documents, statements or materials.
APPENDIX B - AUDIT
B-1
MANAGEMENT DISCUSSION AND ANALYSIS
The Administration’s Discussion and Analysis, a requirement of GASB 34, is intended to be the Bendle Public Schools’
Administration’s discussion and analysis of the financial results for the fiscal year ended June 30, 2014.
District Wide Financial Statements: (Continued)
These two statements report the Bendle Public Schools net position – the difference between assets and liabilities, as
reported in the statement of net position – as one way to measure the School District’s financial health or financial
position. Over time, increases or decreases in the School District’s net position – as reported in the statement of
activities – are indicators of whether its financial health is improving or deteriorating. The relationship between
revenues and expenses is the School District’s operating results. However, the School District’s goal is to provide
services to our students, not to generate profits as commercial entities do. One must consider many other nonfinancial
factors, such as the quality of the education provided and the safety of the schools, to assess the overall health of the
School District.
Generally accepted accounting principles (GAAP), according to GASB 34 requires the reporting of two types of
financial statements: District Wide Financial Statements and Fund Financial Statements.
Fund Financial Statements:
The School District’s fund financial statements provide detailed information about the most significant funds – not the
School District as a whole. Some funds are required to be established by State law and by bond covenants. However, the
School District establishes many other funds to help it control and manage money for particular purposes (the Food
Service is an example) or to show that it is meeting legal responsibilities for using certain taxes, grants, and other
money (such as bond-funded construction funds used for voter-approved capital projects). The governmental funds of
the School District use the following accounting approach:
Governmental funds – All of the School District’s services are reported in governmental funds. Governmental
fund reporting focuses on showing how money flows into and out of funds and the balances left at year end are
available for spending. They are reported using an accounting method called modified accrual accounting, which
measures cash and all other financial assets that can readily be converted to cash. The governmental fund
statements provide a detailed short-term view of the operations of the School District and the services it provides.
Governmental fund information helps you determine whether there are more or fewer financial resources that can
be spent in the near future to finance the School District’s programs. We describe the relationship (or differences)
between governmental activities (reported in the statement of net position and the statement of activities) and
governmental funds in reconciliation.
The statement of net position and the statement of activities report the governmental activities for the School District,
which encompasses all of the School District’s services, including instruction, support services, community services,
athletics, and food services. Property taxes, unrestricted state aid (foundation allowance revenue), and state and federal
grants finance most of these activities.
The School District as Trustee – Reporting the School District’s Fiduciary Responsibilities
The School District is the trustee, or fiduciary, for its student activity funds. All of the School District’s fiduciary
activities are reported in a separate statement of fiduciary net position. We exclude these activities from the School
District’s other financial statements because the School District cannot use these assets to finance its operations. The
School District is responsible for ensuring that the assets reported in these funds are used for their intended purposes.
SUMMARY OF NET POSITION:
The following summarizes the net position at the fiscal years ended June 30, 2014 and 2013:
B-2
In the fund financial statements, purchased capital assets are reported as expenditures in the year of acquisition. No
asset is reported. The issuance of debt is recorded as a financial resource. The current year’s payments of principal and
interest on long term obligations are recorded as expenditures. Future year’s debt obligations are not recorded.
District Wide Financial Statements:
The District wide financial statements are full accrual basis statements. They report all of the District’s assets and
liabilities, both short and long term, regardless if they are “currently available” or not. For example, assets that are
restricted for use in the Debt Funds solely for the payment of long term principal or interest are grouped with
unrestricted assets of the General Fund. Capital assets and obligations of the District are reported in the Statement of
Net Position of the District wide financial statements.
One of the most important questions asked about the School District is, “As a whole, what is the School District’s
financial condition as a result of the year’s activities?” The statement of net position and the statement of activities,
which appear first in the School District’s financial statements, report information on the School District as a whole and
its activities in a way that helps you answer this question. We prepare these statements to include all assets and
liabilities, using the accrual basis of accounting, which is similar to the accounting used by most private-sector
companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received
or paid.
NET POSITION SUMMARY
2014
ASSETS
Current Assets
Non-Current Assets
$6,308,257
17,509,492
$6,653,711
17,988,723
TOTAL ASSETS
$23,817,749
$24,642,434
LIABILITIES
Current Liabilities
Non-Current Liabilities
Total Liabilities
1,667,100
18,194,516
$19,861,616
2,538,670
17,592,112
$20,130,782
1,738,303
727,171
1,490,659
1,964,672
568,923
1,978,057
$3,956,133
$4,511,652
NET POSITION
Net Investment in Capital Assets
Restricted
Unrestricted
TOTAL NET POSITION
-III-
2013
-IV-
RESULTS OF OPERATIONS:
For the fiscal years ended June 30, 2014 and 2013, the District wide results of operations were:
2014
GOVERNMENT- WIDE FINANCIAL ANALYSIS
2013
REVENUES
General Revenues:
Property Taxes
State Sources - Unrestricted
Intermediate Sources
Other General Revenues
Total General Revenues
$1,361,747
7,457,108
278,077
216,417
$9,313,349
$1,370,616
14,356,564
114,018
164,143
$16,005,341
Program Revenues
Charges for Services
Operating Grants
Total Program Revenues
Total Revenues
104,713
2,800,520
$2,905,233
$12,218,582
169,947
3,371,422
$3,541,369
$19,546,710
B-3
EXPENSES
Instruction & Instructional Support
Support Services
Community Services
Outgoing Transfers and Other Uses
Food Service
Interest on Long-Term Debt
Depreciation
Total Expenses
6,528,671
4,299,488
120
151,674
626,277
683,967
483,904
$12,774,101
13,415,699
4,866,141
64,279
147,171
595,895
673,452
478,241
$20,240,878
(DECREASE) IN NET POSITION
($555,519)
($694,168)
BEGINNING NET POSITION
4,511,652
5,205,820
$3,956,133
$4,511,652
ENDING NET POSITION
Analysis of Financial Position: (Page IV)
During the year ended June 30, 2014, the District’s Total Net Position decreased by $555,519 to a total of $3,956,133.
The largest portion of the net position is the District’s investment in capital assets. Net investment in capital assets
decreased by $226,369 during the year due to depreciation exceeding purchases of new capital assets and principal
payments on related debt. The districts unrestricted net position decreased by $487,398 during the year and the
restricted portion of the net position increased by $158,248. The restricted net position consist of the restricted debt
retirement funds that may only be used to pay bonded debt and restricted capital projects funds that may only be used to
fund capital projects. The unrestricted net position may be used to fund the educational services provided to students.
Analysis of Results of Operations: (Page V)
The district’s overall expenses exceeded its revenues for the year by $555,519. The total revenues decreased by
$7,328,128 or 37%. Expenditures decreased by $7,466,777 or 37%. This was primarily the result of change involving
the role of Fiscal Agent for the Bendle/Carman-Ainsworth Consortium. Carman-Ainsworth Community Schools now
acts as the Fiscal Agent.
FINANCIAL ANALYSIS OF GOVERNMENT’S FUNDS – GOVERNMENTAL FUNDS
Analysis of Financial Position
The focus of the District’s governmental funds is to provide information on near term inflows, outflows, and balances of
spendable resources. Such information is useful in assessing the district’s financing requirements. In particular, fund
balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal
year. An analysis of changes for the governmental funds is as follows:
General Fund
The district’s general fund is the chief operating fund of the district. Fund balance for the general fund decreased by
$34,799 during the year primarily the result of a decrease in cash. Revenue for the year decreased by $7,370,845 or 40%
primarily the result of decreases in state aid. Expenditures and other financing uses decreased by $7,676,600 or 41%,
primarily the result of change involving the role of Fiscal Agent for the Bendle/Carman-Ainsworth Consortium.
Carman-Ainsworth Community Schools now acts as the Fiscal Agent.
The major source of general fund revenues is state aid and taxes. An analysis of the sources is as follows:
1.
2.
-V-
State of Michigan Unrestricted Aid (Net State Foundation Grant)
The State of Michigan aid, unrestricted, is determined with the following variables:
a.
State of Michigan State Aid Act per student foundation allowance
b.
Student Enrollment - Blended at 90 percent of current year’s fall count and 10 percent of prior year’s
winter count
c.
The District’s non-homestead tax levy
Per Student, Foundation Allowance:
Annually, the State of Michigan establishes the per student foundation allowance. The Bendle Public Schools
foundation allowance was $7,026 per student for the 2013-2014 school year.
-VI-
FINANCIAL ANALYSIS OF GOVERNMENT’S FUNDS – GOVERNMENTAL FUNDS (Continued)
ANALYSIS OF BUDGETS:
Analysis of Financial Position (Continued)
Actual Results vs. Final Budgets
General Fund (Continued)
3.
Student Enrollment:
The District’s student enrollment for the fall count of 2013-2014 was 1,167 students. A decrease of 986
students from the prior year
4.
Property Taxes Levied For General Operations (General Fund Non-Homestead Taxes)
The District levies 18 mills of property taxes for operations (General Fund) on Non-Homestead Properties.
Under Michigan law, the taxable levy is based on the taxable valuation of properties. Annually, the taxable
valuation increase in property values is capped at the rate of the prior year’s CPI increase or 5 percent,
whichever is less. At the time of sale, a property’s taxable valuation is readjusted to the State Equalized
Value, which is, theoretically, 50 percent of the market value.
Revenues
Variations between the final budget and actual revenues were due to 22j (performance) funds, reimbursements
from the Bendle/Carman-Ainsworth Consortium, an insurance settlement following winter storm damage, as well
as underestimated tax collections.
Expenditures
There were no significant variations between the final budget and actual expenditures.
CAPITAL ASSET AND DEBT ADMINISTRATION
A.
Debt, Principal Payments
The District made principal payments on bonded, long term debt obligations that reduced the amount of the
District’s long term liabilities as follows:
The District’s non-homestead property tax revenue for the 2013-2014 fiscal year was $746,613. This
represents a decrease of $19,528 from the prior year.
Principal
Balance
7-01-13
GENERAL FUND BUDGETARY HIGHLIGHTS:
Building & Site Bonds
GENERAL FUND BUDGET VS. ACTUAL
MI School Bond Loan Fund
B-4
Sick Days Payable
Revenue
Expenditures
TOTAL
Original Budget
$10,663,000
11,054,652
($391,652)
Final Budget
$10,674,600
10,947,172
Actual
$10,935,227
10,970,026
($272,572)
Variance
Original & Final
Budget %
0.11
0.97
Variance Actual
& Final Budget %
2.44
0.21
($34,799)
ANALYSIS OF BUDGETS:
The Uniform Budget Act of the State of Michigan requires that the local Board of Education approve the original
budget for the upcoming fiscal year prior to July 1, the start of the fiscal year.
Total Long-Term Debt
$15,582,570
$0
$400,000
$15,182,570
2,320,929
609,399
0
2,930,328
88,613
0
6,995
81,618
$17,992,112
$609,399
$406,995
$18,194,516
Michigan School Bond Loan Fund
The School District has entered into a loan agreement with the Michigan School Bond Loan Fund to borrow
monies over a period of years sufficient to extinguish the interest and principal requirements as they become due.
The School is required to begin repaying the debt at the point where the School District's State Equalized
Valuation times its levy will be in excess of its interest and principal requirements. The loan shall bear interest at
the average interest rate computed to the nearest one-eighth of one percent, paid by the State on obligations issued
pursuant to Section 16 of Article IX of the State Constitution of 1983. Interest of $86,070 has been assessed for the
year ended June 30, 2014, and is included in the amount owing the State at that date. The principal balance as of
June 30, 2014 was $2,930,328.
As a matter of practice, Bendle Public Schools amends its budget during the school year. The June 2014 budget
amendment was the final budget for the fiscal year.
Original vs. Final Budgets
Revenues
There were no significant variations between the original and final budget.
Expenditures
There were no significant variations between the original and final budget.
-VII-
Principal
Balance
6-30-14
Principal
Payments
6-30-14
Increases
6-30-14
-VIII-
CAPITAL ASSET AND DEBT ADMINISTRATION
B.
Capital Assets
The district’s net investment in capital assets decreased by $626,369 during the fiscal year and can be summarized
as follows:
Capital Assets
Less: Accumulated Depreciation
Net Investment Capital Outlay
Balance
Beginning
$23,181,697
Additions
$0
(5,634,455)
(626,369)
$17,547,242
($626,369)
Deduction
$16,000
(16,000)
$0
Balance
Ending
$23,165,697
(6,244,824)
$16,920,873
There were no additions to fixed assets.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
*
Foundation Allowance
The Board of Education and Administration agreed to an estimate of a foundation allowance of $7,126 per pupil
and an additional per pupil “equity payment” of $125 for the 2014-15 fiscal year based on the budget adopted by
the State of Michigan.
B-5
The District’s September 2014 enrollment is expected to increase by approximately 40 students as a result of the
State of Michigan’s 105 “Limited” Schools of Choice Program.
*
Retirement Rates
The continuing cost of health insurance to current and potential retirees continues to drive the rate increases the
Michigan School Employees Retirement System recommends to the legislature for approval. In 2014-15, the rate
is anticipated to increase 1% to 25.78% effective October 1, 2014. The District will also be required to pay an
additional 7.63% for the UAAL Stabilization.
*
The Bendle Public Schools 2014/2015 adopted budget is as follows:
REVENUE
EXPENDITURES
NET (UNDER) BUDGET
$10,432,345
10,791,538
($359,193)
CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens and taxpayers with a general overview of the District’s finances.
If you have questions about this report or need additional information, please contact the Business Office, Bendle Public
Schools at 810-591-2501.
-IX-
BASIC FINANCIAL STATEMENTS
STATEMENT OF NET POSITION
JUNE 30, 2014
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2014
Governmental
Activities
ASSETS
Cash and Cash Equivalents
Receivables:.
Accounts Receivable
Taxes Receivable
Due from Other Governmental Units
Inventory
Capital Assets, Non-Depreciable - Land
Capital Assets, Net of Accumulated Depreciation
Other Assets
$4,166,888
48,270
8,775
2,076,216
8,108
46,916
16,873,957
588,619
$23,817,749
TOTAL ASSETS
B-6
LIABILITIES
Accounts Payable
Due to Other Governmental Units
Accrued Expenditures
Salaries Payable
Unearned Revenue
Non-Current Liabilities- Due Within One Year
Non-Current Liabilities - Due in More than One Year
Total Governmental Activities
188,922
70,287
309,934
659,689
438,268
400,000
17,794,516
$19,861,616
TOTAL LIABILITIES
NET POSITION
Net Investment in Capital Assets
Restricted
Unrestricted
1,738,303
727,171
1,490,659
$3,956,133
TOTAL NET POSITION
See notes to the financial statements.
-1-
FUNCTIONS/PROGRAMS
Governmental Activities:
Instruction
Support Services
Community Services
Food Service
Interest on Long-Term Obligations
Depreciation - Unallocated
Expenses
Program Revenues
Operating
Charges For
Grants and
Services
Contributions
Governmental
Activities
Net (Expense)
Revenue and
Change in
Net Position
$6,528,671
4,299,488
120
151,674
626,277
683,967
483,904
$0
29,789
8,100
0
66,824
0
0
$1,404,261
807,594
0
0
588,665
0
0
($5,124,410)
(3,462,105)
7,980
(151,674)
29,212
(683,967)
(483,904)
$12,774,101
$104,713
$2,800,520
($9,868,868)
General Revenues:
Taxes:
Property Taxes, Levied for General Purposes
Property Taxes, Levied for Debt Retirement
Property Taxes, Levied for Capital Projects
State Sources - Unrestricted
Intermediate Sources
Investment Earnings
Miscellaneous
Total General Revenues
Change in Net Position
Net Position - Beginning of Year
Net Position - End of Year
-2-
738,790
486,818
136,139
7,457,108
278,077
2,191
214,226
$9,313,349
($555,519)
4,511,652
$3,956,133
RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES TO
NET POSITION OF GOVERNMENTAL ACTIVITIES
JUNE 30, 2014
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2014
Non-Major
Governmental
Funds
General
Fund
ASSETS
Receivables:
Accounts Receivable
Taxes Receivable
Due from Other Governmental Units
Inventory
Total
Governmental
Funds
B-7
$3,449,679
$717,209
$4,166,888
45,045
3,547
2,071,063
0
3,225
5,228
5,153
8,108
48,270
8,775
2,076,216
8,108
TOTAL ASSETS
$5,569,334
$738,923
$6,308,257
LIABILITIES
Accounts Payable
Due to Other Governmental Units
Accrued Expenditures
Salaries Payable
Unearned Revenue
Total Liabilities
$186,136
63,283
211,229
659,079
438,268
$1,557,995
$2,786
7,004
1,352
610
0
$11,752
$188,922
70,287
212,581
659,689
438,268
$1,569,747
FUND BALANCES
Non-Spendable
Inventory
Restricted
Debt Retirement
Capital Projects
Food Service
Committed - QZAB Repayment
Assigned - Subsequent Year Expenditures
Unassigned
Total Fund Balances
0
8,108
8,108
0
0
0
1,618,883
359,193
2,033,263
$4,011,339
69,498
430,246
219,319
0
0
0
$727,171
69,498
430,246
219,319
1,618,883
359,193
2,033,263
$4,738,510
TOTAL LIABILITIES AND
FUND BALANCES
$5,569,334
$738,923
$6,308,257
-3-
Total Governmental Fund Balances:
$4,738,510
Amounts reported for governmental activities in the statement of
net position are different because:
Capital assets used in governmental activities are not financial resources
and therefore are not reported as assets in governmental funds.
Capital Assets
Capital Assets, Net of Accumulated Depreciation
$23,165,697
(6,244,824)
16,920,873
Other Assets
588,619
Accrued Interest on Long-Term Debt
(97,353)
Long-term liabilities, including bonds payable, are not due and
payable in the current period and therefore are not reported as
liabilities in the funds. Long-term liabilities at year end consist of:
Bonds Payable
Sick Days Payable
Total Long-Term Liabilities
TOTAL NET POSITION GOVERNMENTAL ACTIVITIES
$15,182,570
2,930,328
81,618
(18,194,516)
$3,956,133
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
REVENUES
Local Sources
State Sources
Federal Sources
Interdistrict Sources
Total Revenues
B-8
EXPENDITURES
Current:
Instruction
Student Services
Instructional Support
General Administration
School Administration
Business Administration
Operation & Maintenance of Plant
Transportation
Support Services - Central
Support Services - Other
Community Services
Food Service
Debt Retirement
Principal
Interest
Other
Capital Outlay
Total Expenditures
Excess (Deficiency) of Revenues
Over (Under) Expenditures
OTHER FINANCING SOURCES (USES)
Bond Proceeds
Transfers from (to) Other Funds
Total Other Financing Sources (Uses)
Net Change in Fund Balance
FUND BALANCE - BEGINNING OF YEAR
FUND BALANCE - ENDING OF YEAR
General
Fund
Non-Major
Governmental
Funds
Total
Governmental
Funds
$1,012,814
8,756,414
887,922
278,077
$10,935,227
$694,690
25,371
563,294
0
$1,283,355
$1,707,504
8,781,785
1,451,216
278,077
$12,218,582
6,528,671
830,599
337,061
361,250
1,018,258
45,903
1,076,094
194,704
194,951
223,737
120
151,674
0
0
0
0
0
0
0
0
0
0
0
0
0
626,277
6,528,671
830,599
337,061
361,250
1,018,258
45,903
1,076,094
194,704
194,951
223,737
120
151,674
626,277
0
0
0
0
$10,963,022
400,000
600,119
225
28,599
$1,655,220
400,000
600,119
225
28,599
$12,618,242
($27,795)
($371,865)
($399,660)
0
(7,004)
($7,004)
($34,799)
523,108
7,004
$530,112
$158,247
523,108
0
$523,108
$123,448
4,046,138
568,924
4,615,062
$4,011,339
$727,171
$4,738,510
-4-
Total net change in fund balances - governmental funds
$123,448
Amounts reported for governmental activities in the statement of
activities are different because:
Governmental funds report capital outlays as expenditures. However,
in the statement of activities, the cost of those assets is allocated
over their estimated useful lives as depreciation expense. This is
the amount by which capital outlay exceeded depreciation in the
current period.
(626,369)
Repayment of bond principal is an expenditure in the governmental
funds, but the repayment reduces long-term liabilities in the statement
of net assets. This is the amount of repayments reported as
expenditures in the governmental funds.
547,138
(Increase) in Michigan School Bond Loan
(609,398)
Change in accrued interest on long-term liabilities
2,667
Decrease in accrued compensated absences
6,995
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES
($555,519)
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES
FIDUCIARY FUND - AGENCY FUND
JUNE 30, 2014
NOTES TO FINANCIAL STATEMENTS
1)
Trust &
Agency
ASSETS
$315,656
TOTAL ASSETS
$315,656
LIABILITIES
Due to Student Groups
$315,656
TOTAL LIABILITIES
$315,656
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A)
DESCRIPTION OF GOVERNMENT-WIDE FINANCIAL STATEMENTS
The government-wide financial statements (i.e., the statement of net position and the statement of activities)
report information on all of the nonfiduciary activities of the District. All fiduciary activities are reported
only in the fund financial statements. Governmental activities normally are supported by taxes,
intergovernmental revenues, and other nonexchange transactions.
B)
REPORTING ENTITY
The District is governed by an elected seven-member Board of Education. The accompanying basic financial
statements have been prepared in accordance with criteria established by the GASB for determining the
various governmental organizations to be included in the reporting entity. These criteria include significant
operational financial relationships that determine which of the governmental organizations are part of the
District’s reporting entity and which organizations are legally separate component units of the District. Based
on application of the criteria, the District does not contain component units.
The District receives funding from local, state, federal and interdistrict government sources and must comply
with the accompanying requirements of these funding source entities. However, the District is not included
in any other governmental "reporting entity" body that has separate legal standing and is fiscally independent
of the governmental entities. As such, the Board of Education has decision-making authority, the authority
to levy taxes, and determine its budget, the power to designate management, the ability to significantly
influence operations and primary accountability for fiscal matters.
B-9
C)
GOVERNMENT-WIDE FUND FINANCIAL STATEMENTS
The government-wide financial statements (i.e., the statement of net position and the statement of activities)
report information on all of the nonfiduciary activities of the primary government. For the most part, the
effect of interfund activity has been removed from these statements. Governmental activities, which
normally are supported by taxes and intergovernmental revenue, are reported separately from business-type
activities, which rely to a significant extent on fees and charges for support. All of the School District's
government-wide activities are considered governmental activities.
The statement of activities demonstrates the degree to which the direct expenses of a given function or
segment are offset by program revenue. Direct expenses are those that are clearly identifiable with a specific
function. Program revenue includes (I) charges to customers or applicants who purchase, use, or directly
benefit from goods, services, or privileges provided by a given function and (2) grants and contributions that
are restricted to meeting the operational or capital requirements of a particular function. Taxes,
intergovernmental payments, and other items not properly included among program revenue are reported
instead as general revenue.
Separate financial statements are provided for governmental funds and fiduciary funds, even though the
latter are excluded from the government-wide financial statements. Major individual governmental funds are
reported as separate columns in the fund financial statements.
D)
MEASUREMENT
PRESENTATION
FOCUS,
BASIS
OF
ACCOUNTING,
AND
FINANCIAL
STATEMENT
Government-wide Financial Statements - The government-wide financial statements are reported using the
economic resources measurement focus and the accrual basis of accounting. Revenue is recorded when
earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
Property taxes are recognized as revenue in the year for which they are levied. Grants, categorical aid, and
similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have
been met.
-6-
-5-
1)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D)
MEASUREMENT FOCUS, BASIS
PRESENTATION (Continued)
OF
ACCOUNTING,
1)
AND
FINANCIAL
STATEMENT
D)
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial
statements.
B-10
Fiduciary fund statements are also reported using the economic resources measurement focus and the accrual
basis of accounting.
The School District reports the following major governmental fund:
General Fund - The General Fund is the School District's primary operating fund. It accounts for all
financial resources of the School District, except those required to be accounted for in another fund.
The School District reports the following fund types:
Special Revenue Funds - Special revenue funds are used to segregate, for administrative purposes, the
transactions of the School District's food service operations from General Fund revenue and expenditure
accounts. The School District maintains full control of these funds. Any deficits generated by these activities
are the responsibility of the General Fund. The main sources of revenue for these funds are food sales to
pupils, free/reduced breakfast and lunch reimbursement from federal funds and funds received from the
State.
-7-
ACCOUNTING,
AND
FINANCIAL
STATEMENT
Debt Retirement Fund - The Debt Retirement Fund is used to account for the accumulation of resources
for, and the payment of, general long-term debt principal, interest, and related costs.
Student Activities Agency Fund - The School District maintains an Agency Fund to record the transactions
of student groups for school and school-related purposes. The funds are segregated and held in trust for the
students.
Amounts reported as program revenue include (I) charges to customers or applicants for goods, services, or
privileges provided and (2) operating grants and contributions. Internally dedicated resources are reported as
general revenue rather than as program revenue. Likewise, general revenue includes all taxes and
unrestricted state aid.
Property taxes, unrestricted state aid, intergovernmental grants, and interest associated with the current fiscal
period are all considered to be susceptible to accrual and so have been recognized as revenue of the current
fiscal period. All other revenue items are considered to be available only when cash is received by the
School District.
OF
Capital Projects Sinking Funds - The Capital Projects Sinking Funds records capital project activities
funded with Sinking Fund millage. For this fund, the school district has complied with the applicable
provision of §1212 of the Revised School Code.
When an expense is incurred for the purpose for which both restricted and unrestricted net position or fund
balance are available, the School District's policy is to first apply restricted resources. When an expense is
incurred for purposes which amounts in any of the unrestricted fund balance classifications could be used, it
is the School District's policy to spend funds in this order: committed, assigned, and unassigned.
Fund Financial Statements - Governmental fund financial statements are reported using the current
financial resources measurement focus and the modified accrual basis of accounting. Revenue is recognized
as soon as it is both measurable and available. Revenue is considered to be available if it is collected within
the current period or soon enough thereafter to pay liabilities of the current period. Revenue not meeting this
definition is classified as a deferred inflow of resources. For this purpose, the School District considers
revenue to be available if it is collected within 60 days of the end of the current fiscal period. Expenditures
generally are recorded when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and judgments, are
recorded only when payment is due.
MEASUREMENT FOCUS, BASIS
PRESENTATION (Continued)
During the course of operations the District has activity between funds for various purposes. Any residual
balances outstanding at year end are reported as due from/to other funds. While these balances are reported
in the fund financial statements, they are eliminated in the preparation of the government-wide financial
statements.
Further, certain activity occurs during the year involving transfers of resources between funds. In the fund
financial statements these amounts are reported at gross amounts as transfers in/out. While reported in the
fund financial statements, they are eliminated in the preparation of the government-wide financial
statements.
E)
BASIS OF ACCOUNTING/MEASUREMENT FOCUS
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus
and basis of accounting. Measurement focus indicates the type of resources being measured such as current
financial resources or economic resources. The basis of accounting indicates the timing of transactions or
events for recognition in the financial statements.
The process of preparing financial statements in conforming with accounting principles generally accepted in
the United States of America requires the use of estimates and assumptions regarding certain types of assets,
liabilities, revenues, and expenses. Such estimates primarily related to unsettled transactions and events as of
the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated
amounts.
Governmental Fund Financial Statements
All governmental fund types are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. With this measurement focus, revenues are recognized as soon as they
are both measurable and available. Only current assets and current liabilities generally are included on the
balance sheet. Operating statements of these funds present increases (revenues and other financing sources)
and decreases (expenditures and other financing uses) in current assets. Accordingly, they are said to present
a summary of sources and uses of "available spendable resources" during a period. Revenues are considered
to be available when they are collectible within the current period or soon enough thereafter to pay liabilities
of the current period. For this purpose, the District considers revenues to be “Available” if they are
generally collected within 60 days of year end. Expenditures are generally recognized under the modified
accrual basis of accounting when the related liability is incurred. However, debt service expenditures, as
well as expenditures related to compensated absences are recorded only when payment is due. General
capital assets acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt
and acquisitions under capital leases are reported as other financing sources.
-8-
1)
E)
BASIS OF ACCOUNTING/MEASUREMENT FOCUS (Continued)
Those revenues susceptible to accrual are property taxes, state aid, interest revenue, grants and charges for
services. Other revenue is recorded when received.
1)
H)
The District reports unearned revenue on its governmental funds balance sheet. Unearned revenues arise
when potential revenue does not meet both the “measurable” and “available” criteria for recognition in the
current period. Unearned revenues also arise when the District receives resources before it has a legal claim
to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent
periods, when both revenue recognition criteria are met, or when the government has a legal claim to the
resources, the liability for unearned revenue is removed from the combined balance sheet and revenue is
recognized.
F)
B-11
G)
CASH AND CASH EQUIVALENTS/INVESTMENTS
Cash and cash equivalents include amounts in demand deposits, certificates of deposit and cash on hand.
Governmental Activities
Estimated Lives
Description
Buildings and Improvements
Furniture and Equipment
Vehicles and Buses
20 – 50 years
5 – 10 years
5 – 10 years
I)
Certain investments are valued at fair value as determined by quoted market prices, or by estimated fair
values when quoted market prices are not available. The standards also provide that certain investments are
valued at cost (or amortized cost) when they are of a short-term duration, the rate of return is fixed, and the
district intends to hold the investment until maturity. Accordingly, investments in banker acceptances and
commercial paper are recorded at amortized cost.
INTERFUND BALANCES
On fund financial statements, receivables and payables resulting from short-term interfund loans are
classified as “interfund receivables/payables.” These amounts are eliminated in the governmental activities
columns of the statement of net position.
J)
State statues authorize the District to invest in bonds and other direct and certain indirect obligations of the
U.S. Treasury, certificates of deposit, savings accounts, deposit accounts, or depository receipts of a bank,
savings and loan association, or credit union, which is a member of the Federal Deposit Insurance
Corporation, Federal Savings and Loan Insurance Corporation, or National Credit Union Administration,
respectively; in commercial paper rated at the time of purchase within the three highest classifications
established by no less than two standard rating services and which matures not more than 270 days after the
date of purchase. The District is also authorized to invest in U.S. Government or federal agency obligation
repurchase agreements, bankers’ acceptances of U.S. banks, and mutual funds composed of investments as
outlined above.
COMPENSATED ABSENCES
The liability for compensated absences reported in the government-wide statements consists of earned but
unused accumulated vacation, sick leave, and severance benefits. A liability for these amounts is reported in
governmental funds as it comes due for payment. The liability has been calculated using the vesting method,
in which leave amounts are included both for employees who are currently eligible to receive termination
payments and for other employees who are expected to become eligible in the future to receive such
payments upon termination.
K)
LONG-TERM OBLIGATIONS
In the government-wide financial statements, long-term debt and other long-term obligations are reported as
liabilities in the statement of net position. Bond premiums and discounts, as well as issuance costs, are
deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are
reported net of the applicable bond premium or discount. Bond issuance costs are reported as debt service
expenditures.
INVENTORIES AND PREPAID COSTS
Inventories are valued at cost, on a first-in, first-out basis. Inventories of governmental funds, including
commodities received from the United States Department of Agriculture, are recorded as expenditures when
consumed rather than when purchased.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as
bond issuance costs, during the current period.
The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances
are reported as other financing sources while discounts are reported as other financing uses. Issuance costs
are reported as debt service expenditures.
Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid costs
in both government-wide and fund financial statements.
H)
CAPITAL ASSETS (Continued)
All reported capital assets are depreciated. Improvements are depreciated over the remaining useful lives of
the related capital assets. Depreciation is computed using the straight-line method over the following useful
lives:
CAPITAL ASSETS
General capital assets are those assets not specifically related to activities reported in the proprietary funds.
These assets generally result from expenditures in the governmental funds. These assets are reported in the
governmental activities column of the government-wide statement of net position but are not reported in the
fund financial statements.
All capital assets are capitalized at cost (or estimated historical cost) using a $5,000 capitalization threshold
and updated for additions and retirements during the year. Donated fixed assets are recorded at their fair
market values as of the date received. The School District does not possess any infrastructure.
Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the
asset or materially extend an assets life are not. Interest incurred during the construction of capital assets is
also capitalized.
-9-
L)
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of financial position will sometimes report a separate section for deferred
outflows of resources. This separate financial statement element, deferred outflows of resources, represents a
consumption of net position or fund balance that applies to a future period(s) and thus, will not be recognized
as an outflow of resources (expense/expenditure) until then. The District does not have any of this type of
item.
In addition to liabilities, the statement of financial position will sometimes report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of resources,
represents an acquisition of net position that applies to a future period (s) and so will not be recognized as an
inflow of resources (revenue) until that time. The District does not have any of this type of item.
-10-
1)
1)
M) FUND BALANCE
Fund balances for each of the District's governmental funds are displayed in the following classifications
depicting the relative strength of the spending constraints placed on the purposes for which resources can be
used:
*
Nonspendable fund balance - amounts that cannot be spent because they are either not in a spendable
form (such as inventories and prepaid amounts) or are legally or contractually required to be maintained
intact.
*
Restricted fund balance - amounts that can be spent only for specific purposes because of constraints
imposed by external providers (such as grantors, bondholders, and higher levels of government), or
imposed by constitutional provisions or enabling legislation. The District’s Capital Projects Fund, Debt
Service Fund and Food Service balances are considered restricted.
*
Committed fund balance – amounts that have been formally set aside by specific purposes.
Commitments are made and can be rescinded only via resolution of the Board of Education.
P)
BUDGETARY INFORMATION
Budgetary basis of accounting:
Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the
general fund and special revenue fund. The capital projects fund is appropriated on a project-length basis.
Other funds do not have appropriated budgets.
Appropriations in all budgeted funds lapse at the end of the fiscal year even if they have related
encumbrances. Encumbrances are commitments related to unperformed (executor) contracts for goods or
services (i.e., purchase orders, contracts, and commitments). The District does not utilize encumbrance
accounting.
The District follows these procedures in establishing the budgetary data reflected in the financial statements:
B-12
*
Assigned fund balance - amounts the District intends to use for specific purposes that do not meet the
criteria to be classified as restricted or committed. The intent is expressed by the Board of Education.
*
Unassigned fund balance - amounts that are available for any purpose; these amounts can be reported
only in the District's General Fund.
1.
The Superintendent submits to the School Board a proposed operating budget for the fiscal year
commencing on July 1. The operating budget includes proposed expenditures and the means of
financing them. The level of control for the budgets is at the functional level as set forth and presented
as required supplementary information.
2.
Public hearings are conducted to obtain taxpayer comments.
3.
Prior to July 1, the budget is legally adopted by School Board resolution pursuant to the Uniform
Budgeting and Accounting Act (1968 PA 2). The Act requires that the budget be amended prior to the
end of the fiscal year when necessary to adjust appropriations if it appears that revenues and other
financing sources will be less than anticipated or so that expenditures will not be in excess of original
estimates. Expenditures shall not be made or incurred, unless authorized in the budget, in excess of the
amount appropriated. Violations, if any, in the general fund are noted in the required supplementary
information section.
4.
Transfers may be made for budgeted amounts between major expenditure functions within any fund;
however, these transfers and any revisions that alter the total expenditures of any fund must be
approved by the School Board.
5.
The budget was amended during the year with supplemental appropriations, the last one approved prior
to year end June 30, 2014. The District does not consider these amendments to be significant.
The District would typically use restricted fund balance first, followed by committed resources, and then
assigned resources as appropriate opportunities arise, but reserve the right to selectively spend unassigned
resources first to defer the use of these classified funds.
N)
O)
NET POSITION
Net position represents the difference between assets and liabilities. Net position invested in capital assets,
net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding
balances of any borrowings used for the acquisition, construction or improvement of those assets. Net
position are reported as restricted when there are limitations imposed on their use either through the enabling
legislation adopted by the School District or through external restrictions imposed by creditors, grantors or
laws or regulations of other governments.
REVENUES
Program Revenues – Amounts reported as program revenues include (1) charges to customers or applicants
who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or
segment, and (2) grants and contributions that are restricted to meeting the operational requirements of a
particular function or segment. All taxes, including those dedicated for specific purposes, unrestricted state
aid, interest, and other internally dedicated resources are reported as general revenues rather than as program
revenues.
2)
STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY – BUDGET VIOLATIONS
1968 PA 2 provides that a local unit shall not incur expenditures in excess of the amount appropriated.
In the body of the financial statements, the School District's actual expenditures and budgeted expenditures for the
budgetary funds have been shown on a functional basis. The approved budgets of the School District for these
budgetary funds were adopted to the functional level.
During the year ended June 30, 2014, the School incurred expenditures in certain budgetary funds which were in
excess of the amounts appropriated.
-11-
-12-
3)
5)
DEPOSITS AND INVESTMENTS
As of June 30, 2014, the District had no investments.
Interest rate risk. In accordance with its investment policy, the District will minimize interest rate risk, which is
the risk that the market value of securities in the portfolio will fall due to changes in market interest rates, by
structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations,
thereby avoiding the need to sell securities in the open market; and, investing operating funds primarily in shorterterm securities, liquid asset funds, money market mutual funds, or similar investment pools and limiting the
average maturity in accordance with the District’s cash requirements.
A summary of the principal items of intergovernmental receivables (due from other governmental units) follows:
Concentration of credit risk. The District will minimize concentration of credit risk, which is the risk of loss
attributed to the magnitude of the District’s investment in a single issuer, by diversifying the investment portfolio
so that the impact of potential losses from any one type of security or issuer will be minimized.
Custodial credit risk – deposits. In the case of deposits, this is the risk that in the event of a bank failure, the
District’s deposits may not be returned to it. As of June 30, 2014, $4,237,470 of the District’s bank balance of
$4,552,891 was exposed to custodial credit risk.
Custodial credit risk – investments. For an investment, this is the risk that, in the event of the failure of the
counterparty, the District will not be able to recover the value of its investments or collateral securities that are in
the possession of an outside party.
B-13
The District will minimize custodial credit risk, which is the risk of loss due to the failure of the security issuer or
backer, by; limiting investments to the types of securities allowed by law; and pre-qualifying the financial
institutions, broker/dealers, intermediaries and advisors with which the District will do business.
Foreign currency risk. The District is not authorized to invest in investments which have this type of risk.
As of June 30, 2014, the District had the following deposits:
Deposits – Including Fiduciary Funds of $315,656
$
4,482,544
Cash Agency Fund
Cash – District Wide
$
315,656
4,166,888
TOTAL
$
4,482,544
The above amounts are reported in the financial statements as follows:
4)
PROPERTY TAXES
Property taxes levied by the District are collected by various municipalities and periodically remitted to the
District. The District levies its property taxes on December 1 and various municipalities collect its property taxes
and remit them to the District through February. The delinquent real property taxes of the District are purchased
by the County, and delinquent personal property taxes continue to be collected by the municipalities and recorded
as revenue as they are collected. The county sells tax notes, the proceeds of which have been used to pay the
District for these delinquent real property taxes. These delinquent real property taxes have been recorded as
revenue in the current year.
-13-
INTERGOVERNMENTAL RECEIVABLES
Receivables at June 30, 2014, consist of taxes, accounts (fees), intergovernmental grants and interest. All
receivables are considered collectible in full due to the ability to foreclose for the nonpayment of taxes, the stable
condition of State programs, and the current year guarantee of federal funds.
6)
GOVERNMENTAL ACTIVITIES
State Aid
Federal Grants
Other Grant Programs & Fees
AMOUNT
$ 1,655,506
304,554
116,156
TOTAL GOVERNMENTAL ACTIVITIES
$
2,076,216
CAPITAL ASSETS
Capital asset activity for the fiscal year ended June 30, 2014, was as follows:
Balance
Beginning
Land
Land Improvements
Equipment and Furniture
Vehicles
Totals at Historical Cost
Land Improvements
Equipment and Furniture
Vehicles
Total Accumulated Depreciation
CAPITAL ASSETS - NET
Additions
$46,916
19,806,117
1,710,678
1,244,689
373,297
$23,181,697
$0
0
0
0
0
$0
(3,771,969)
(651,069)
(1,094,144)
(117,273)
($5,634,455)
(399,376)
(74,265)
(118,879)
(33,849)
($626,369)
$17,547,242
($626,369)
Deductions
Balance
Ending
$0
0
0
16,000
0
$16,000
$46,916
19,806,117
1,710,678
1,228,689
373,297
$23,165,697
0
0
(16,000)
0
($16,000)
(4,171,345)
(725,334)
(1,197,023)
(151,122)
($6,244,824)
$0
$16,920,873
Depreciation expense, when appropriate, was allocated to governmental functions. Depreciation expense that was
not allocated appears on the statement of activities as “unallocated”. Depreciation was recorded on the statement
of activities as follows:
Support Services
Unallocated
$
142,465
483,904
TOTAL DEPRECIATION EXPENSE
$
626,369
-14-
6)
CAPITAL ASSETS (Continued)
8)
D)
Net investment in capital assets consists of the following:
Capital Assets
Less: Long-Term Liabilities
Compensated Absences
$ 23,165,697
(6,244,824)
(18,194,516)
2,930,328
81,618
NET INVESTMENT IN CAPITAL ASSETS
$
1,738,303
7)
SHORT-TERM DEBT
The District has various options for short-term financing including tax anticipation notes, state aid anticipation
notes and lines of credit. The District entered into no short-term financing arrangements during the fiscal year
ended June 30, 2014.
8)
GENERAL LONG-TERM DEBT
A)
B-14
2006 School Building and Site Bonds
Bendle Public Schools has issued General Obligation Bonds dated February 9, 2006, in the amount of
$15,455,000, bearing interest at rates varying from 3.50% to 5.00% per annum. These bonds were issued for
the purpose of erecting, equipping and furnishing a new high school and related athletic facilities, acquiring,
preparing, developing and improving the site, demolishing T.N. Lamb Middle School, remodeling,
reequipping and refurnishing the existing high school building to provide for a middle school building. The
balance of the bonds as of June 30, 2014 was $12,975,000. Payments on this debt are recorded in the
District’s 2006 Debt Retirement Fund.
B)
Energy Conservation Improvement Bonds
Bendle Public Schools has issued Energy Conservation Improvement Bonds dated March 1, 2010, in the
amount of $2,207,570, bearing interest at 0% per annum. The balance of the bonds as of June 30, 2014 was
$2,207,570. Payments of $147,171 on this debt will be recorded in the District’s General Fund and will be
deposited into an escrow account. The balance in the escrow account at June 30, 2014 was $588,619 and is
included in other assets on the statement of net position.
C)
Michigan School Bond Loan Fund
The School District has entered into a loan agreement with the Michigan School Bond Loan Fund to borrow
monies over a period of years sufficient to extinguish the interest and principal requirements as they become
due. The School is required to begin repaying the debt at the point where the School District's State
Equalized Valuation times its levy will be in excess of its interest and principal requirements. The loan shall
bear interest at the average interest rate computed to the nearest one-eighth of one percent, paid by the State
on obligations issued pursuant to Section 16 of Article IX of the State Constitution of 1983. Interest of
$86,070 Has been assessed for the year ended June 30, 2014, and is included in the amount owing the State
at that date. The principal balance as of June 30, 2014 was $2,930,328.
-15-
GENERAL LONG-TERM DEBT (Continued)
Annual Principal Requirements
The annual principal requirements for all debts outstanding as of June 30, 2014 are as follows:
June 30, 2015
June 30, 2016
June 30, 2017
June 30, 2018
June 30, 2019
June 30, 2020-2024
June 30, 2025-2029
June 30, 2030-2034
June 30, 2035
Thereafter
BONDS
PAYABLE
$400,000
425,000
450,000
450,000
475,000
2,750,000
5,582,570
3,875,000
775,000
0
MI SCHOOL
BOND LOAN
$0
0
0
0
0
0
0
0
0
2,930,328
INTEREST
$584,119
568,118
551,118
533,118
515,118
2,258,094
1,607,919
771,126
38,750
0
TOTAL
$984,119
993,118
1,001,118
983,118
990,118
5,008,094
7,190,489
4,646,126
813,750
2,930,328
TOTAL
$15,182,570
$2,930,328
$7,427,480
$25,540,378
The payment dates of sick and longevity days payable is undeterminable. The interest expenditures on
long-term obligations for the year ended June 30, 2014, was $600,119.
E)
9)
Changes in General Long-Term Debt
Governmental Activities:
Building & Site Bonds
Sick Days Payable
Balance
Beginning
$15,582,570
2,320,929
88,613
Additions
$0
609,399
0
Deductions
$400,000
0
6,995
Balance
Ending
$15,182,570
2,930,328
81,618
Amount Due
in One Year
$400,000
0
0
Total Governmental
Activities
$17,992,112
$609,399
$406,995
$18,194,516
$400,000
COMMITTED FUND BALANCE
The District has committed $1,618,883 from the general fund equity to repay the QZAB bonds.
-16-
10) DEFINED BENEFIT PLAN AND POST RETIREMENT BENEFITS
Plan Description - The District participates in the statewide Michigan Public School Employees’ Retirement
System (MPSERS) plan governed by the State of Michigan (State) originally created under Public Act 136 of
1945, recodified and currently operating under the provisions of Public Act 300 of 1980, as amended. Section 25
of this act establishes the board’s authority to promulgate or amend the provisions of the System. The System’s
pension plan was established by the State to provide retirement, survivor, and disability benefits to public school
employees. In addition, the System’s health plan provides all retirees with the option of receiving health, dental
and vision coverage under the Michigan Public School Employees’ Retirement Act.
The System’s financial statements are included as a pension and other employee benefit trust fund in the State of
Michigan Comprehensive Annual Financial Report. The MPSERS issues a publicly available financial report that
includes financial statements and required supplementary information for MPSERS. That report may be obtained
by writing to Michigan Public School Employees Retirement System, P.O. Box 30171, Lansing, Michigan 489097671 or by calling (800) 381-5111. It is also available at http://www.michigan.gov/orsschools.
10) DEFINED BENEFIT PLAN AND POST RETIREMENT BENEFITS (Continued)
Funding Policy (Continued)
Member Contributions (Continued)
Basic Plan members make no contributions. For a limited period ending December 31, 1992, an active Basic Plan
Member could enroll in the MIP by paying the contributions that would have been made had enrollment occurred
initially on January 1, 1987, or on the date of hire, plus interest. MIP contributions at the rate of 3.9% of gross
wages begin at enrollment. Actuarial rate of interest is posted to member accounts on July 1st on all MIP monies
on deposit for 12 months. If a member leaves public school service and no pension is payable, the member’s
accumulated contributions plus interest, if any, are refundable.
B-15
The System is administered by the Office of Retirement Services within the Michigan Department of Technology,
Management & Budget. The Department Director appoints the Office Director who serves as Executive Secretary
to the System’s Board, with whom the general oversight of the System resides. The State Treasurer serves as the
investment officer and custodian for the System.
Under Public Act 300 of 2012, eligible members voluntarily chose between increasing, maintaining, or stopping
their contributions to the pension fund as of the transition date. Members who elected to increase their level of
contribution contribute 4% (Basic Plan) or 7% (MIP); by doing so they maintain a 1.5% pension factor in their
pension formula. Members who elected to maintain their level of contribution will receive a 1.25% pension factor
in their pension formula for their years of service as of their transition date. Their contribution rates are described
above. Members who elected to stop their contributions became participants in the Defined Contribution plan as
of their transition date.
Benefit Provisions - Pension
Employer Contributions
Introduction
Each school district or reporting entity is required to contribute the full actuarial funding contribution amount to
fund pension benefits on a prefunded basis. The School District pays an amount equal to a percentage of its
employees’ wages to the Michigan Public School Employees Retirement System (“MPSERS”), which is
administered by the State of Michigan. These contributions are required by law and are calculated by using the
contribution rates and periods provided in the following table. The District contributions to MPSERS were equal
to the required contribution for those years.
Benefit provisions of the defined benefit pension plan are established by State statute, which may be amended.
Public Act 300 of 1980, as amended, establishes eligibility and benefit provisions for the defined benefit (DB)
pension plan. Retirement benefits for DB plan members are determined by final average compensation and years
of service. DB members are eligible to receive a monthly benefit when they meet certain age and service
requirements. The System also provides disability and survivor benefits to DB plan members. A DB member or
Pension Plus hybrid plan member who leaves Michigan public school employment may request a refund of his or
her member contributions to the retirement system account. A refund cancels a former member’s rights to future
benefits. However, returning members who previously received a refund of their contributions may reinstate their
service through repayment of the refund upon satisfaction of certain requirements.
Funding Policy
Member Contributions
Mandatory member contributions were phased out between 1974 and 1977, with the plan remaining
noncontributory until January 1, 1987, when the Member Investment Plan (MIP) was enacted. MIP members
enrolled prior to January 1, 1990; contribute at a permanently fixed rate of 3.9% of gross wages. The MIP
contribution rate was 4.0% from January 1, 1987, the effective date of the MIP, until January 1, 1990, when it was
reduced to 3.9%. Members first hired between January 1, 1990 and June 30, 2008, and returning members who
did not work between January 1, 1987 through December 31, 1989, contribute at the following graduated
permanently fixed contribution rates: 3% of the first $5,000; 3.6% of $5,001 through $15,000; 4.3% of all wages
over $15,000. Members first hired July 1, 2008, or later including Pension Plus Plan members, contribute at the
following graduated permanently fixed contribution rates: 3% of the first $5,000; 3.6% of $5,001 through
$15,000; 6.4% of all wages over $15,000.
-17-
The School District’s contributions to MPSERS are as follows:
Contribution
to MSPERS
$ 1,779,062
1,825,765
1,653,589
Fiscal Year Ending
June 30,
2014
2013
2012
Included in the amounts paid above, the District received - of section 147(c) State Aid for the sole purpose of
making supplemental payments to MPSERS. The District has recorded this amount as state revenue and
additional pension expenditures/expenses for the years ended June 30, 2014 and 2013.
PA 464 Retirees Returning to Work, effective December 27, 2012 also requires applicable employer contributions
to the defined benefit and defined contribution plans. These amounts if any are included in the amounts paid
above.
-18-
Contribution rates
Public School Employee
Pension Rates (FYE Sept. 30th)
Fiscal Year 2014
Effective October 1, 2013
Pension Plus Pension Plus to
PHF - First
DC with PHF
Basic MIP DB
to DC with DB Basic MIP DB
worked after
First worked
9/2/13
after 9/2/13
Health
to DC with PHF
Benefit Provisions - Other Postemployment
Introduction
Basic MIP
with PHF
Basic MIP
Pension Plus
Pension Normal Cost
2.90%
2.67%
2.67%
0.00%
0.00%
0.00%
2.90%
Pension UAL
14.08%
14.08%
14.08%
14.08%
14.08%
14.08%
14.08%
Pension Early Retirement Incentive
1.36%
1.36%
1.36%
1.36%
1.36%
1.36%
1.36%
18.34%
18.11%
18.11%
15.44%
15.44%
15.44%
18.34%
Health Normal Cost
0.93%
0.93%
0.00%
0.00%
0.93%
0.00%
0.00%
Health UAL
5.52%
5.52%
5.52%
5.52%
5.52%
5.52%
5.52%
Health Contributions - Total Rate
6.45%
6.45%
5.52%
5.52%
6.45%
5.52%
5.52%
Total
20.96%
DB Contributions
Pension Contributions - Total Rate
24.79%
24.56%
23.63%
21.89%
20.96%
23.86%
DC Employer Contributions
0.00%
1.00%
1.00%
3.00%
4.00%
4.00%
0.00%
Personal Healthcare Fund
0.00%
0.00%
2.00%
2.00%
0.00%
2.00%
2.00%
Total
0.00%
1.00%
3.00%
5.00%
4.00%
6.00%
2.00%
Grand Total
24.79%
25.56%
26.63%
25.96%
25.89%
26.96%
25.86%
Benefit provisions of the postemployment healthcare plan are established by State statute, which may be amended.
Public Act 300 of 1980, as amended, establishes eligibility and benefit provisions. Retirees have the option of
health coverage. Beginning fiscal year 2013, it is funded on a prefunded basis. The System has contracted to
provide the comprehensive group medical, hearing, dental and vision coverage for retirees and beneficiaries. A
subsidized portion of the premium is paid by the System with the balance deducted from the monthly pension of
each retiree health care recipient. For members who first worked before July 1, 2008, (Basic, MIP-Fixed, and
MIP-Graded plan members), the subsidy is the maximum allowed by statute. To limit future liabilities of Other
Postemployment Benefits, members who first worked on or after July 1, 2008, (MIP-Plus plan members), have a
graded premium subsidy based on career length where they accrue credit towards their insurance premiums in
retirement, not to exceed the maximum allowable by statute. Public Act 300 of 2012 sets the maximum subsidy at
80% beginning January 1, 2013; 90% for those Medicare eligible and enrolled in the insurances as of that date.
DC Contributions
Fiscal Year 2013
B-16
Effective February 1, 2013
Contribution rates
Grand Total
Basic MIP
Pension Plus
Pension Plus
PHF - First
worked after
9/3/12
24.32%
24.13%
26.20%
Pension Plus to
DC with PHF
First worked
after 9/3/12
25.96%
Fiscal Year 2013
4 months ended 1/31/2013
Total
First worked
before 7/1/10
First worked
between
6/30/10 and
9/3/12
25.36%
24.13%
Pension Plus
and First
worked after
9/3/12
23.20%
Elected DC and
First worked
after 9/3/12
20.96%
Basic MIP DB
to DC with DB Basic MIP DB
Health
to DC with PHF
25.89%
26.96%
Basic MIP
with PHF
Public Act 75 of 2010 requires each actively employed member of MPSERS after June 30, 2010 to annually
contribute 3% of their compensation to offset employer contributions for health care benefits of current retirees.
Retiree Healthcare Reform of 2012
Public Act 300 of 2012 granted all active members of the Michigan Public School Employees Retirement System,
who earned service credit in the 12 months ending September 3, 2012, or were on an approved professional
services or military leave of absence on September 3, 2012, a voluntary election regarding their retirement
healthcare. Any changes to a member’s healthcare benefit are effective as of the member’s transition date, which
is defined as the first day of the pay period that begins on or after December 1, 2012.
25.39%
Under Public Act 300 of 2012, members were given the choice between continuing the 3% contribution to retiree
healthcare and keeping the premium subsidy benefit described above, or choosing not to pay the 3% contribution
and instead opting out of the subsidy benefit and becoming a participant in the Personal Healthcare Fund (PHF), a
portable, tax-deferred fund that can be used to pay healthcare expenses in retirement. Participants in the PHF are
automatically enrolled in a 2% employee contribution into their 457 account as of their transition date, earning
them a 2% employer match into a 401(k) account. Members who selected this option stop paying the 3%
contribution to retiree healthcare as of the day before their transition date, and their prior contributions will be
deposited into their 401(k) accounts.
Fiscal Year 2012
Total
FY 2011 - 2012
First worked First worked
before 7/1/10 after 6/30/10
24.46%
11 months ended 9/30/11
First worked
First worked
after 6/30/10
before 7/1/10
23.23%
-19-
20.66%
19.16%
Other Information
On June 28, 2010, the Michigan Court of Claims issued an injunction in response to a challenge to the authority of
the State to require employees who began working before July 1, 2010, to contribute 3% of reportable wages to
the retiree health care trust at MPSERS. As a result, the State has adjusted the contribution rate due on
employees’ wages paid between November 1, 2010 and September 30, 2011 to 20.66% for members who first
worked prior to July 1, 2010 and 19.16% for Pension Plus members. In March 2011, the Court of Claims granted
the plaintiffs’ motions for summary disposition finding that the mandatory 3% contribution violated both the U.S.
and Michigan constitutions. The State appealed the ruling to the Michigan Court of Appeals. The Court of
Appeals accepted the appeal and ordered an expedited review. The Court of Appeals also granted the State’s
motion for a stay of proceedings and ordered that the 3% deduction continue to be collected and placed into an
escrow account until further order of the Court.
-20-
Other Information (Continued)
On August 16, 2012 the State of Michigan Court of Appeals affirmed the trial court’s orders granting summary
dispositions in favor of the plaintiffs in each of the cases before it, terminating the stay ordered by this Court on
March 18, 2011. The State of Michigan has appealed the decision to the Michigan Supreme Court. The Office of
Retirement Services is instructing Michigan public school employers to continue withholding the 3% contribution.
Should the plaintiffs prevail; the escrowed funds will be returned to the employees.
11) CONTINGENCIES AND COMMITMENTS
The District participates in a number of federally assisted grant programs. These programs are subject to program
compliance audits. The audits of these programs for and including the year ended June 30, 2014, have been
conducted and have been reported in this audit report. However, the compliance audit reports have not yet been
accepted by the grantors. The amount, if any, of expenditures which may be disallowed by the granting agencies
cannot be determined at this time; although the District expects such amounts, if any, to be immaterial.
12) SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date of the auditor’s opinion, the date on which the
financial statements were available to be issued.
B-17
13) UPCOMING ACCOUNTING PRONOUNCEMENT
GASB Statement No. 68, Accounting and Financial Reporting for Pensions, was issued by the GASB in June
2012 and will be effective for the District's 2015 fiscal year. The Statement requires governments that participate
in defined benefit pension plans to report in their statement of net position a net pension liability. The net pension
liability is the difference between the total pension liability (the present value of projected benefit payments to
employees based on their past service) and the assets (mostly investments reported at fair value) set aside in a trust
and restricted to paying benefits to current employees, retirees, and their beneficiaries. Statement 68 requires costsharing employers to record a liability and expense equal to their proportionate share of the collective net pension
liability and expense for the cost-sharing plan. The Statement also will improve the comparability and consistency
of how governments calculate the pension liabilities and expense.
-21-
REQUIRED SUPPLEMENTARY
INFORMATION
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
Budgeted Amounts
Variance With
Final Budget
B-18
Original
Final
Actual
REVENUES
Local Sources
State Sources
Federal Sources
Total Revenues
$930,000
8,603,000
930,000
$10,463,000
$930,000
8,603,000
930,000
$10,463,000
$1,012,814
8,756,414
887,922
$10,657,150
$82,814
153,414
(42,078)
$194,150
EXPENDITURES
Current:
Instruction
Student Services
Instructional Support
General Administration
School Administration
Business Administration
Operation & Maintenance of Plant
Transportation
Support Services - Central
Support Services - Other
Community Services
Total Expenditures
Excess of Revenues Over Expenditures
6,572,000
843,000
292,000
395,000
987,000
52,000
1,084,480
206,000
229,000
247,000
0
$10,907,480
($444,480)
6,572,000
843,000
292,000
395,000
987,000
46,000
1,015,000
192,000
229,000
224,000
0
$10,795,000
($332,000)
6,528,671
830,599
337,061
361,250
1,018,258
45,903
1,076,094
194,704
194,951
223,737
120
$10,811,348
($154,198)
43,329
12,401
(45,061)
33,750
(31,258)
97
(61,094)
(2,704)
34,049
263
(120)
($16,348)
$177,802
52,828
($391,652)
59,428
($272,572)
119,399
($34,799)
OTHER FINANCING SOURCES (USES)
Net Change in Fund Balance
FUND BALANCE - BEGINNING OF YEAR
4,046,138
$4,011,339
FUND BALANCE - ENDING OF YEAR
-22-
59,971
$237,773
APPENDIX C - STATE QUALIFICATION
STATE QUALIFICATION
ARTICLE IX, SECTION 16 OF THE
1963 STATE OF MICHIGAN CONSTITUTION
State loans to school districts.
Sec. 16. The state, in addition to any other borrowing power, may borrow from time to time such amounts as shall be
required, pledge its faith and credit and issue its notes or bonds therefor, for the purpose of making loans to school districts as
provided in this section.
Amount of loans.
If the minimum amount which would otherwise be necessary for a school district to levy in any year to pay principal
and interest on its qualified bonds, including any necessary allowances for estimated tax delinquencies, exceeds 13 mills on each
dollar of its assessed valuation as finally equalized, or such lower millage as the legislature may prescribe, then the school
district may elect to borrow all or any part of the excess from the state. In that event the state shall lend the excess amount to the
school district for the payment of principal and interest. If for any reason any school district will be or is unable to pay the
principal and interest on its qualified bonds when due, then the school district shall borrow and the state shall lend to it an
amount sufficient to enable the school district to make the payment.
Qualified bonds.
The term "qualified bonds" means general obligation bonds of school districts issued for capital expenditures,
including refunding bonds, issued prior to May 4, 1955, or issued thereafter and qualified as provided by law pursuant to Section
27 or Section 28 of Article X of the Constitution of 1908 or pursuant to this section.
Repayment of loans, tax levy by school district.
After a school district has received loans from the state, each year thereafter it shall levy for debt service, exclusive of
levies for nonqualified bonds, not less than 13 mill or such lower millage as the legislature may prescribe, until the amount
loaned has been repaid, and any tax collections therefrom in any year over and above the minimum requirements for principal
and interest on qualified bonds shall be used toward the repayment of state loans. In any year when such levy would produce an
amount in excess of the requirements and the amount due to the state, the levy may be reduced by the amount of the excess.
Bonds, state loans, repayment.
Subject to the foregoing provisions, the legislature shall have the power to prescribe and to limit the procedure, terms
and conditions for the qualification of bonds, for obtaining and making state loans, and for the repayment of loans.
Power to tax unlimited.
The power to tax for the payment of principal and interest on bonds hereafter issued which are the general obligations
of any school district, including refunding bonds, and for repayment of any state loans made to school districts, shall be without
limitations as to rate or amount.
Rights and obligations to remain unimpaired.
All rights acquired under Sections 27 and 28 of Article X of the Constitution of 1908, by holders of bonds heretofore
issued, and all obligations assumed by the state or any school district under these sections, shall remain unimpaired.
C-1
SCHOOL BOND QUALIFICATION, APPROVAL, AND LOAN ACT
Act 92 of 2005
AN ACT to prescribe the procedures, terms, and conditions for the qualification or approval of school
bonds and other bonds; to authorize this state to make loans to certain school districts for the payment of
certain bonds and to authorize schools to borrow from this state for that purpose; to prescribe the terms and
conditions of certain loans to school districts; to prescribe the powers and duties of certain state agencies and
certain state and local officials; to provide for certain fees; to prescribe certain penalties; and to repeal acts
and parts of acts.
History: 2005, Act 92, Imd. Eff. July 20, 2005.
The People of the State of Michigan enact:
388.1921 Short title.
Sec. 1. This act shall be known and may be cited as the "school bond qualification, approval, and loan act".
388.1922 Purpose of act.
Sec. 2. The purpose of this act is to implement section 16 of article IX of the state constitution of 1963 and
to provide for loans to school districts.
388.1923 Definitions.
Sec. 3. As used in this act:
(a) "Computed millage" means the number of mills in any year, not less than 7 mills and not more than 13
mills, determined on the date of issuance of the order qualifying the bonds or on a later date if requested by
the school district and approved by the state treasurer, that, if levied by the school district, will generate
sufficient annual proceeds to pay principal and interest on all the school district's qualified bonds plus
principal and interest on all qualified loans related to those qualified bonds no later than the final mandatory
repayment date. Based on changes of circumstances, including, but not limited to, additional bond
qualification, refundings, changes in qualified loan interest rates, changes in taxable values, and assumptions
contained in any then currently effective guidelines issued by the state treasurer pursuant to section 5(2)(c),
the school district shall not less than annually, beginning on October 1, 2013, using methods prescribed in this
act, recalculate the computed millage necessary to generate sufficient annual levy proceeds to pay principal
and interest on all of the school district's qualified bonds and principal and interest on all qualified loans
related to those qualified bonds not later than the final mandatory repayment date. If the school district
determines that the recalculated computed millage is lower than its current millage levy rate, the school
district shall promptly notify the state treasurer in writing of the recalculated computed millage. Immediately
thereafter, the school district shall decrease its millage levy rate to the recalculated computed millage, but not
below the computed millage established pursuant to the most recent order qualifying bonds for that school
district, or to the minimum levy prescribed by law for receipt of qualified loans, whichever rate is higher. If
the school district determines that the recalculated computed millage is higher than its current millage levy
rate, the school district shall promptly notify the state treasurer in writing of the recalculated computed
millage. Immediately thereafter, the school district shall increase its millage levy rate to the recalculated
computed millage, subject to 1 of the following exceptions, and subject to any maximum millage levy rate
otherwise prescribed for by law:
(i) For each school district's first recalculated computed millage required as of October 1, 2013, increase its
millage levy by a percentage amount equal to the equivalent percentage of taxable value change for that
school district over the immediately preceding 5 years, but not higher than the recalculated computed millage.
(ii) For each school district's subsequent recalculated computed millage beginning October 1, 2014 and
each year thereafter, increase its millage levy by a percentage amount equal to the percentage of taxable value
decline for the immediately preceding year ending September 30, but not to a rate higher than the recalculated
computed millage.
(iii) If it is determined that a district's current computed millage is sufficient to pay all qualified loans by
the mandatory final loan repayment date, no recalculation of the computed millage is required.
(b) "Final mandatory repayment date" means the final mandatory repayment date determined by the state
treasurer under section 9.
(c) "Michigan finance authority" means the Michigan finance authority created under Executive
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Reorganization Order No. 2010-2, MCL 12.194.
(d) "Qualified bond" means a bond that is qualified under this act for state loans as provided in section 16
of article IX of the state constitution of 1963. A qualified bond includes the interest amount required for
payment of a school district's net interest obligation under an interest rate exchange or swap, hedge, or other
agreement entered into pursuant to the revised municipal finance act, 2001 PA 34, MCL 141.2101 to
141.2821, but does not include a termination payment or similar payment related to the termination or
cancellation of an interest rate exchange or swap, hedge, or other similar agreement. A qualified bond may
include a bond issued to refund loans owed to the state under this act.
(e) "Qualified loan" means a loan made under this act or former 1961 PA 108 from this state to a school
district to pay debt service on a qualified bond.
(f) "Revolving loan fund" means the school loan revolving fund created under section 16c of the shared
credit rating act, 1985 PA 227, MCL 141.1066c.
(g) "School district" means a general powers school district organized under the revised school code, 1976
PA 451, MCL 380.1 to 380.1852, or a school district of the first class as described in the revised school code,
1976 PA 451, MCL 380.1 to 380.1852, having the power to levy ad valorem property taxes.
(h) "State treasurer" means the state treasurer or his or her duly authorized designee.
(i) "Taxable value" means the value determined under section 27a of the general property tax act, 1893 PA
206, MCL 211.27a.
History: 2005, Act 92, Imd. Eff. July 20, 2005;⎯Am. 2012, Act 437, Eff. Mar. 28, 2013.
388.1924 Qualification of new bonds; terms and conditions applicable to outstanding
qualified bonds; application for prequalification.
Sec. 4. (1) A school district may issue and market bonds as qualified bonds if the state treasurer has issued
an order granting qualification under this act.
(2) Except with regard to qualification of new bonds, nothing in this act shall be construed to alter the
terms and conditions applicable to outstanding qualified bonds issued in accordance with former 1961 PA
108. Unless otherwise amended as permitted by this act, outstanding qualified loans incurred in association
with outstanding qualified bonds described in this subsection shall bear interest as provided in section 9(8) but
otherwise shall be due and payable as provided in the repayment agreements entered into between the school
district and the state before the effective date of this act.
(3) The state treasurer may qualify bonds for which the state treasurer has received an application for
prequalification on or before May 25, 2005 without regard to the requirements of section 5(2)(f) if the electors
of the school district approve the bonds at an election held during 2005.
388.1925 Preliminary qualification; application.
Sec. 5. (1) A school district may apply to the state treasurer for preliminary qualification of a proposed
school bond issue by filing an application in the form and containing the information required by this act.
(2) An application for preliminary qualification of a school bond shall contain all of the following
information:
(a) The proposed ballot language to be submitted to the electors.
(b) A description of the project or projects proposed to be financed.
(c) A pro forma debt service projection showing the estimated mills the school district will levy to provide
revenue the school district will use to pay the qualified bonds, any outstanding qualified bonds, and any
outstanding or projected qualified loans of the school district. For the purpose of the pro forma debt service
projection, the school district may assume for the first 5 years following the date of the application the
average growth or decline in taxable value for the 5 years or such other period of time requested by the school
district if approved by the state treasurer preceding the date of the application and the average growth or
decline rate for the 20 years immediately preceeding the date of the application but not more than 3% or less
than 0% growth rate, for the remaining term of the proposed bonds.
(d) Evidence that the rate of utilization of each project to be financed will be at least 85% for new
buildings and 60% for renovated facilities. If the projected enrollment of the district would not otherwise
support utilization at the rates described in this subsection, the school district may include an explanation of
the actions the school district intends to take to address the underutilization, including, if applicable, actions to
close school buildings or other actions designed to assure continued assured use of the facilities being
financed.
(e) Evidence that the cost per square foot of the project or projects will be reasonable in light of economic
conditions applicable to the geographic area in which the school district is located.
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(f) Evidence that the school district will repay all outstanding qualified bonds, the proposed qualified
bonds, all outstanding qualified loans, and all qualified loans expected to be incurred with respect to all
qualified bonds of the school district, including the proposed qualified bond issue, not later than the
applicable final mandatory repayment date.
(g) The overall utilization rate of all school buildings in the school district, excluding special education
purposes.
(h) The total bonded debt outstanding of the school district and the total taxable value of property in the
school district for the school district fiscal year in which the application is filed.
(i) A statement describing any environmental or usability problems to be addressed by the project or
projects.
(j) An architect's analysis of the overall condition of the facilities to be renovated or replaced as a part of
the project or projects.
(k) An amortization schedule demonstrating that the weighted average maturity of the qualified bond issue
does not exceed 120% of the average reasonably expected useful life of the facilities, excluding land and site
improvements, being financed or refinanced with the proceeds of the qualified bonds, determined as of the
later of the date on which the qualified bonds will be issued or the date on which each facility is expected to
be placed in service.
(l) An agreement that the school district will keep books and records detailing the investment and
expenditure of the proceeds of the qualified bonds and, at the request of the state treasurer, the school district
will promptly, but not later than the date specified in the request, which date shall be not less than 5 business
days after the date of the request, submit information requested by the state treasurer related to the detailed
information maintained by the school district as to the investment and expenditure of the proceeds of its
qualified bonds.
388.1926 Prequalification of bonds; determination by state treasurer.
Sec. 6. The state treasurer shall prequalify bonds of a school district if the state treasurer determines all of
the following:
(a) The issuance of additional qualified bonds will not prevent the school district from repaying its
outstanding qualified bonds, the proposed bonds, all outstanding qualified loans, and all qualified loans
expected to be incurred with respect to all qualified bonds of the school district, including the proposed bond
issue, not later than the applicable final mandatory repayment date.
(b) The form and language of the ballot conforms with the requirements of this act.
(c) The school district has filed an application complying with the requirements of section 5.
(d) If the proposed bond issue is approved by the voters after September 30, 2012 and will result in
additional qualified loans, the outstanding balance of all qualified loans on the most recent May 1 or
November 1 did not exceed $1,800,000,000.00. The $1,800,000,000.00 limitation described in the
immediately preceding sentence does not apply after June 30, 2016.
(e) The issuance of additional qualified bonds approved by voters after September 30, 2012 will not have
an adverse financial impact on the school district, this state, or the school loan revolving fund. In making this
determination, the state treasurer shall consider relevant factors, including, but not limited to, whether the
issuance of the proposed bond issue will cause the aggregate outstanding amount of qualified and
nonqualified bonds, including the proposed bond issue, and currently outstanding qualified loans of the school
district to exceed 25% of the taxable value of the school district at the time the proposed bonds are issued.
388.1927 Qualification of bonds; determination by state treasurer; order; specifications; loan
agreement; reapplication; qualification of refunding bonds; requirements.
Sec. 7. (1) The state treasurer shall qualify bonds of a school district if the state treasurer determines all of
the following:
(a) A majority of the school district electors have approved the bonds.
(b) The terms of the bond issue comply with applicable provisions of the revised school code, 1976 PA
451, MCL 380.1 to 380.1852.
(c) The school district is in compliance with the revised municipal finance act, 2001 PA 34, MCL
141.2101 to 141.2821.
(d) The weighted average maturity of the qualified bond issue does not exceed 120% of the average
reasonably expected useful life of the facilities, excluding land and site improvements, being financed or
refinanced with the proceeds of the bonds, determined as of the later of the date on which the qualified bonds
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will be issued or the date on which each facility is expected to be placed in service.
(e) The school district has filed any information necessary to update the contents of the original application
to reflect changes in any of the information approved in the preliminary qualification process.
(f) The school district has agreed that the school district will keep books and records detailing the
investment and expenditure of the proceeds of the qualified bonds and, at the request of the state treasurer, the
school district will promptly, but not later than the date specified in the request, which date shall be not less
than 5 business days after the date of the request, submit information requested by the state treasurer related to
the detailed information maintained by the school district as to the investment and expenditure of the proceeds
of its qualified bonds.
(2) An order qualifying bonds shall specify the principal and interest payment dates for all the bonds, the
maximum principal amount of and maximum interest rate on the bonds, the computed millage, if any, the
final mandatory repayment date, and other matters as the state treasurer shall determine or as are required by
this act.
(3) If the application for prequalification demonstrates that the school district will borrow from this state in
accordance with this act, the state treasurer and the school district shall enter into a loan agreement setting
forth the terms and conditions of any qualified loans to be made to the school district under this act.
(4) If a school district does not issue its qualified bonds within 180 days after the date of the order
qualifying bonds, the order shall no longer be effective. However, the school district may reapply for
qualification by filing an application and information necessary to update the contents of the original
application for prequalification or qualification.
(5) The state treasurer shall qualify refunding bonds issued to refund qualified loans or qualified bonds if
the state treasurer finds that all of the following are met:
(a) The refunding bonds comply with the provisions of the revised municipal finance act, 2001 PA 34,
MCL 141.2101 to 141.2821.
(b) That the school district will repay all outstanding qualified bonds, the proposed qualified bonds, all
outstanding qualified loans, and all qualified loans expected to be incurred with respect to all qualified bonds
of the school district, including the proposed qualified bond issue, not later than the applicable final
mandatory repayment date.
388.1928 Submission of ballot to electors; ballot.
Sec. 8. A ballot submitted to the school electors of a school district after November 8, 2005 requesting
authorization to issue unlimited tax general obligations that will be guaranteed by this state in accordance
with section 16 of article IX of the state constitution of 1963 shall inform the electors that if the school district
expects to borrow from this state to pay debt service on the bonds, the estimated total amount of the principal
of that borrowing and the interest to be paid on that borrowing, the estimated duration of the millage levy, and
the estimated computed millage rate for that levy. The ballot shall also inform the electors of the total amount
of qualified bond and loan debt currently outstanding and that the estimated computed millage rate may
change based on changes in certain circumstances.
388.1929 Amount of borrowing; limitation; payment date for outstanding qualified loans;
order; maintenance of separate accounts for each school district; duration of millage levy;
amended and restated repayment agreements; waiver of portion of millage levy; findings;
interest; final or later mandatory repayment date.
Sec. 9. (1) Except as otherwise provided in this act, a school district may borrow from the state an amount
not greater than the difference between the proceeds of the school district's computed millage and the amount
necessary to pay principal and interest on its qualified bonds, including any necessary allowances for
estimated tax delinquencies.
(2) For school districts having qualified loans outstanding as of July 20, 2005, the state treasurer shall
review information relating to each school district regarding the taxable value of the school district and the
actual debt service of outstanding qualified bonds as of July 20, 2005 and shall issue an order establishing the
payment date for all those outstanding qualified loans and any additional qualified loans expected to be
incurred by those school districts related to qualified bonds issued before July 20, 2005. The payment date
shall be not later than 72 months after the date on which the qualified bonds most recently issued by the
school district are due and payable. The payment date established pursuant to this subsection for a school
district is a final mandatory repayment date.
(3) For qualified loans related to qualified bonds issued after July 20, 2005, the qualified loans shall be due
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72 months after the date on which the qualified bonds for which the school borrowed from this state are due
and payable. The due date determined pursuant to this subsection for a school district is a final mandatory
repayment date. This section does not preclude early repayment of qualified bonds or qualified loans.
(4) The state treasurer shall maintain separate accounts for each school district on the books and accounts
of this state noting the qualified bond, the related qualified loans, the final payment date of the bonds, the
final mandatory repayment date of the qualified loans, and the interest rate accrued on the loans.
(5) For qualified loans relating to qualified bonds issued after July 20, 2005, a school district shall continue
to levy the computed millage until it has completely repaid all principal and interest on its qualified loans.
(6) For qualified loans relating to qualified bonds issued before July 20, 2005, a school district shall
continue to comply with the levy and repayment requirements imposed before July 20, 2005. Not less than 90
days after July 20, 2005, the state treasurer and the school district shall enter into amended and restated
repayment agreements to incorporate the levy and repayment requirements applicable to qualified loans
issued before July 20, 2005.
(7) Upon the request of a school district made before June 1 of any year, the state treasurer annually may
waive all or a portion of the millage required to be levied by a school district to pay principal and interest on
its qualified bonds or qualified loans under this section if the state treasurer finds all of the following:
(a) The school board of the school district has applied to the state treasurer for permission to levy less than
the millage required to be levied to pay the principal and interest on its qualified bonds or qualified loans
under subsection (1).
(b) The application specifies the number of mills the school district requests permission to levy.
(c) The waiver will be financially beneficial to this state, the school district, or both.
(d) The waiver will not reduce the millage levied by the school district to pay principal and interest on
qualified bonds or qualified loans under this act to less than 7 mills.
(e) The board of the school district, by resolution, has agreed to comply with all conditions that the state
treasurer considers necessary.
(8) All qualified loans shall bear interest at 1 of the following rates:
(a) The greater of 3% or the average annual cost of funds used to make qualified loans plus 0.125%, but
not less than the cost of funds on outstanding qualified notes and bonds issued by the Michigan finance
authority to finance loans computed by the state treasurer not less often than annually.
(b) A lesser rate determined by the state treasurer to be necessary to maintain the exemption from federal
income tax of interest on any bonds or notes issued to fund qualified loans.
(c) A higher rate determined by the state treasurer to be necessary to prevent the impairment of any
contract of this state or the Michigan finance authority in existence on the effective date of the amendatory act
that added this subdivision.
(9) A payment date determined under subsection (2) or a due date determined under subsection (3) is a
final mandatory repayment date. Once established for a school district as provided in this section, a final
mandatory repayment date shall apply to all qualified loans of the school district, whenever made, until 30
days after the date the school district has no outstanding qualified loans and no outstanding debt incurred to
refund qualified loans. Notwithstanding this subsection, the state treasurer may determine a later mandatory
repayment date for a school district that agrees to levy a higher millage, acceptable to the state treasurer, not
to exceed 13 mills, than its existing computed millage.
History: 2005, Act 92, Imd. Eff. July 20, 2005;⎯Am. 2006, Act 71, Imd. Eff. Mar. 20, 2006;⎯Am. 2009, Act 50, Imd. Eff. June 18,
2009;⎯Am. 2012, Act 437, Eff. Mar. 28, 2013.
388.1930 Certificates of qualification or approval; file; delivery.
Sec. 10. The state treasurer shall keep all certificates of qualification or approval in a permanent file and
shall deliver copies of the certificates to the school district.
388.1931 Rules; bulletins.
Sec. 11. The state treasurer may promulgate rules to implement this act pursuant to the administrative
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328, and may issue bulletins as authorized by this
act.
388.1932 Failure to apply for prequalification, qualification, or approval of bond before
issuance.
Sec. 12. If a school district does not apply for prequalification or qualification or approval of a bond issue
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before the issuance of those bonds, the state treasurer shall not approve or qualify those bonds as qualified
bonds under this act.
388.1933 School district owing revolving loan fund; filing annual loan activity application
required; borrowing for debt service on qualified bonds; draw request; duties of state
treasurer upon receipt of qualified loan confirmation; notification of no need to borrow by
school district; invoice for repayment amount; remittance.
Sec. 13. (1) If a school district owes a balance due to the revolving loan fund or has been identified as a
potential borrower, the school district shall file an annual loan activity application with the state treasurer no
less than 60 days before certifying its annual tax levy. The annual loan activity application shall be submitted
in a format prescribed by the state treasurer and shall provide the taxable value, debt service, and any other
information necessary to determine the proper required millage levy required under this act. The application
shall contain a resolution passed by the local school board authorizing a designated school district official to
complete all necessary documents to obtain a loan from the revolving loan fund or for making repayment to
the revolving loan fund for the year.
(2) If a school district is eligible to borrow for debt service on qualified bonds, the school district shall file
a draw request with the state treasurer not less than 30 days before each date on which the school district owes
the debt service. The draw request shall include all of the following:
(a) A statement of the debt service owed in the next 6 months.
(b) A copy of the most recent bank statement showing the amount on hand in the debt service accounts for
all qualified bonds.
(c) A statement of any revenue received for payment of the debt service since the date of the bank
statement.
(d) A statement of any withdrawals made from the debt service account since the date of the bank
statement.
(3) Not more than 7 days before the date established by the state treasurer for making qualified loans, the
school district shall confirm in writing the final qualified loan amount to be drawn on a certificate in the form
prescribed by the state treasurer.
(4) Upon receipt of a qualified loan confirmation described in subsection (3), the state treasurer shall
determine the amount of the draw, which shall be the difference between the funds on hand in all debt service
accounts and the amount of the debt service, and shall make a qualified loan in that amount to the school
district no later than 6 days before the date the debt service is due.
(5) When a school district's current computed millage levy is sufficient to pay principal and interest on its
qualified bonds, a school district shall notify the state treasurer in writing of no need to borrow no later than
30 days before the date set for payment of the qualified bonds.
(6) Within 30 days after receipt of the annual activity application under subsection (1), the state treasurer
shall send an invoice to the school district for the amount of repayment the school district owes on its
outstanding qualified loans, which shall be the difference between the debt service payable or paid to
bondholders and the funds on hand at the school district, less a reasonable amount of funds on hand, as
determined by the state treasurer, to cover minimum balance requirements or potential tax disputes. The
school district shall remit the amount specified in the invoice within 30 days after the dated date of the
invoice.
388.1934 Failure of school district to pay principal and interest due on qualified bonds;
notice; payment by state treasurer; billing of school district for amount paid; remittance.
Sec. 14. (1) If any paying agent for a school district’s qualified bonds notifies the state treasurer that the
school district has failed to deposit sufficient funds to pay principal and interest due on the qualified bonds
when due, or if a bondholder notifies the state treasurer that the school district has failed to pay principal or
interest on qualified bonds when due, whether or not the school district has filed a draw request with the state
treasurer, the state treasurer shall promptly pay the principal or interest on the qualified bond when due.
(2) If the state treasurer pays any amount described in this section, the state treasurer shall bill the school
district for the amount paid and the school district shall immediately remit the amount to the state treasurer. If
the school district would have been eligible to borrow the debt service in accordance with the terms of this
act, the school district shall enter into a loan agreement establishing the terms of the qualified loan as
provided in this act. If the state treasurer directs the Michigan municipal bond authority to pay any amount
described in this section, the state treasurer shall cause the Michigan municipal bond authority to bill the
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school district for the amount paid and the school district shall immediately remit the amount to the Michigan
municipal bond authority.
388.1935 Default; repayment.
Sec. 15. (1) If a school district that owes this state loan repayments relating to qualified bonds fails to levy
at least the computed millage upon its taxable value for debt retirement purposes for qualified bonds and for
repayment of a qualified loan made under this act while any part of the qualified loan is unpaid or defaults in
its agreement to repay a qualified loan or any installment of a qualified loan, the school district shall increase
its debt levy in the next succeeding year to obtain the amount necessary to repay this state the amount of the
default plus a late charge of 3% and shall pay that amount to this state together with any other amounts owed
during the next tax year. The school district may use other funds to repay this state including a transfer of
general funds of the school district, if approved by the state treasurer. The state treasurer shall not disburse
state school aid to the school district until the school district has made satisfactory arrangements with the state
treasurer for the payment of the amount in default.
(2) If a school district fails to process any report, application, confirmation, or repayment as required under
this act, the state treasurer may withhold a school district's state aid funds until the school district complies
with the requirements under this act.
388.1936 Charging and disposition of fees.
Sec. 16. (1) The state treasurer may charge a prequalification application fee, a qualification application
fee, and an annual loan activity fee in the amounts determined by the state treasurer to be required to pay the
estimated administrative expenses incurred under this act for the fiscal year in which the state treasurer
imposes the fee.
(2) The state treasurer shall deposit all fees collected under this act into a separate fund established within
the state treasury, and shall use the proceeds of the fees solely for the purpose of administering and enforcing
this act. The unexpended and unobligated balance of this fund at the end of each state fiscal year shall be
carried forward over to the succeeding state fiscal year and shall not lapse to the general fund but shall be
available for reappropriation for the next state fiscal year.
388.1937 False statement or unauthorized use of proceeds; violation as felony; penalty.
Sec. 17. A person who knowingly makes a false statement or conceals material information for the purpose
of obtaining qualification of a bond issue under this act or for the purpose of obtaining a qualified loan under
this act, or who knowingly uses all or part of the proceeds of a qualified loan obtained under this act for any
purpose not authorized by this act, is guilty of a felony punishable by imprisonment for not more than 4 years
or a fine of not more than $5,000.00, or both.
388.1938 Use of remaining proceeds.
Sec. 18. If a school district has completed the projects approved by the school electors of the school district
to be funded from proceeds of qualified bonds, a school district may use any remaining proceeds of the
qualified bonds as follows:
(a) To pay debt service on the qualified bonds.
(b) To repay this state.
(c) If in the opinion of the school district's bond counsel use of the remaining proceeds for the purposes
described in subdivisions (a) and (b) would adversely affect the federal tax treatment of interest on the
qualified bonds, to pay for enhancements to the projects approved by the school electors as described in the
ballot language proposing the qualified bonds.
388.1939 Actions by designee.
Sec. 19. The state treasurer may designate in writing a person or persons to take any actions required to be
taken by the state treasurer under this act. The signature of any designee shall have the same force and effect
as the signature of the state treasurer for all purposes of this act.
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OPINION #4422 OF THE ATTORNEY GENERAL, STATE OF MICHIGAN
DATED MARCH 12, 1965
CONSTITUTIONAL LAW:
SCHOOL BONDS:
MUNICIPAL FINANCE COMMISSION:
Article 9, § 16, Michigan Constitution of 1963, requires school districts to borrow and State to lend sufficient sum to
cover debt service payments on qualified bonds of school districts. Although this is not a pledge of full faith and credit of the
State, the Municipal Finance Commission may and must enforce the duty of the district to borrow and the State to lend such sum.
No. 4422
March 12, 1965.
Hon. Sanford A. Brown
State Treasurer
Lansing, Michigan
You have asked in your letter of February 5 whether Article IX, § 16 of the Michigan Constitution of 1963 pledges the
full faith and credit of the State to the payment of principal and interest of qualified school bonds.
Article IX, § 16 of the Michigan Constitution of 1963 provides in pertinent part as follows:
"The state * * * may borrow from time to time such amounts as shall be required,
pledge its faith and credit and issue its notes or bonds therefor, for the purpose of making
loans to school districts as provided in this section.
"If the minimum amount which would otherwise be necessary for a school district
to levy in any year to pay principal and interest on its qualified bonds, including any
necessary allowances for estimated tax delinquencies, exceeds 13 mills on each dollar of
its assessed valuation as finally equalized, or such lower millage as the legislature may
prescribe, then the school district may elect to borrow all or any part of the excess from
the state. In that event the state shall lend the excess amount to the school district for
payment of principal and interest. If for any reason any school district will be or is
unable to pay the principal and interest on its qualified bonds when due, then the school
district shall borrow and the state shall lend to it an amount sufficient to enable the
school district to make the payment.
"The term 'qualified bonds' means general obligation bonds of school districts
issued for capital expenditures, including refunding bonds, issued prior to May 4, 1955,
or issued thereafter and qualified as provided by law pursuant to Section 27 or Section 28
of Article X of the Constitution of 1908 or pursuant to this section."
Thus, the school district is required to borrow and the State to lend an amount sufficient to enable the school district to
make payments of principal and interest due on qualified bonds, and the state is empowered to borrow and to issue its notes or
bonds for the purpose of making such loans, and to pledge its full faith and credit for such state bonds or notes.
The constitutional provision quoted does not pledge the full faith and credit of the state to all qualified bonds. The
state is not primarily liable on qualified bonds of a school district. Rather, the state is required to lend whatever the school
district needs, from time to time, to meet debt service requirements on such bonds.
You ask what remedies are available to enforce the obligation of the state.
The quoted language makes it mandatory upon the school district to borrow and upon the state to lend "an amount
necessary to enable the school district to make the payment." Under Chapter II, Section 2(f) of the Municipal Finance Act [C.L.
1948 § 132.2; M.S.A. 1958 Rev. Vol. § 5.3188(4)f], the Municipal Finance Commission has power to enforce compliance with
any law by, inter alia, the "institution of appropriate proceedings in the courts of the state, including those for writs of mandamus
and injunction."
The Commission could and indeed must enforce the duty of the district to borrow and the state to lend. The
bondholders also would have an action to enforce the duty of the district to borrow and of the state to lend.
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Thus the bondholders are assured of the availability of state funds where needed to meet debt service requirements on
qualified bonds. This is not a pledge of full faith and credit, but gives the bondholders as much or more protection as would such
a pledge.
FRANK J. KELLEY,
Attorney General
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OPINION #4508 OF THE ATTORNEY GENERAL, STATE OF MICHIGAN
DATED AUGUST 29, 1966
BONDS: Qualified bonds of school districts.
CONSTITUTION OF 1963: School Bond Loan Fund.
SCHOOLS: Bond Loans.
STATE TREASURER: Payment of principal and interest on qualified school district bonds.
Authority of State Treasurer and procedures to be followed in paying from the School Bond Loan Fund principal and
interest on qualified school bonds upon presentment by a bondholder.
No. 4508
Hon. Allison Green
State Treasurer
Capitol Building
Lansing, Michigan
August 29, 1966.
You have requested my opinion on what procedures should be followed by the state treasurer preparatory to making
loans to local school districts which are unable to make payments on principal and interest of qualified school district bonds.1
Loans to bonded school districts are authorized by Article IX, Section 16, Constitution of 1963, which in part contains
pertinent language:
"If the minimum amount which would otherwise be necessary for a school district
to levy in any year to pay principal and interest on its qualified bonds, including any
necessary allowances for estimated tax delinquencies, exceeds 13 mills on each dollar of
its assessed valuation as finally equalized, or such lower millage as the legislature may
prescribe, then the school district may elect to borrow all or any part of the excess from
the state. In that event the state shall lend the excess amount to the school district for the
payment of principal and interest. If for any reason any school district will be or is
unable to pay the principal and interest on its qualified bonds when due, then the school
district shall borrow and the state shall lend to it an amount sufficient to enable the
school district to make the payment.
"The term 'qualified bonds' means general obligation bonds of school districts
issued for capital expenditures, including refunding bonds, issued prior to May 4, 1955,
or issued thereafter and qualified as provided by law pursuant to Section 27 or Section 28
of Article X of the Constitution of 1908 or pursuant to this section."
Article IX, Section 16, Constitution of 1963, is a continuation with minor revisions of the provisions relating to school bond
financing which appeared in Sections 27 and 28 of Article X, Constitution of 1908. Section 27, Article X, Constitution of 1908,
was proposed by joint resolution of the legislature in 1955 and approved by the people at the regular election of April 4, 1955.
The loan provisions of Section 27 ceased to have effectiveness after July 1, 1962, and were replaced by the provisions of Section
28, Article X, Constitution of 1908, which was proposed by joint resolution of the legislature in 1960 and approved by the
people at the general election of November 8, 1960. Section 28 by its own terms took effect on July 1, 1962.
Section 28, Article X, Constitution of 1908, was implemented by the legislature by the enactment of Act 108, P.A.
1961, which took effect September 8, 1961. The first section of Act 108, P.A. 1961, stated that the purpose of the act was to
implement Section 28 of Article X of the Constitution of 1908. The Constitution of 1963 took effect on January 1, 1964. In
anticipation of the effectiveness of that Constitution, the legislature passed Act 33, P.A. 1963, Second Extra Session, such act to
take effect on January 1, 1964. Act 33, P.A. 1963, Second Extra Session, amended Sections 1, 3, 8 and 9 of Act 108, P.A. 1961,
and further amended section 7 of Act 108, P.A. 1961, as amended by Act 131, P.A. 1962. The first section of amendatory Act 33
stated that the act's purpose was to implement Section 16 of Article IX of the Constitution of 1963. Subsequent amendment has
been made to Sections 2, 4, 6, 9 and 10 of Act 108, P.A. 1961, by Act 169, P.A. 1964, which act also added a new Section 4a.2.
1
In your letter of request you stated that you were familiar with Opinion No. 4422 issued by me on March 12, 1965, in which it was ruled that
Article IX, Section 16, Constitution of 1963, requires school districts to borrow and the state to lend sufficient sums to cover debt service
payments on qualified bonds of school districts but that this requirement is not a pledge of the full faith and credit of the state; the Municipal
Finance Commission however may and must enforce the duty of the school district to borrow and have the state to lend the necessary amounts.
2
Act 108, P.A. 1961, in its present amended form appears in M.S.A. 1965 Cum. Supp. § S 3.424(111) et seq.
C-11
Answer to your question is to be found in amended Sections 6, 7 and 8 of the act. These sections present two
situations in which you may become involved as state treasurer. The first situation is where a loan is to be made to the school
district to permit the district to meet the principal and interest requirements on its bonds without a default in payment; the second
is where the principal or interest on the bonds has not been paid when due upon proper presentation because of inadequate funds
resulting in a default in payment.
Under amended Section 6 of the act, in any school district where the amount necessary to be levied in any year for
principal and interest on qualified bonds exceeds 7 mills on each dollar of the assessed valuation of the school district as last
equalized by the state, such school district on or before 60 days prior to the time of certification of its tax levy to the assessing
officer shall file with the superintendent of public instruction3 a preliminary application for a loan from the state in the amount of
any part of such excess over 7 mills which the school district does not propose to levy in such year.4 Amended Section 6
specifies the information to be supplied in the application. The superintendent of public instruction if he finds the application in
proper form shall approve or deny the application in whole or in part and notify the school district of his action. Amended
Section 7 of the act provides that if a loan from the state shall become necessary for the payment of principal and interest on
qualified bonds in accordance with an approved preliminary application to the superintendent of public instruction or by virtue of
a supplemental application, it shall be the duty of the superintendent of public instruction after audit to forward to the state
treasurer a statement setting forth the amount to be loaned to the school district for the payment of principal and interest and the
date on or before which loan shall be made.5 The superintendent shall prepare a voucher as a basis for the issuance of a warrant
and upon receipt of such statement and warrant, it shall be the duty of the state treasurer to loan to the school district from the
school bond loan fund the amount set forth in the statement of the superintendent of public instruction on or before the date
specified therein. The state treasurer upon making such loan shall obtain from the school district a receipt for the amount so
loaned which receipt shall specify the terms of repayment in accordance with the provisions of Section 16 of Article IX,
Constitution of 1963 and the act. The school district treasurer upon receipt of the loan is required to deposit the same in the debt
retirement fund to be used solely for the payment of principal and interest on qualified bonds.
The foregoing summaries of the procedures prescribed by amended Section 6 and 7 relate to the first situation abovedescribed where the loan to the school district is to be made before the school district has defaulted in the payment of the
principal or interest on its bonds.
The second situation described above is covered by amended Section 8 of the act which prescribes that in the event the
principal or interest on any qualified bond is not paid when due, upon proper presentation of the bond or interest coupon to the
agent or officer charged with making payment thereof, the state treasurer shall forthwith pay such principal or interest upon
presentation of the bond or coupon to him. Any amount so paid by the state treasurer shall be deemed a loan to the school
district made pursuant to the requirements of Section 16, Article IX, Constitution of 1963, and the act and the school district shall
give a receipt therefor and repay the loan in the manner provided in the act for the repayment of loans.
The method of processing loans to school districts under amended Sections 6 and 7 before default in payment of
principal or interest is adequately spelled out in those sections and no additional comment from me is necessary. Your real
concern is in regard to the applicable procedures which you should follow in the situation where the school district has defaulted
in the payment of principal or interest on its bonds and the bond or bonds and the interest coupons have not been paid when due
by the paying agent because of lack of funds. In the event of such a happening it is assumed for the purposes of this opinion that
the holder of the bond or of the interest coupon will make demand on you as state treasurer for the prompt payment of the
obligation thereunder. Should such demand be made on you as state treasurer, you would be entitled to take the following action
before making payment:
a. Ascertaining from the superintendent of public instruction or from the records in your own office that the
bonds involved are duly qualified bonds as defined and described in amended Section 3 of the act;
b. Requiring proof reasonably satisfactory to you that the bond or bonds or the interest coupons have been
properly presented for payment to the paying agent or officer charged with the responsibility for making payment
thereof and that payment has been refused because sufficient monies had not been deposited by the school district for
that purpose; such proof of nonpayment may be furnished you in the form of a certificate from the paying agent.
3
Article VIII, Section 3, Constitution of 1963 requires the state board of education to appoint a superintendent of public instruction who shall be
the principal executive officer of the department of education and who shall have powers and duties provided by law. Section 14 of Act 287, P.A.
1964 (M.S.A. 1965 Cum. Supp. § 15.1023(14)) specifies that after June 30, 1965, a reference in any law to the powers and duties of the
superintendent of public instruction shall be deemed to be made to the state board of education, subject to exceptions not pertinent here, and that
the state board of education may delegate any of its functions to the superintendent. Section 300 of Act 380, P.A. 1965, creates a department of
education. Section 301 of that act provides that the head of the department of education is the state board of education. Section 303 of that act
transfers by a Type III transfer all powers, duties and functions then vested by law in the superintendent of public instruction to the department of
education. Section 305 of the act specifies that the principal executive officer of the department of education is the superintendent of public
instruction. Act 380 appears in M.S.A. 1965 Cum. Supp. at § 3.29(1) et seq. Act 380, P.A. 1965, was amended without regard to the sections
involved here by Act 407, P.A. 1965. Without doubt, under the foregoing provisions the state board of education could delegate to the
superintendent of public instruction the performance of all of the functions and duties imposed on the board in connection with the School Bond
Loan Fund.
4
Other details set forth in amended Section 6 have been omitted.
5
Other details set forth in amended Section 7 have been omitted.
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c. Notification to the school district given by you or your designee of the action taken by paying agent in
refusing payment of the bonds or interest coupons on presentment because of the failure of the school district to have
deposited funds with the paying agent for that purpose and verification from the school district of the fact of such
failure to supply the required funds; notification to the school district by you or your designee that payment of the
required amounts were to be made from the school bond loan fund by you as state treasurer and that such payment
would be in the form of a loan to the school district which the school district would be required to be repay to the
school bond loan fund in the manner required by law; the school district will be required to furnish you as state
treasurer with a receipt evidencing the loan and specifying the terms of repayment, as required by law.
Upon the fulfillment of the above conditions in a manner reasonably acceptable to you, you would be authorized to
make payment of the amounts due on the bonds and interest coupons and thereupon to demand their surrender and delivery to
you as state treasurer.
Because of the safeguards built into the Michigan Constitution and statutes there should be no default of Michigan
qualified school bonds. The School Loan Fund Program will have afforded the school district access to loan funds prior to the
due date of the principle [sic] and interest on such bonds. In order to advise of the procedures in the remote possibility of
nonpayment, however, I have set forth the foregoing guide lines [sic].
FRANK J. KELLEY,
Attorney General
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APPENDIX D - FORM OF CONTINUING DISCLOSURE AGREEMENT
FORM OF
CONTINUING DISCLOSURE AGREEMENT
$___________
COUNTY OF GENESEE
STATE OF MICHIGAN
2015 REFUNDING BONDS
(GENERAL OBLIGATION - UNLIMITED TAX)
This Continuing Disclosure Agreement (the "Agreement") is executed and delivered by
Bendle Public Schools, County of Genesee, State of Michigan (the "Issuer"), in connection with
the issuance of $__________ 2015 Refunding Bonds (General Obligation - Unlimited Tax) (the
"Bonds"). The Bonds are being issued pursuant to resolutions adopted by the Board of
Education of the Issuer on June 8, 2015 and _________________, 2015 (together, the
"Resolution"). The Issuer covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Agreement. This Agreement is being executed
and delivered by the Issuer for the benefit of the Bondholders and in order to assist the
Participating Underwriters in complying with the Rule. The Issuer acknowledges that this
Agreement does not address the scope of any application of Rule 10b-5 promulgated by the SEC
pursuant to the 1934 Act to the Annual Reports or notices of the Listed Events provided or
required to be provided by the Issuer pursuant to this Agreement.
SECTION 2. Definitions. In addition to the definitions set forth in the Resolution, which
apply to any capitalized term used in this Agreement unless otherwise defined in this Section, the
following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and
as described in, Sections 3 and 4 of this Agreement.
"Bondholder" means the registered owner of a Bond or any person which (a) has the
power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of,
any Bonds (including any person holding Bonds through nominees, depositories or other
intermediaries), or (b) is treated as the owner of any Bond for federal income tax purposes.
"Dissemination Agent" means any agent designated as such in writing by the Issuer and
which has filed with the Issuer a written acceptance of such designation, and such agent's
successors and assigns.
"EMMA" shall mean the MSRB's Electronic Municipal Market Access which provides
continuing disclosure services for the receipt and public availability of continuing disclosure
documents and related information required by Rule 15c2-12 promulgated by the SEC.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Agreement.
"MSRB" shall mean the Municipal Securities Rulemaking Board.
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"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Official Statement" shall mean the final Official Statement for the Bonds dated
__________, 2015.
"Participating Underwriter" shall mean any of the original underwriters of the Bonds
required to comply with the Rule in connection with the offering of the Bonds.
"Resolution" shall mean the resolutions duly adopted by the Issuer authorizing the
issuance, sale and delivery of the Bonds.
"Rule" shall mean Rule 15c2-12 promulgated by the SEC pursuant to the 1934 Act, as the
same may be amended from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"State" shall mean the State of Michigan.
"State Repository" shall mean any public or private repository or entity designated by the
State as a state repository for the purpose of the Rule and recognized as such by the SEC.
Currently, the following is the State Repository:
Municipal Advisory Council of Michigan
Buhl Building
535 Griswold, Suite 1850
Detroit, Michigan 48226
Tel: (313) 963-0420
Fax: (313) 963-0943
E-Mail: [email protected]
SECTION 3. Provision of Annual Reports.
(a)
Each year, the Issuer shall provide, or shall cause the Dissemination Agent to
provide, on or prior to the 180th day after the end of the fiscal year of the Issuer commencing
with the fiscal year ending June 30, 20___, to EMMA and the State Repository an Annual Report
for the preceding fiscal year which is consistent with the requirements of Section 4 of this
Agreement. Currently, the Issuer's fiscal year ends on June 30. In each case, the Annual Report
may be submitted as a single document or as separate documents comprising a package, and may
include by specific reference other information as provided in Section 4 of this Agreement;
provided, however, that if the audited financial statements of the Issuer are not available by the
deadline for filing the Annual Report, they shall be provided when and if available, and
unaudited financial statements in a format similar to the financial statements contained in the
Official Statement shall be included in the Annual Report.
(b)
The Annual Report shall be submitted to EMMA either through a web-based
electronic submission interface or through electronic computer-to-computer data connections
with EMMA in accordance with the submission process, document format and configuration
requirements established by the MSRB. The Annual Report shall also include all related
information required by MSRB to accurately identify: (i) the category of information being
D-2
provided; (ii) the period covered by the Annual Report; (iii) the issues or specific securities to
which the Annual Report is related (including CUSIP number, Issuer name, state, issue
description/securities name, dated date, maturity date, and/or coupon rate); (iv) the name of any
obligated person other than the Issuer; (v) the name and date of the document; and (vi) contact
information for the Dissemination Agent or the Issuer's submitter.
(c)
If the Issuer is unable to provide to EMMA an Annual Report by the date required
in subsection (a), the Issuer shall send a notice in a timely manner to the MSRB and to the State
Repository in substantially the form attached as Appendix A.
(d)
If the Issuer's fiscal year changes, the Issuer shall send a notice of such change to
the MSRB and to the State Repository in substantially the form attached as Appendix B. If such
change will result in the Issuer's fiscal year ending on a date later than the ending date prior to
such change, the Issuer shall provide notice of such change to the MSRB and to the State
Repository on or prior to the deadline for filing the Annual Report in effect when the Issuer
operated under its prior fiscal year. Such notice may be provided to the MSRB and to the State
Repository along with the Annual Report, provided that it is filed at or prior to the deadline
described above.
SECTION 4. Content of Annual Reports. The Issuer's Annual Report shall contain or
include by reference the following:
(a)
audited financial statements of the Issuer prepared pursuant to State laws,
administrative rules and guidelines and pursuant to accounting and reporting policies conforming
in all material respects to generally accepted accounting principles as applicable to governmental
units as such principles are prescribed, in part, by the Financial Accounting Standards Board and
modified by the Government Accounting Standards Board and in effect from time to time; and
(b)
additional annual financial information and operating data as set forth in the
Official Statement under "CONTINUING DISCLOSURE".
Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the Issuer or related public entities,
which previously have been provided to each of the Repositories or filed with the SEC. If the
document included by specific reference is a final official statement, it must be available from
the MSRB. The Issuer shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a)
The Issuer covenants to provide, or cause to be provided, notice in a timely
manner not in excess of ten business days of the occurrence of any of the following events with
respect to the Bonds in accordance with the Rule:
(1)
(2)
(3)
(4)
principal and interest payment delinquencies;
non-payment related defaults, if material;
unscheduled draws on debt service reserves reflecting financial
difficulties;
unscheduled draws on credit enhancements reflecting financial
difficulties;
D-3
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
substitution of credit or liquidity providers, or their failure to
perform;
adverse tax opinions, the issuance by the Internal Revenue Service
of proposed or final determinations of taxability, Notices of
Proposed Issue (IRS Form 5701-TEB) or other material notices or
determinations with respect to the tax status of the security, or
other material events affecting the tax status of the security;
modifications to rights of security holders, if material;
bond calls, if material, and tender offers;
defeasances;
release, substitution, or sale of property securing repayment of the
securities, if material;
rating changes;
bankruptcy, insolvency, receivership or similar event of the
obligated person;
the consummation of a merger, consolidation, or acquisition
involving an obligated person or the sale of all or substantially all
of the assets of the obligated person, other than in the ordinary
course of business, the entry into a definitive agreement to
undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its
terms, if material;
appointment of a successor or additional trustee or the change of
name of a trustee, if material.
(b)
Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, the
Issuer shall as soon as possible determine if such event would constitute material information for
the Bondholders, provided, that any event other than those listed under Section 5(a)(1), (3), (4),
(5), (9), (11) (only with respect to any change in any rating on the Bonds) or (12) above will
always be deemed to be material. Events listed under Section 5(a)(6) and (8) above will always
be deemed to be material except with respect to that portion of those events which must be
determined to be material.
(c)
The Issuer shall promptly cause a notice of the occurrence of a Listed Event,
determined to be material in accordance with the Rule, to be electronically filed with EMMA and
with the State Repository together with a significant event notice cover sheet substantially in the
form attached as Appendix C. In connection with providing a notice of the occurrence of a
Listed Event described in Section 5(a)(9) above, the Issuer shall include in the notice explicit
disclosure as to whether the Bonds have been escrowed to maturity or escrowed to call, as well
as appropriate disclosure of the timing of maturity or call.
(d)
The Issuer acknowledges that the "rating changes" referred to above in Section
5(a)(11) of this Agreement may include, without limitation, any change in any rating on the
Bonds or other indebtedness for which the Issuer is liable, or on any indebtedness for which the
State is liable.
D-4
(e)
The Issuer acknowledges that it is not required to provide a notice of a Listed
Event with respect to credit enhancement when the credit enhancement is added after the primary
offering of the Bonds, the Issuer does not apply for or participate in obtaining such credit
enhancement, and such credit enhancement is not described in the Official Statement.
SECTION 6. Termination of Reporting Obligation.
(a)
The Issuer's obligations under this Agreement shall terminate upon the legal
defeasance of the Resolution or the prior redemption or payment in full of all of the Bonds.
(b)
This Agreement, or any provision hereof, shall be null and void in the event that
the Issuer (i) receives an opinion of nationally recognized bond counsel, addressed to the Issuer,
to the effect that those portions of the Rule, which require such provisions of this Agreement, do
not or no longer apply to the Bonds, whether because such portions of the Rule are invalid, have
been repealed, amended or modified, or are otherwise deemed to be inapplicable to the Bonds, as
shall be specified in such opinion, and (ii) delivers notice to such effect to the MSRB, and to the
State Repository, if any.
SECTION 7. Dissemination Agent. The Issuer, from time to time, may appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Agreement,
and may discharge any such Dissemination Agent, with or without appointing a successor
Dissemination Agent.
SECTION 8. Amendment. Notwithstanding any other provision of this Agreement, this
Agreement may be amended, and any provision of this Agreement may be waived to the effect
that:
(a)
such amendment or waiver is made in connection with a change in circumstances
that arises from a change in legal requirements, a change in law or a change in the identity,
nature or status of the Issuer, or the types of business in which the Issuer is engaged;
(b)
this Agreement as so amended or taking into account such waiver, would have
complied with the requirements of the Rule at the time of the primary offering of the Bonds, after
taking into account any amendments or interpretations of the Rule, as well as any change in
circumstances, in the opinion of independent legal counsel; and
(c)
such amendment or waiver does not materially impair the interests of the
Bondholders, in the opinion of independent legal counsel.
If the amendment or waiver results in a change to the annual financial information
required to be included in the Annual Report pursuant to Section 4 of this Agreement, the first
Annual Report that contains the amended operating data or financial information shall explain, in
narrative form, the reasons for the amendment and the impact of such change in the type of
operating data or financial information being provided. If the amendment or waiver involves a
change in the accounting principles to be followed in preparing financial statements, the Annual
Report for the year in which the change is made shall present a comparison between the financial
statements or information prepared based on the new accounting principles and those prepared
based on the former accounting principles. The comparison should include a qualitative
discussion of such differences and the impact of the changes on the presentation of the financial
D-5
information. To the extent reasonably feasible, the comparison should also be quantitative. A
notice of the change in the accounting principles should be sent by the Issuer to the MSRB and to
the State Repository. Further, if the annual financial information required to be provided in the
Annual Report can no longer be generated because the operations to which it related have been
materially changed or discontinued, a statement to that effect shall be included in the first Annual
Report that does not include such information.
SECTION 9. Additional Information. Nothing in this Agreement shall be deemed to
prevent the Issuer from disseminating any other information, using the means of dissemination
set forth in this Agreement or any other means of communication, or including any other
information in any Annual Report or notice of occurrence of a Listed Event, in addition to that
which is required by this Agreement. If the Issuer chooses to include any information in any
Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically
required by this Agreement, the Issuer shall have no obligation under this Agreement to update
such information or include it in any future Annual Report or notice of occurrence of a Listed
Event.
SECTION 10. Default. In the event of a failure of the Issuer to comply with any
provision of this Agreement, any Bondholder may take such actions as may be necessary and
appropriate, including seeking mandamus or specific performance by court order, to cause the
Issuer to comply with its obligations under this Agreement. A default under this Agreement
shall not be deemed an Event of Default under the Resolution or the Bonds, and the sole remedy
under this Agreement in the event of any failure of the Issuer to comply with the Agreement
shall be an action to compel performance.
SECTION 11. Duties of Dissemination Agent. The Dissemination Agent shall have only
such duties as are specifically set forth in this Agreement.
SECTION 12. Beneficiaries. This Agreement shall inure solely to the benefit of the
Issuer, the Dissemination Agent, the Participating Underwriters, and the Bondholders and shall
create no rights in any other person or entity.
SECTION 13. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State, and any suits and actions arising out of this Agreement
shall be instituted in a court of competent jurisdiction in the State. Notwithstanding the
foregoing, to the extent this Agreement addresses matters of federal securities laws, including the
Rule, this Agreement shall be construed and interpreted in accordance with such federal
securities laws and official interpretations thereof.
COUNTY OF GENESEE
STATE OF MICHIGAN
By: _________________________________
Its: Superintendent
Dated:
, 2015
D-6
APPENDIX A
NOTICE TO THE MSRB AND TO THE STATE REPOSITORY
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer:
Bendle Public Schools, Genesee County, Michigan
Name of Bond Issue: 2015 Refunding Bonds (General Obligation - Unlimited Tax)
Date of Bonds:
, 2015
NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with
respect to the above-named Bonds as required by Section 3 of its Continuing Disclosure
Agreement with respect to the Bonds. The Issuer anticipates that the Annual Report will be filed
by _____________.
COUNTY OF GENESEE
STATE OF MICHIGAN
By: _________________________________
Its: Superintendent
Dated: _______________________
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APPENDIX B
NOTICE TO THE MSRB AND THE STATE REPOSITORY
OF CHANGE IN ISSUER'S FISCAL YEAR
Name of Issuer:
Bendle Public Schools, Genesee County, Michigan
Name of Bond Issue: 2015 Refunding Bonds (General Obligation - Unlimited Tax)
Date of Bonds:
, 2015
NOTICE IS HEREBY GIVEN that the Issuer's fiscal year has changed. Previously, the
Issuer's fiscal year ended on ______________. It now ends on _________________.
COUNTY OF GENESEE
STATE OF MICHIGAN
By: _________________________________
Its: Superintendent
Dated:
D-8
APPENDIX C
SIGNIFICANT EVENT NOTICE COVER SHEET
This cover sheet and significant event notice should be provided in an electronic format to the Municipal Securities
Rulemaking Board and the State Repository pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C)
and (D).
Issuer's and/or other Obligated Person's Name:
Issuer's Six-Digit CUSIP Number(s):
or Nine-Digit CUSIP Number(s) to which this significant event notice relates:
Number of pages of attached significant event notice:
Description of Significant Events Notice (Check One):
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Principal and interest payment delinquencies
Non-payment related defaults
Unscheduled draws on debt service reserves reflecting financial difficulties
Unscheduled draws on credit enhancements reflecting financial difficulties
Substitution of credit or liquidity providers, or their failure to perform
Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material
notices or determinations with respect to the tax status of the security, or other material events
affecting the tax status of the security
Modifications to rights of security holders
Bond calls
Tender offers
Defeasances
Release, substitution, or sale of property securing repayment of the securities
Rating changes
Bankruptcy, insolvency, receivership or similar event of the obligated person
The consummation of a merger, consolidation, or acquisition involving an obligated person or the
sale of all or substantially all of the assets of the obligated person, other than in the ordinary course
of business, the entry into a definitive agreement to undertake such an action or the termination of
a definitive agreement relating to any such actions, other than pursuant to its terms
Appointment of a successor or additional trustee or the change of name of a trustee
Other significant event notice (specify)
I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly:
Signature:
Name:
Title:
Employer:
Address:
City, State, Zip Code:
Voice Telephone Number: (
)
The MSRB Gateway is www.msrb.org or through the EMMA portal at emma.msrb.org/submission/
Submission_Portal.aspx. Contact the MSRB at (703) 797-6600 with questions regarding this form or the
dissemination of this notice. The cover sheet and notice may also be faxed to the MAC at (313) 963-0943.
D-9
APPENDIX E - DRAFT LEGAL OPINION
39555 Orchard Hill Place, Suite 600
NOVI, MI 48375-5381
PHONE: (248) 449-2950
FAX: (248) 449-2953
MICHAEL B. FARRELL
ROY H. HENLEY
KIRK C. HERALD
DAVID M. REVORE
KATHERINE WOLF BROADDUS
GORDON W. VAN WIEREN, JR.
ROBERT G. HUBER
MARGARET M. HACKETT
JENNIFER K. JOHNSTON
TIMOTHY T. GARDNER, JR.
BEVERLY J. BONNING
MICHAEL D. GRESENS
MATTHEW F. HISER
RYAN J. NICHOLSON
MARTHA J. MARCERO
CHRISTOPHER J. IAMARINO
KARI S. COSTANZA
BRANDON C. WALKER
LISA L. SWEM
RAYMOND M. DAVIS
ROBERT A. DIETZEL
FREDRIC G. HEIDEMANN
KEVIN S. HARTY (OF COUNSEL)
JEFFREY J. SOLES
MICHELE R. EADDY
ERIC D. DELAPORTE
DANIEL R. MARTIN
ROBERT J. ROBINSON (OF COUNSEL)
DRAFT LEGAL OPINION
County of Genesee
State of Michigan
We have acted as legal counsel in connection with the issuance by Bendle Public Schools,
County of Genesee, State of Michigan (the "Issuer"), of bonds in the aggregate principal amount of
$_____________ designated 2015 Refunding Bonds (General Obligation - Unlimited Tax) (the
"Bonds").
The Bonds are in fully registered form and issued without coupons.
The Bonds are dated ______________, 2015, are subject to redemption prior to maturity at
the option of the Issuer in the manner and at the times as set forth in the Bonds, are of $5,000
denomination or any integral multiple thereof, mature serially on May 1 of each year, and bear
interest payable on May 1, 2016, and semiannually thereafter on November 1 and May 1 of each year
in the amounts and rates as follows:
Year
Amount
Rate
Year
Amount
Rate
The Bonds maturing on May 1, ________, are term Bonds subject to mandatory redemption
in part, by lot, on the redemption dates and at the redemption price equal to the principal amount
thereof as provided in the Bonds.
We have examined the documents which we deem authentic and pertinent to the validity of
the Bonds, including the certified record evidencing the authorization of the Bonds by the board of
education of the Issuer, a copy of the approval of the Department of Treasury of the State of
Michigan to issue the Bonds, a signed copy of the certificate of the Treasurer of the State of
Michigan qualifying the Bonds for purposes of Article IX, Section 16, of the Michigan Constitution,
and a specimen of the Bond certificates.
Based upon the foregoing, we are of the opinion that under existing law:
(1)
the Bonds have been lawfully authorized and issued and are enforceable obligations
of the Issuer in accordance with their terms;
(2)
the Bonds are the general obligation of the Issuer for which its full faith, credit and
resources have been irrevocably pledged;
E-1
East Lansing • Novi • West Michigan
County of Genesee
State of Michigan
________________, 2015
Page 2
(3)
the Issuer has the power, and is obligated, to levy taxes on all taxable property now
situated within the corporate boundaries of the Issuer, without limitation as to rate or amount,
sufficient to pay the principal of and interest on the Bonds;
(4)
the Bonds have been fully qualified pursuant to Act 92, Public Acts of Michigan,
2005, as amended, enacted pursuant to Article IX, Section 16, of the Michigan Constitution of 1963.
Under the terms of said constitutional and statutory provisions, if for any reason the Issuer will be or
is unable to pay the principal and interest on the Bonds when due, then the Issuer shall borrow, and
the State of Michigan shall lend to it, an amount sufficient to enable the Issuer to make the payment;
(5)
the Bonds and the interest thereon are exempt from all taxation in the State of
Michigan, except inheritance and estate taxes and taxes on gains realized from the sale, payment or
other disposition thereof; and
(6)
the interest on the Bonds is excluded from gross income for federal income tax
purposes and is not an item of tax preference for purposes of the federal alternative minimum tax
imposed on individuals and corporations; it should be noted, however, that certain corporations must
take into account interest on the Bonds in determining adjusted net current earnings for the purpose
of computing the alternative minimum tax imposed on such corporations. The opinions set forth in
the preceding sentence are subject to the condition that the Issuer comply with all requirements of the
Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the
Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal
income tax purposes. The Issuer has covenanted to comply with such requirements. Failure to
comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross
income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We
express no opinion regarding other federal tax consequences arising with respect to the Bonds.
The rights of the owners of the Bonds and the enforceability thereof may be subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights
heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement of
such rights may also be subject to the exercise of judicial discretion in appropriate cases.
THRUN LAW FIRM, P.C.
TLF/MFH
E-2
APPENDIX F - DRAFT OFFICIAL NOTICE OF SALE
OFFICIAL NOTICE OF SALE
$12,750,000
COUNTY OF GENESEE
STATE OF MICHIGAN
2015 REFUNDING BONDS
(GENERAL OBLIGATION - UNLIMITED TAX)
BIDS for the purchase of the above 2015 Refunding Bonds (the "Bond" or "Bonds") will
be received by Bendle Public Schools, Genesee County, Michigan (the "Issuer"), at the
administration offices, 3420 Columbine Avenue, Burton, Michigan 48529, on Monday, the 10th
day of August, 2015, until 1:30 o'clock in the p.m., prevailing Eastern Time, at which time and
place said bids will be publicly opened and read. BIDS also will be received on the same date
and the same hour by an agent of the undersigned at the offices of the Municipal Advisory
Council of Michigan, Buhl Building, 535 Griswold, Suite 1850, Detroit, Michigan 48226, where
the bids will simultaneously be opened and read. Bidders may choose either location to present
bids but not both locations. Award of the bids will be considered by the Board of Education of
the Issuer at 7:00 o'clock in the p.m., prevailing Eastern Time, on that date.
FAXED BIDS: Bidders may submit signed bids via facsimile transmission to the Issuer
at (810) 591-2210 or the Municipal Advisory Council at (313) 963-0943, provided that the faxed
bids are received prior to the time and date fixed for receipt of bids. Bidders submitting faxed
bids bear the full risk of failed or untimely transmission of their bids. Bidders are encouraged to
confirm the timely receipt of their full and complete bids by telephoning the Issuer at (810) 5912501 or the Municipal Advisory Council at (313) 963-0420. Bidders submitting bids by fax
must satisfy the requirements of the good faith deposit obligations described herein.
ELECTRONIC BIDS may be presented via PARITY on the date and at the time shown
above provided that such bidders must also comply with the good faith deposit requirements
described herein. To the extent any instructions or directions set forth in PARITY conflict with
this Notice, the terms of this Notice shall control. For further information about PARITY,
potential bidders may contact Stauder, Barch & Associates, Inc., at (734) 668-6688 or PARITY at
(212) 849-5021.
PURPOSE AND SECURITY: The Bonds are being issued for the purpose of refunding
a certain prior outstanding obligation of the Issuer (the "Refunded Bonds"). The Bonds will
pledge the full faith, credit and resources of the Issuer for payment of the principal and interest
thereon, and will be payable from ad valorem taxes, which may be levied without limitation as to
rate or amount as provided by Article IX, Section 6, and Article IX, Section 16, of the Michigan
Constitution of 1963.
STATE QUALIFICATION: The Bonds are expected to be fully qualified pursuant to
Act 92, Public Acts of Michigan, 2005, as amended, enacted pursuant to Article IX, Section 16,
of the Michigan Constitution of 1963. Under the terms of said constitutional and statutory
provisions, if for any reason the Issuer will be or is unable to pay the principal and interest on the
Bonds when due, then the Issuer shall borrow, and the State of Michigan shall lend to it, an
amount sufficient to enable the Issuer to make the payment.
F-1
OPTIONAL DTC BOOK-ENTRY-ONLY: Unless otherwise requested by the
Purchaser, the Bonds will be initially offered as registered in the name of Cede & Co., as
registered owner and nominee for The Depository Trust Company, New York, New York
("DTC") under DTC's Book-Entry-Only system of registration. If DTC Book-Entry-Only is
used, purchasers of interests in the Bonds (the "Beneficial Owners") will not receive physical
delivery of bond certificates, and ownership by the Beneficial Owners of the Bonds will be
evidenced by book-entry-only. As long as Cede & Co. is the registered owner of the Bonds as
nominee of DTC, payments of principal and interest payments will be made directly to such
registered owner which will in turn remit such payments to the DTC participants for subsequent
disbursement to the Beneficial Owners.
BOND DETAILS: Said Bonds will be fully registered Bonds, of the denomination of
$5,000 each or multiples thereof up to the amount of a single maturity, dated the date of delivery,
numbered in order of issue from 1 upwards and will bear interest from their dated date payable
on May 1, 2016, and semiannually thereafter.
The Bonds will mature on May 1 as follows:
Year
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
Amount
$490,000
505,000
520,000
540,000
560,000
590,000
615,000
640,000
660,000
680,000
Year
2027
2028
2029
2030
2031
2032
2033
2034
2035
Amount
$705,000
730,000
755,000
780,000
810,000
810,000
795,000
785,000
780,000
TERM BOND OPTION: Bidders shall have the option of designating bonds maturing
in any year as serial bonds or term bonds, or both. The bidder must designate whether each of
the principal amounts shown above represent a serial maturity or a mandatory redemption
requirement for a term bond maturity. There may be more than one term bond maturity. In any
event, the above principal amount schedule shall be represented by either serial bond maturities
or mandatory redemption requirements, or a combination of both. Any such designation must be
made within twenty-four (24) hours of the Bond sale.
MATURITY ADJUSTMENT: The aggregate principal amount of this issue is believed
to be the amount necessary to provide, in part, adequate funds to retire the Refunded Bonds and
transactional costs. The Issuer reserves the right to increase or decrease the aggregate principal
amount of the Bonds by not more than $700,000 after receipt of the bids and prior to final award.
Such adjustment, if necessary, will be made in increments of $5,000, will not exceed $50,000 per
maturity and may be made in any maturity.
F-2
ADJUSTMENT TO PURCHASE PRICE: The purchase price of the Bonds will be
adjusted proportionately to the adjustment in principal amount of the Bonds and in such manner
as to maintain as comparable an underwriter spread as possible to the winning bid.
PAYING AGENT: Principal and interest shall be payable at a bank or trust company
qualified to act as a paying agent in Michigan (the "Paying Agent"), or such other Paying Agent
as the Issuer may hereafter designate by notice mailed to the registered owner not less than sixty
(60) days prior to any change in Paying Agent. In the event the Bonds cease to be held in book
entry form only, the Paying Agent will serve as bond registrar and transfer agent, interest shall be
paid by check mailed to the owner as shown by the registration books of the Issuer as of the
close of business on the 15th day of the month preceding any interest payment date and the
Bonds will be transferable only upon the registration books of the Issuer kept by the Paying
Agent. See "Optional DTC Book-Entry-Only" above.
PRIOR REDEMPTION:
A.
Mandatory Redemption – Term Bonds.
Principal designated by the original Purchaser of the Bonds as a term maturity shall be
subject to mandatory redemption, in part, by lot, at par and accrued interest on the redemption
dates corresponding to the maturities hereinbefore scheduled. When term Bonds are purchased
by the Issuer and delivered to the Paying Agent for cancellation or are redeemed in a manner
other than by mandatory redemption, the principal amount of the term Bonds affected shall be
reduced by the principal amount of the Bonds so redeemed or purchased in the order determined
by the Issuer.
B.
Optional Redemption.
Bonds of this issue maturing in the years 2017 through 2025 shall not be subject to
redemption prior to maturity. Bonds or portions of Bonds in multiples of $5,000 of this issue
maturing in the year 2026 and thereafter shall be subject to redemption prior to maturity, at the
option of the Issuer, in such order as the Issuer may determine and by lot within any maturity, on
any date occurring on or after May 1, 2025, at par and accrued interest to the date fixed for
redemption.
Notice of redemption of any Bond shall be given not less than thirty (30) days and not
more than sixty (60) days prior to the date fixed for redemption by mail to the Registered Owner
at the registered address shown on the registration books kept by the Paying Agent. Bonds shall
be called for redemption in multiples of $5,000 and Bonds of denominations of more than $5,000
shall be treated as representing the number of Bonds obtained by dividing the denomination of
the Bond by $5,000 and such Bonds may be redeemed in part. The notice of redemption for
Bonds redeemed in part shall state that upon surrender of the Bond to be redeemed a new Bond
or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond
surrendered shall be issued to the Registered Owner thereof. No further interest payment on the
Bonds or portions of Bonds called for redemption shall accrue after the date fixed for
redemption, whether presented for redemption, provided funds are on hand with the Paying
Agent to redeem the same.
F-3
If less than all of the Bonds of any maturity shall be called for redemption prior to
maturity unless otherwise provided, the particular Bonds or portions of Bonds to be redeemed
shall be selected by the Paying Agent, in such manner as the Paying Agent in its discretion may
deem proper, in the principal amounts designated by the Issuer. Upon presentation and surrender
of such Bonds at the corporate trust office of the Paying Agent, such Bonds shall be paid and
redeemed.
INTEREST RATE AND BIDDING DETAILS: The Bonds shall bear interest at a rate
or rates not exceeding four percent (4%) per annum, to be fixed by the bids therefor, expressed in
multiples of 1/8 or 1/20 of 1%, or both. The interest on any one Bond shall be at one rate only.
All Bonds maturing in any one year must carry the same interest rate. The difference between
the highest and lowest interest rates bid shall not exceed two percent (2%) per annum. THE
PURCHASE PRICE OF THE BONDS SHALL BE NOT LESS THAN 101% NOR GREATER
THAN 104% OF THE PAR VALUE. THE INTEREST RATE BORNE BY BONDS
MATURING IN ANY YEAR SHALL NOT BE LESS THAN THE INTEREST RATE BORNE
BY BONDS MATURING IN THE PRECEDING YEAR.
GOOD FAITH: A certified or cashier's check in the amount of two percent (2%) of the
par value of the Bonds may be submitted contemporaneously with the bid or, in the alternative, a
deposit in the amount of two percent (2%) of the par amount of the Bonds shall be made by the
winning bidder by federal wire transfer as directed by Stauder, Barch & Associates, Inc., to be
received by the Issuer not later than noon, prevailing Eastern Time, on the next business day
following the award as a guarantee of good faith on the part of the bidder to be forfeited as
liquidated damages if such bid be accepted and the bidder fails to take up and pay for the Bonds.
Any award made to the low bidder is conditional upon receipt of the good faith deposit. The
good faith deposit will be applied to the purchase price of the Bonds. In the event the Purchaser
fails to honor its accepted bid, the good faith deposit will be retained by the Issuer. No interest
shall be allowed on the good faith deposit. Payment for the balance of the purchase price of the
Bonds shall be made at the closing. Good faith checks of unsuccessful bidders will be returned
via U.S. Mail.
AWARD OF BONDS: The Bonds will be awarded to the bidder whose bid produces
the lowest true interest cost which is the rate that will discount all future cash payments so that
the sum of the present value of all cash flows will equal the Bond proceeds computed from
August 27, 2015.
LEGAL OPINION: Bids shall be conditioned upon the unqualified approving opinion
of Thrun Law Firm, P.C., Novi, Michigan, bond counsel, the original of which will be furnished
without expense to the Purchaser of the Bonds at the delivery thereof. The fees of Thrun Law
Firm, P.C. for services rendered in connection with such approving opinion are expected to be
paid from Bond proceeds. Except to the extent necessary to issue its approving opinion as to the
validity of the above Bonds, Thrun Law Firm, P.C. has not been requested to examine or review,
and has not examined or reviewed, any financial documents, statements or other materials that
have been or may be furnished in connection with the authorization, marketing or issuance of the
Bonds and, therefore, has not expressed and will not express an opinion with respect to the
accuracy or completeness of any such financial documents, statements or materials.
F-4
TAX MATTERS: In the opinion of bond counsel, assuming continued compliance by
the Issuer with certain requirements of the Internal Revenue Code of 1986, as amended (the
"Code"), interest on the Bonds is excluded from gross income for federal income tax purposes,
as described in the opinion, and the Bonds and interest thereon are exempt from all taxation in
the State of Michigan, except inheritance and estate taxes and taxes on gains realized from the
sale, payment or other disposition thereof. The Issuer has covenanted to comply with certain
requirements of the Code necessary to continue the exclusion of interest on the Bonds from gross
income for federal income tax purposes.
OFFICIAL STATEMENT: Upon the sale of the Bonds, the Issuer will publish an
Official Statement in substantially the same form as the Preliminary Official Statement, subject
to minor additions, deletions and revisions as required to complete the Preliminary Official
Statement. Promptly after the sales date, but in no event later than seven (7) business days after
such date, the Issuer will provide the successful bidder with a reasonable number of final Official
Statements. Such final Official Statements may be obtained without cost to the successful bidder
in a reasonable amount from the financial consultant as set forth herein. The successful bidder
agrees to supply to the Issuer all necessary pricing information and any underwriter identification
necessary to complete the Official Statement within 24 hours after the award of Bonds.
Additional copies of the final Official Statement may be obtained up to three months following
the sale of the Bonds by a request and payment of costs to the financial consultant. The Issuer
agrees to provide to the successful bidder at closing a certificate executed by appropriate officers
of the Issuer acting in their official capacities, to the effect that as of the date of delivery the
information contained in the Official Statement, and any supplement to the Official Statement,
relating to the Issuer and the Bonds are true and correct in all material respects, and that the
Official Statement does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading.
CONTINUING DISCLOSURE: As more particularly described in the Official
Statement, the Issuer will agree in the bond resolution or sales resolution to provide or cause to
be provided, in accordance with the requirements of Rule 15c2-12 (the "Rule") promulgated by
the Securities and Exchange Commission, (i) on or prior to the 180th day after the end of the
fiscal year of the Issuer, commencing with the fiscal year ended June 30, 2015, certain annual
financial information and operating data, including audited financial statements for the preceding
fiscal year, generally consistent with the information contained or cross-referenced in the
Official Statement relating to the Bonds, (ii) timely notice of the occurrence of certain significant
events with respect to the Bonds and (iii) timely notice of a failure by the Issuer to provide the
required annual financial information on or before the date specified in (i) above.
CERTIFICATE REGARDING "ISSUE PRICE": The successful bidder will be
required to furnish, prior to the delivery of the Bonds, a certificate in a form acceptable to bond
counsel as to the "issue price" of the Bonds within the meaning of Section 1273 of the Internal
Revenue Code of 1986, as amended. In addition, if the successful bidder will obtain a municipal
bond insurance policy or other credit enhancement for the Bonds in connection with their
original issuance, the successful bidder will be required, as a condition of delivery of the Bonds,
to certify whether the premium therefor will be less than the present value of the interest
F-5
expected to be saved as a result of such insurance or other credit enhancement. The form of an
acceptable certificate will be provided by bond counsel.
DELIVERY OF BONDS: The Issuer will furnish Bonds ready for execution at its
expense. Bonds will be delivered without expense to the Purchaser at a place to be mutually
agreed upon with the Purchaser. The usual closing documents, including a certificate that no
litigation is pending affecting the issuance of the Bonds, will be delivered at the time of the
delivery of the Bonds. If the Bonds are not tendered for delivery by twelve o'clock, noon,
prevailing Eastern Time, on the 45th day following the date of sale, or the first business day
thereafter if the 45th day is not a business day, the successful bidder may on that day, or any time
thereafter until delivery of the Bonds, withdraw the proposal by serving notice of cancellation in
writing, on the undersigned, in which event the Issuer shall promptly return the good faith
deposit. Accrued interest to the date of delivery of the Bonds shall be paid by the Purchaser at
the time of delivery. Payment for the Bonds shall be made in federal reserve funds. Unless the
Purchaser furnishes the Paying Agent with a list giving the denominations and names in which it
wishes to have the certificates issued at least five (5) business days prior to delivery of the
Bonds, the Bonds will be delivered in the form of a single certificate for each maturity registered
in the name of the Purchaser.
CUSIP NUMBERS: CUSIP numbers will be imprinted on the Bonds at the expense of
the Issuer. An improperly imprinted number or failure to print CUSIP numbers shall not
constitute basis for the Purchaser to refuse to accept delivery of the Bonds. The Purchaser shall
be responsible for requesting assignment of numbers and for the payment of any charges for the
assignment of numbers. If the Purchaser requires CUSIP numbers on the Bonds, the Purchaser
shall request assignment of CUSIP numbers for the Bonds and provide the numbers to Stauder,
Barch & Associates, Inc. and Thrun Law Firm, P.C., within forty-eight (48) hours of the bond
sale.
BIDDER CERTIFICATION - NOT "IRAN-LINKED BUSINESS": By submitting a
bid, the bidder shall be deemed to have certified that it is not an "Iran-Linked Business" as
defined in Act 517, Public Acts of Michigan, 2012; MCL 129.311, et seq.
FURTHER INFORMATION may be obtained from Stauder, Barch & Associates, Inc.,
3989 Research Park Drive, Ann Arbor, Michigan 48108. Telephone: (734) 668-6688.
THE RIGHT IS RESERVED TO REJECT ANY OR ALL BIDS.
ENVELOPES containing the bids should be plainly marked "Proposal for Bendle Public
Schools 2015 Refunding Bonds."
Janis Bugbee_____________
Secretary, Board of Education
F-6
BID FORM
$12,750,000*
County of Genesee
State of Michigan
Ms. Janis Bugbee, Secretary
Board of Education
Burton, MI 48529
Dear Ms. Bugbee :
Reference is made to your OFFICIAL NOTICE OF SALE of $12,750,000*, Bendle Public Schools, County of Genesee, State
of Michigan, 2015 Refunding Bonds (General Obligation - Unlimited Tax), which was published in THE BOND BUYER.
For your legally issued Bonds, as described in said notice, we will pay you par and accrued interest from date of issue to date
of delivery to us, plus a premium of $
or less a discount of $
for Bonds maturing and bearing interest
as follows:
2017
% 2023
%
2029
%
2018
% 2024
%
2030
%
2019
% 2025
%
2031
%
2020
% 2026
%
2032
%
2021
% 2027
%
2033
%
2022
% 2028
%
2034
%
2035
%
Term Bonds
%
%
20__
20__
20__
20__
%
%
20__
20__
%
%
This bid is for all or none of the Bonds.
of the
in the amount of $255,000*,
Attached hereto is (Cashier’s)(Certified) Check No.
which is our good faith deposit and which is submitted under the terms set forth in the OFFICIAL NOTICE OF SALE.
Respectfully submitted,
By:
Authorized Representative
ACCEPTANCE CLAUSE
The above and foregoing is hereby in all things accepted by the Bendle Public Schools, County of Genesee, State of Michigan,
this the 10th day of August, 2015.
ATTEST:
**************************************************************************************************************
The following is a computation of the interest cost on the above bid. This computation is not to be considered as a part of the bid
and is subject to verification.
Return of bid deposit is hereby acknowledged by:
True Interest Cost
%
$12,750,000*
County of Genesee
State of Michigan
Additional information relative to this Bond issue may be obtained from
Stauder, BARCH & ASSOCIATES, Inc.
Municipal Bond Financial and Marketing Consultants
3989 Research Park Drive
Ann Arbor, Michigan 48108
734-668-6688 Facsimile: 734-668-6723

Bendle Public Schools - Raymond James Financial

Transcription

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