The School Bond Qualification and Loan program was established by the Michigan Constitution of 1963 and amended by Public Act 92 of 2005 to provide a state credit enhancement and loan mechanism for school district bond issues. The bonds must be qualified by the State Treasurer and the bond proceeds must be used for capital expenditure purposes.
- Qualified Bonds Bonds qualified by the State Treasurer provide school districts with:
- Access to the State's credit rating; which will usually result in a lower interest rate and cost.
- Ability to borrow for the principal and interest requirements of outstanding qualified bonds (subject to a minimum debt millage).
Prior to applying for state qualification, a district should have conducted a thorough local level study regarding the district's facility needs and options for financing those needs.
- SBQLP Frequently Asked Questions
- SBQLP Administrative Rules
- Bond Qualification Process
A school district that seeks State qualification of its bond issue is required to file a preliminary qualification (PQ) application. The PQ application is the mechanism to seek preliminary qualification. Prior to completing the PQ application, a district should conduct a thorough study to determine facility needs and gauge the level of support that exists within the community.
- Preliminary Qualification Instructions
- Preliminary Qualification Application (Form 3881)
- Worksheet 1: Useful Life Calculation
- Cost per Square Foot Parameters (Effective June 30, 2014)
School district bond elections must be held in accordance with Public Act 166 of 1954 (MCL 408.551-408.558), more information can be obtained from the school district's legal counsel.
- Ballot Requirements for State Qualified Bond Elections
- Election Results
If a majority of the district's citizens vote in favor of the proposition, the district applies for final qualification.
- Final Qualification Application and Instructions (Form 3451)
- Qualification Fee Schedule
Once an Order Qualifying Bonds is issued the district can proceed to sell the bonds to prospective investors.
- Bond Structures with Variable Rate and Derivative Transactions
- Qualification and Loan Reports
- School Loan Revolving Fund
- Qualified Bonds
School Loan Revolving Fund
- The School Loan Revolving Fund (SLRF) is a self-sustaining fund that makes loans to school districts to assist with making debt service payments on state qualified bonds issued under the School Bond Qualification and Loan Program. Any money repaid by school districts on loans made by the SLRF are deposited back into the fund for future use.
In order to borrow from the state for debt service needs the district must:
- Have the bond issue qualified.
- Levy a minimum of 7 debt mills.
School Loan Revolving Fund participants must submit a board authorized application due annually every August 1.
- School District Loan Account Statements
Borrowing for Debt Service
When a school district intends to borrow from the SLRF, it is important to understand the ongoing annual administrative effort that will be required for obtaining disbursements and accounting for borrowing and repayments until the debt is repaid.
- SBQLP Administrative Rules
- Computed Millage Waiver Request (Form 5108)
- School Loan Revolving Fund Process
Debt Service Repayment
A district may request a loan from the state for the additional portion of the funds required to make full debt service payment rather than increase its current debt millage. Funds are disbursed to the district before the May and November debt service payments.
While loan repayment is deferred until the required debt millage yields enough to pay the district's debt service obligations, interest accumulation does begin once funds are disbursed.