State and Authority Finance

Michigan Finance Authority pooled loan programs provide a cost-effective mechanism for individual borrowers to participate in a larger transaction to access the capital markets. Borrowers do not need a separate bond rating as  MFA obtains a rating for each pooled financing.

• Local Government Loan Program (LGLP) provides competitive interest rates for three- to 30-year loans to public entities. Typically, tax-exempt bonds or installment purchase contracts are issued, although taxable and private activity bonds have been issued.
• State Aid Note Programs are streamlined loan programs to finance       short-term operational cash flow needs for public schools. MFA facilitates the process by pooling the loans, soliciting bids, and obtaining the highest possible short-term rating, resulting in competitive interest rates and typically lower costs for the schools. State Aid Note loans are available for both traditional public schools (SAN) and charter schools (PSA SAN).

State Revolving Funds (SRF) are jointly administered by MFA and the Michigan Department of Environmental Quality (DEQ) which determines qualified projects and annual funding priority.

• Clean Water Revolving Fund (CWRF)  provides low-cost financing for municipal wastewater facilities.
• Drinking Water Revolving Fund (DWRF) provides low-cost financing for drinking water projects.
• Strategic Water Quality Initiatives Fund (SWQIF) provides financing for the removal of ground water or storm water from sewer leads that cannot qualify for CWRF assistance.

School Loan Revolving Fund (SLRF) is intended to be a self-sustaining fund that makes loans to school districts to assist with making debt service payments on bonds issued through the School Bond Qualification and Loan Program.

• Loan repayment is deferred until the required debt millage yields enough to pay the district’s debt service obligations.
• Money repaid by school districts is deposited back into the fund for debt service and for future loans.

MFA performs finance activities, including issuing bonds and notes, as needed for:

• Private/Non-Profit School Project Finance
• Student Loan Investor Reports
• Tobacco Securitization
• Underground Storage Tank Cleanup
• Forest Finance
• Land Bank Fast Track
• Unemployment Trust Fund Obligation

The School Bond Qualification and Loan Program (SBQLP) was established by the Michigan Constitution of 1963 and subsequently amended by Public Act 92 of 2005 to provide a state credit enhancement and loan mechanism for school district bond issues. The State Treasurer must qualify the bonds, and the bond proceeds must be used for capital expenditure purposes.

Qualified bonds provide school districts with access to the state’s credit rating, which will usually result in a lower interest rate and cost and the ability to borrow for the principal and interest requirements of outstanding qualified bonds (subject to a minimum debt millage).

The Bureau of State and Authority Finance performs investment, cash management, accounting, and bond (registrar, transfer, paying and escrow agent, and lost bonds) services on behalf of the State Treasurer for various bond issues and public finance programs. This includes activities for the State General Obligation bonds and notes and various issuing authorities such as State Park Revenue Bonds, State Building Authority, the Michigan Finance Authority (MFA), the Michigan Education Trust (MET), and Department of Transportation escrow accounts.