Who can keep the interest that is earned on State Education Tax payments while those funds are in the possession of the city, township, or county treasurer?

The law allows local and county treasurers to keep the earned interest on State Education Tax (SET) payments prior to the time of remittance.

• Background: The general rule is that interest follows principal, unless there is statutory language to the contrary. In 1985, the Court of Appeals in Grand Rapids Public Schools v City of Grand Rapids (146 MICH APP 652) held that "Interest on public funds designated for a specific purpose follows those funds, absent a clear statutory provision to the contrary, in general, interest is merely an incident of the principal fund, making it the property of the party owning the principal."
• County treasurers have the authority to keep earned interest on the SET. MCL 211.43(10), which was added by Public Act 253 of 1994, provides that "The county treasurer may retain the interest earned on the money collected under Act No. 331 of the Public Acts of 1993 while held by the county treasurer, as reimbursement for the cost incurred by the county in collecting and transmitting the tax imposed by that act."
• Township and city treasurers have authority to keep earned interest on the SET. MCL 211.43c provides that "Notwithstanding section 43, if there is not an agreement for alternative schedules for delivering interest earned, the local tax collecting unit shall retain interest earned on the collections of the state education tax levied under the state education tax act, Act No. 331 of the Public Acts of 1993, being sections 211.901 to 211.906 of the Michigan Compiled Laws, while in the possession of the local tax collecting unit."