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Clinton Township, Macomb Township

December 5, 2012

Proposed bill attracts wide range of critics

By Robert Guttersohn
C & G Staff Writer

CLINTON TOWNSHIP — The House Appropriations Committee invited people representing a wide range of professions to testify Nov. 28 on a bill that would alter school districts’ ability to borrow bond money.

Despite their varied backgrounds — from construction contractors to school superintendents — all nine of whom were called to speak pronounced their disapproval of the new School Bond Qualification and Loan Program bill.

Critics say it would put undue pressure on local taxpayers to pay for building improvements and decrease students’ access to technological upgrades.

“We’ve got to approach this in some way that solves the problem without starting another problem,” said Nick Ceglarek, superintendent of Hudsonville Public Schools and one of the nine who testified last week.

The House of Representatives is debating the changes to the bond program and other education bills this December, before the legislative session ends. State Sen. John Pappageorge, R-Troy, created the bill after discovering that Chippewa Valley Schools owed the state $143 million in loans. The Senate passed it earlier this year.

State Rep. Ken Goike, R-Ray, a member of the House Appropriations Committee, said he was surprised when he found CVS owed the state more than any other district using the bond program and believed something needed to be done to address the debt issue. “We’re right in the bull’s-eye of it,” Goike said of his congressional district, which contains CVS. “(The school district is) the largest culprit of it.”

But he is worried the bill that passed the Senate could bury people living in the district. “My intent is to not have the district go bankrupt on this issue,” Goike said.

The school bond program loans money to districts that have issued a bond, allowing the district to pay back the state with interest throughout a long period of time. The benefit of the program is that it allows districts to borrow using the state’s credit rating and allows growing districts with low taxable house values to borrow bond money from the state to pay for new buildings. State lawmakers used CVS as a case study for why the program needs to be changed because the district has not paid the state back in 45 years. Instead, it has rolled old debt into new bonds.

Goike said he met with Gov. Rick Snyder’s office three times on the bond program bill last week and has also been in touch with the authors of the bill in the Senate.

“The goal of ours is to fix the problem and not bury everyone in the process,” he said.

The current draft of the bill calls for a cap on the amount the program can loan to districts at $1.8 billion. Because the program has already loaned $1.4 billion as of this year, the House Fiscal Agency predicts the program will reach that cap in 2014 and would not fall under the cap until 2042. That means school districts looking to make capital improvements would have to raise local property millage to find the funding.

“Our initial concern is that the net result is going to be less access to infrastructure improvements and technology for students,” said Brad Biladeau, associate executive director of government relations for the Michigan Association of School Administrators.

He has testified in front of the House Appropriations Committee in the past and lobbied against it while it was still in the Senate.

Ceglarek agrees, saying the $1.8 billion cap would hurt growing school districts like CVS and the one he oversees in Hudsonville.

“That’s a program that quite honestly has allowed us to provide needed facilities for our students,” Ceglarek said.

Like CVS, Hudsonville is currently borrowing from the program. In May, voters approved a $25.3 million bond that the district borrowed from Michigan. Unlike CVS, Hudsonville paid off its previous debt to the state a month prior.

“We’ve been using the school bond program as it has been designed,” he said.

Biladeau suggested the state completely overhaul its funding for capital improvements. “We need to come up with a strategy to adequately address infrastructure concerns in the state,” he said.

Currently, the only two ways districts can pay for building repairs or new buildings is by borrowing from the state’s bond program or by raising its local millage. He said Michigan is only one of eight states that does not have a formula for funding school improvements. “Other states spend their state resources to provide school infrastructural improvements,” Biladeau said. “Michigan pushes that to local taxpayers.”

If the bill does not pass before the end of the year, it would have to be reintroduced to the Appropriations Committee next year. Biladeau would not offer his prediction on whether it would pass, but said he does think there will be much more debate about it.

“I know that several (committee) members had concerns with the legislation, and I imagine they’ll have more hearings on this,” he said.

You can reach C & G Staff Writer Robert Guttersohn at rguttersohn@candgnews.com or at (586)218-5006.