With the budget shenanigans going on in Lansing and the school year fast coming upon us, districts may find themselves in search of money to keep things going. While cash is fungible, accountancy is not. While some districts may have sinking funds in place, the funds those generate are specifically earmarked and must be utilized for the stated purposes.
Under MCL 380.1212, as amended August 6, 2023, a school district with a sinking fund may use those funds:
for the purchase of real estate for sites for, and the construction or repair of, school buildings
for school security improvements
for the acquisition or upgrading of technology
for the acquisition of student transportation vehicles
for the acquisition of parts, supplies, and equipment used for the maintenance of student transportation vehicles
for the acquisition of trucks and vans registered under the Michigan vehicle code, and used to carry parts, equipment, and transporting personnel for or in the maintenance of school buildings
for the acquisition of parts, supplies, and equipment used to maintain those trucks and vans.
Importantly, before a district can use its sinking fund for one of these purposes, it must be allowed to do so through the ballot language approving the sinking fund. As an example, a sinking fund approved by voters before the August 6, 2023, amendment would not be able to be used to acquire or maintain student transportation since it was not in the ballot language when the voters approved it.
Before a district allocates or reallocates funds using its sinking fund, be sure to verify its authority to do so in the ballot language and with your bond counsel.
If you have questions on this or other matters, be sure to reach out to our legal team.