124 school districts in Michigan, including all five public districts in Livingston County, will save approximately $8 million in interest thanks to legislation signed into law earlier this week.
Governor Gretchen Whitmer signed Senate Bill 618 this week allowing for the adjustment of the School Loan Revolving Fund (SLRF) interest rate to 1.19%
The SLRF assists schools in their borrowing needs for debt service payments. When the fund was created in 2005, a 3% floor was established. With the lower interest rate, the 124 school districts participating in the program, including Brighton, Hartland , Howell, Fowlerville and Pinckney, will begin saving immediately.
“Every student, in every district, has a birthright to a phenomenal public education so they can pursue their potential,” said Whitmer. “With these cost savings, we will have even more resources to invest where they matter most-in our students, teachers, and classrooms. I am proud of the work the Michigan Legislature and I have done to close the funding gap between districts and increase per-pupil funding to its highest amount ever. As we look ahead, we have a huge opportunity to continue providing savings for school infrastructure, providing our students safe, well-equipped facilities for learning.”
The School Bond Qualification and Loan Program provides 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. Through this program, school districts receive the benefit of the state’s credit rating, which usually results in a lower interest rate and costs, and gives districts access to borrow from the SLRF.
To borrow from the SLRF for debt service needs, a district must levy a minimum of seven (7) debt mills and enter into a loan repayment agreement with the state.
“This fund is an important tool for school districts,” said State Treasurer Rachael Eubanks. “Lowering the interest rate means local communities can realize taxpayer savings, or they can direct more property tax dollars to building and improving school facilities rather than paying interest to the State.”
The SLRF rate is calculated quarterly and is based on the cost of the program.
To learn more about the School Bond Qualification and Loan Program, visit https://www.michigan.gov/treasury/0,4679,7-121-1753_56435—,00.html