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Posted on Wed, Apr 17, 2013 : 10 a.m.

New bills would allow districts to spend sinking fund money on technology, transportation

By Danielle Arndt

Two new bills introduced in the Michigan House of Representatives would lessen restrictions on how school districts are allowed to spend sinking fund money.


State Rep. Adam Zemke, D-Ann Arbor, claps to congratulate a colleague on being sworn in to the 97th Michigan House of Representatives in January. Zemke recently introduced two bills to change how school districts can spend their money.

Mike Mulholland | file photo

Ann Arbor Democrat Adam Zemke and Dearborn Heights Democrat David Knezek introduced the legislation. If passed, the bills would permit sinking fund dollars to be used for technology purchases and upgrades, as well as transportation-related spending and busing repairs.

House Bills 4483 and 4515 are in addition to legislation introduced by Zemke in March (HB 4368) that would allow sinking fund expenditures to include security equipment and other school safety measures.

"These bills expand local control by giving school districts, and the people who live in them, more of a say in funding decisions," Zemke said. "Rather than simply accepting the decisions made for them in Lansing, community leaders can have another tool at their disposal to improve schools and give kids a brighter future."

Sinking funds may only be used for capital improvement or enhancement projects under existing laws.

"Many school districts find themselves unable to provide students with the latest technology as a result of the deep funding cuts that have been imposed over the past few years," Knezek said. "Technology in the classroom supplements a high quality education and ensures our children are ready to enter the 21st century workforce."

The Ann Arbor Public Schools district is preparing for a sinking fund millage renewal sometime within the next year. Planning a millage campaign was identified as one component of the board's financial goal for the 2012-13 academic year.

Ann Arbor's current millage collects 1 mill from district taxpayers and expires in 2014. It was last renewed by voters in 2008.

Passing a sinking fund millage has financial benefits that a bond does not, school officials said. A bond millage requires the district to borrow the full amount of the bond upfront from a third-party lender, whereas a sinking fund millage enables the district to spend taxpayers' money as it is collected.

State law allows schools to levy up to 5 mills in property taxes for no longer than 20 years.

Danielle Arndt covers K-12 education for Follow her on Twitter @DanielleArndt or email her at



Fri, Apr 19, 2013 : 2:13 a.m.

I'd bet that A2 school leadership knew this was coming and that's why they initiated the recent and successful "technology" millage.

Jeremy Peters

Wed, Apr 17, 2013 : 5:58 p.m.

Cheers to Rep. Zemke for supporting local control when it comes to school funding. If anything, I'd say that each city and town's residents know what the priorities of each local school is, not someone inside an office building in Lansing.


Wed, Apr 17, 2013 : 6:06 p.m.

These bills have nothing to do with local control but will create the danger of injudicious spending of sinking fund money which is designed to provide an orderly retirement of debt instruments. And, by the way, what exactly do you think each resident knows about the financial structure of Ann Arbor's school system?

An Arborigine

Wed, Apr 17, 2013 : 5:05 p.m.

Methinks the only thing sinking in this fund will be the balance.


Wed, Apr 17, 2013 : 4:54 p.m.

NOT WISE A "sinking fund" involves periodic payments to gradually reduce a debt obligation so that the entire principle amount is not due at debt maturity. To spend sinking fund money for any other purpose will not be legal until this bill becomes law. Those governments and government agencies who spend sinking fund money will only complicate the repayment of debt and may increase the cost of retiring the debt. Formal definitions of "sinking fund": Wikipedia- "A sinking fund is a fund established by a government agency or business for the purpose of reducing debt by repaying or purchasing outstanding loans and securities held against the entity. It helps keep the borrower liquid so it can repay the bondholder." Investopedia- "A means of repaying funds that were borrowed through a bond issue. The issuer makes periodic payments to a trustee who retires part of the issue by purchasing the bonds in the open market."


Fri, Apr 19, 2013 : 2:20 a.m.

You're right veracity, and then property owners will be on the hook for bond defaults. Courts can increase property taxes to pay defaulted bond issues as they did in Sylvan Township over the defaulted water treatment bond debacle. This would be a very bad law. Our school leadership has been, and remains incapable of fiscal restraint and management. Maybe requiring all employees to actually live in the city and pay A2 property taxes might rein in the spending sprees.

Basic Bob

Wed, Apr 17, 2013 : 4:53 p.m.

more bond millage issues on special election days. more money left over to give to the mea and political action committees. more for the haves, less for the have-nots.


Wed, Apr 17, 2013 : 4:48 p.m.

In case anyone else had to look it up: A sinking fund is a fund established by a government agency or business for the purpose of reducing debt by repaying or purchasing outstanding loans and securities held against the entity. It helps keep the borrower liquid so it can repay the bondholder.


Wed, Apr 17, 2013 : 5:20 p.m.

Sorry, Fordie, but I was writing my comment while you were posting yours so I did not see your comment. The definition is important enough to be repeated anyway.

Nicholas Urfe

Wed, Apr 17, 2013 : 4 p.m.

More Ipad purchases. Yay.