HOUSE BILL No. 5846 May 25, 2000, Introduced by Rep. Shulman and referred to the Committee on Local Government and Urban Policy. A bill to amend 1968 PA 2, entitled "Uniform budgeting and accounting act," by amending sections 1, 2a, 2b, 2c, 2d, 4, 7, 8, 14, 15, 16, 17, 18, 19, and 20 (MCL 141.421, 141.422a, 141.422b, 141.422c, 141.422d, 141.424, 141.427, 141.428, 141.434, 141.435, 141.436, 141.437, 141.438, 141.439, and 141.440), sections 1 and 7 as amended by 1982 PA 451, sections 2b and 4 as amended by 1996 PA 439, section 2d as amended by 1999 PA 142, section 8 as amended by 1996 PA 400, section 15 as amended by 1981 PA 77, and sections 16 and 17 as amended by 1995 PA 41. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1. (1) The state treasurer shall prescribe uniform 2 charts of accounts for all local units of similar size, function, 3 or service designed to fulfill the requirements of good 4 accounting practices relating to general government. Such chart 05932'00 LBO 2 1 of accounts shall conform as nearly as practicable to the uniform 2 standards as set forthin the publication of the municipal3finance officers' association of the United States and Canada4entitled "governmental accounting, auditing and financial report-5ing, 1980" or as revised or changedBY THE GOVERNMENTAL ACCOUNT- 6 ING STANDARDS BOARD OR BY A SUCCESSOR ORGANIZATION THAT ESTAB- 7 LISHES NATIONAL GENERALLY ACCEPTED ACCOUNTING STANDARDS AND IS 8 DETERMINED ACCEPTABLE TO THE STATE TREASURER. The official who 9 by law or charter is charged with the responsibility for the 10 financial affairs of the local unit shall insure that the local 11 unit accounts are maintained and kept in accordance with the 12 chart of accounts. The state treasurer may also publish standard 13 operating procedures and forms for the guidance of local units in 14 establishing and maintaining uniform accounting. 15 (2) A local unit may request the state treasurer to provide 16 assistance, advice, or instruction in establishing or maintaining 17 the uniform chart of accounts required by subsection (1). 18 (3) The state treasurer may provide assistance, advice, or 19 instruction to a local unit to establish or maintain the uniform 20 chart of accounts required by subsection (1) based on information 21 from 1 or more of the following sources: 22 (a) Disclosure by the certified public accountant or the 23 department of treasury in an audit report required by section 5 24 or 6 that the local unit has failed to establish or maintain the 25 uniform chart of accounts required by subsection (1). 26 (b) Disclosure by the department of treasury in a special 27 examination report that the local unit has failed to establish or 05932'00 3 1 maintain the uniform chart of accounts required by subsection 2 (1). 3 (c) Disclosure in an audit report issued under section 5 or 4 6 that the records of the local unit are not auditable because 5 the local unit has failed to establish or maintain the uniform 6 chart of accounts required by subsection (1). 7 (d) Disclosure from another state agency. 8 (e) Department of treasury records indicate that the audit 9 required under section 5 has not been performed or filed and is 10 delinquent, and that the local unit is subject to the provisions 11 of section 21 ofAct No. 140 of the Public Acts of 1971, as12amended, being section 141.921 of the Michigan Compiled LawsTHE 13 GLENN STEIL STATE REVENUE SHARING ACT OF 1971, 1971 PA 140, MCL 14 141.921. 15 (4) The state treasurer, in performing the services under 16 subsection (2) or (3), may make a determination that the local 17 unit cannot adequately establish or maintain the uniform chart of 18 accounts without additional assistance, advice, or instruction 19 from the state treasurer. The state treasurer shall submit a 20 written report of the findings and recommendations to the govern- 21 ing body of the local unit. The local unit shall retain, within 22 90 days after receipt of this report, the services of a certified 23 public accountant or the state treasurer to perform the needed 24 additional services and shall notify, by resolution of the gov- 25 erning body, the state treasurer of such action. Upon failure of 26 the local unit to respond within the 90-day period, the state 05932'00 4 1 treasurer shall perform the necessary services to adequately 2 establish or maintain the uniform chart of accounts. 3 (5) The state treasurer shall charge reasonable and neces- 4 sary expenses, including per diem and travel expenses, to the 5 local unit for services performed pursuant to subsections (2), 6 (3), and (4), and the local unit shall make payment to the state 7 treasurer for these expenses. The state treasurer shall execute 8 a contract with the local unit or provide monthly billings if a 9 contract is not executed. 10 Sec. 2a. (1) "Administrative officer" means an individual 11 employed or otherwise engaged by a local unit to supervise a bud- 12 getary center. 13 (2) "Allotment" means a portion of an appropriation which 14 may be expended or encumbered during a certain period of time. 15 (3) "Appropriation" means an authorization granted by a leg- 16 islative body to incur obligations and to expend public funds for 17 a stated purpose. 18 (4) "Budget" means a plan of financial operation for a given 19 period of time, including an estimate of all proposed expendi- 20 tures from the funds of a local unit and the proposed means of 21 financing the expenditures. Budget does not include any of the 22 following: 23 (a) A fund for which the local unit acts as a trustee or 24 agent. 25 (b) AnintragovernmentalINTERNAL service fund. 26 (c) An enterprise fund. 05932'00 5 1 (d) Apublic improvement or building and siteCAPITAL 2 PROJECT fund. 3 (e) Aspecial assessmentDEBT SERVICE fund. 4 Sec. 2b. (1) "Budgetary center" means a general operating 5 department of a local unit or any other department, institution, 6 court, board, commission, agency, office, program, activity, or 7 function to which money is appropriated by the local unit. 8 (2) "Capital outlay" means a disbursement of money which 9 results in the acquisition of, or addition to, fixed assets. 10 (3) "Chief administrative officer" means any of the 11 following: 12 (a) The manager of a village or, if a village does not 13 employ a manager, the president of the village. 14 (b) The city manager of a city or, if a city does not employ 15 a city manager, the mayor of the city. 16 (c) The superintendent of a local school district or, if the 17 school district does not have a superintendent, the person having 18 general administrative control of the school district. 19 (d) The superintendent of an intermediate school district 20 or, if the school district does not have a superintendent, the 21 person having general administrative control of the school 22 district. 23 (e) The manager of a township or, if the township does not 24 employ a manager, the supervisor of the township. 25 (f) The elected county executive or appointed county manager 26 of a county; or if the county has not adopted an optional unified 27 form of county government, the controller of the county appointed 05932'00 6 1 pursuant to section 13b ofAct No. 156 of the Public Acts of21851, being section 46.13b of the Michigan Compiled Laws1851 PA 3 156, MCL 46.13B; or if the county has not appointed a controller, 4 an individual designated by the county board of commissioners of 5 the county. 6 (g) The official granted general administrative control of 7 an authority or organization of government established by law 8which may issue obligations pursuant to the municipal finance9act, Act No. 202 of the Public Acts of 1943, being sections10131.1 to 139.3 of the Michigan Compiled Laws, and which either11may levy a property tax orTHAT may expend funds of the author- 12 ity or organization. 13 (4) "Deficit" means an excess of liabilities and reserves of 14 a fund over its assets. 15 (5) "Derivative instrument or product" means either of the 16 following: 17 (a) A contract or convertible security that changes in value 18 in concert with a related or underlying security, future, or 19 other instrument or index; or that obtains much of its value from 20 price movements in a related or underlying security, future, or 21 other instrument or index; or both. 22 (b) A contract or security, such as an option, forward, 23 swap, warrant, or a debt instrument with 1 or more options, for- 24 wards, swaps, or warrants embedded in it or attached to it, the 25 value of which contract or security is determined in whole or in 26 part by the price of 1 or more underlying instruments or 27 markets. 05932'00 7 1 (6) "Derivative instrument or product" does not mean a fund 2 created pursuant to the surplus funds investment pool act,Act3No. 367 of the Public Acts of 1982, being sections 129.111 to4129.118 of the Michigan Compiled Laws1982 PA 367, MCL 129.111 5 TO 129.118, or section 1223 of the revised school code,Act6No. 451 of the Public Acts of 1976, being section 380.1223 of the7Michigan Compiled Laws1976 PA 451, MCL 380.1223. 8 (7) "Disbursement" means a payment in cash. 9 Sec. 2c. (1) "Expenditure" means the cost of goods deliv- 10 ered or services rendered, whether paid or unpaid, including 11 expenses, debt retirement not reported as a liability of the fund 12 from which retired, or capital outlay. 13(2) "Fiscal officer" means the controller, finance direc-14tor, business manager, or other elected or appointed official who15prepares and administers the budget of a local unit.16 (2)(3)"General appropriations act" means the budget as 17 adopted by the legislative body or as otherwise given legal 18 effect pursuant to a charter provision in effect on the effective 19 date of this section. 20 Sec. 2d. (1) "Depository library" means a depository 21 library designated under section 10 of the library of Michigan 22 act, 1982 PA 540, MCL 397.20. 23 (2) "Legislative body" means any of the following: 24 (a) The council, commission, or other entity vested with the 25 legislative power of a village. 26 (b) The council or other entity vested with the legislative 27 power of a city. 05932'00 8 1 (c) The board of education of a local school district. 2 (d) The board of education of an intermediate school 3 district. 4 (e) The township board of a township. 5 (f) The county board of commissioners of a county. 6 (g) The board of county road commissioners of a county. 7 (h) The official body to which is granted general governing 8 powers over an authority or organization of government estab- 9 lished by law thatmay issue obligations pursuant to the munici-10pal finance act, 1943 PA 202, MCL 131.1 to 139.3, and that either11may levy a property tax ormay expend funds of the authority or 12 organization. As used in this act, legislative body does not 13 include an intermunicipality committee established under 1957 14 PA 200, MCL 123.631 to123.636123.637. 15 (3) "Library of Michigan" means the library of Michigan cre- 16 ated under section 3 of the library of Michigan act, 1982 PA 540, 17 MCL 397.13. 18 (4) "Local unit" does not include an intermunicipality com- 19 mittee established under 1957 PA 200, MCL 123.631 to123.63620 123.637. Except as used in sections 14 to 20a, local unit means 21 a village, city, or township or an authority or commission estab- 22 lished by a county, village, city, or township ordinance or 23 charter. As used in sections 14 to 20a, local unit means any of 24 the following: 25 (a) A village. 26 (b) A city. 05932'00 9 1 (c) A local school district. 2 (d) An intermediate school district. 3 (e) A township. 4 (f) A county. 5 (g) A county road commission. 6 (h) An authority or organization of government established 7 by law thatmay issue obligations pursuant to the municipal8finance act, 1943 PA 202, MCL 131.1 to 139.3, and that either may9levy a property tax ormay expend funds of the authority or 10 organization. 11 (5) "Local school district" means the following: 12 (a) Unless included in subdivision (b) or (c), a school dis- 13 trict or local act school district as defined under the revised 14 school code, 1976 PA 451, MCL 380.1 to 380.1852. 15 (b) After December 15, 1981, a school district or local act 16 school district as defined under the revised school code, 1976 17 PA 451, MCL 380.1 to 380.1852, which levied 35.75 mills, 34.83 18 mills, 28 mills, 31.2155 mills, 24.19 mills, 22.6027 mills, or 19 27.90 mills for operating purposes in 1979-80, and operated under 20 a deficit budget for its 1980-81 fiscal year. Once a school dis- 21 trict is considered a local school district pursuant to this sub- 22 division or subdivision (c), the chief administrative officer 23 shall comply, if necessary, with the requirements of section 17 24 and the local school district shall amend, if necessary, its 25 budget or general appropriations act to conform with the require- 26 ments of section 16. 05932'00 10 1 (c) After December 15, 1981, any school district or local 2 act school district as defined under the revised school code, 3 1976 PA 451, MCL 380.1 to 380.1852, that meets all of the follow- 4 ing criteria: 5 (i) A deficit in excess of $150,000.00 was incurred as of 6 June 30, 1980. 7 (ii) A deficit in excess of $300,000.00 was anticipated for 8 the fiscal year of the school district ending June 30, 1981. 9 (6) "Revenue" means an addition to the assets of a fund that 10 does not increase a liability, does not represent the recovery of 11 an expenditure, does not represent the cancellation of a liabil- 12 ity without a corresponding increase in any other liability or a 13 decrease in assets, and does not represent a contribution of fund 14 capital in enterprise or inintragovernmentalINTERNAL service 15 funds. 16 (7) "Surplus" means an excess of the assets of a fund over 17 its liabilities and reserves. 18 Sec. 4. (1) ThefiscalCHIEF ADMINISTRATIVE officer of 19 each local unit shall make an annual financial report (local unit 20 fiscal report) which shall be uniform for all local units of the 21 same class. 22 (2) The annual financial report shall contain for each 23 fiscal year, all of the following: 24 (a) An accurate statement in summarized form, showing the 25 amount of all revenues from all sources, the amount of expendi- 26 tures for each purpose, the amount of indebtedness, the fund 05932'00 11 1 balances at the close of each fiscal year, and any other 2 information as may be required by law. 3 (b) A statement indicating whether there are derivative 4 instruments or products in the local unit's nonpension AND NON- 5 PUBLIC EMPLOYEE HEALTH CARE FUND investment portfolio at fiscal 6 year end. 7 (c) If the statement under subdivision (b) is affirmative, 8 an accurate schedule reporting the cost and fiscal year end 9 market value of derivative instruments or products in the local 10 unit's nonpension AND NONPUBLIC EMPLOYEE HEALTH CARE FUND invest- 11 ment portfolio at fiscal year end. The information required 12 under this subdivision shall be reported both on an aggregate 13 basis and itemized by issuer and type of derivative instrument or 14 product. 15 (d) A statement indicating whether there are derivative 16 instruments or products in the local unit's pension AND PUBLIC 17 EMPLOYEE HEALTH CARE FUND investment portfolio at fiscal year 18 end. Investments of defined contribution plans and deferred com- 19 pensation plans that are chosen by the employee participating in 20 the plan shall be excluded from the information reported under 21 this subdivision. 22 (e) If the statement under subdivision (d) is affirmative, 23 an accurate schedule reporting the cost and fiscal year end 24 market value of derivative instruments or products in the local 25 unit's pension AND PUBLIC EMPLOYEE HEALTH CARE FUND investment 26 portfolio at fiscal year end. The information required under 27 this subdivision shall be reported both on an aggregate basis and 05932'00 12 1 itemized by issuer and type of derivative instrument or product. 2 Investments of defined contribution plans and deferred compensa- 3 tion plans that are chosen by the employee participating in the 4 plan shall be excluded from the information reported under this 5 subdivision. 6 (3) The annual report filed under this section shall be in 7 lieu of the reporting requirements imposed by section 5(2) of 8 chapter III of the municipal finance act,Act No. 202 of the9Public Acts of 1943, being section 133.5 of the Michigan Compiled10Laws1943 PA 202, MCL 133.5. 11 (4) One copy of the annual financial report required by sub- 12 section (1) shall be filed with the state treasurer within12013days6 MONTHS after the end of the fiscal year of the local 14 unit. The state treasurer shall prescribe the forms to be used 15 by local units for preparation of the financial reports. The 16governing body of alocal unit may request an extension of the 17 filing date from the state treasurer, and the state treasurer may 18 grant the request for reasonable cause.The state treasurer19shall grant a 60-day extension if the local unit presents evi-20dence to the state treasurer that the audit is in progress, and21will be completed within 180 days after the end of the fiscal22year.23 (5) This section does not authorize a local unit to make 24 investments not otherwise authorized by law. 25 Sec. 7. (1) The state treasurer shall prescribe minimum 26 auditing procedures and standards and these shall conform as 27 nearly as practicable to generally accepted auditing standards 05932'00 13 1 established by the American institute of certified public 2 accountants. 3 (2) A report of the auditing procedures applied in each 4 audit shall be prepared on a form provided for this purpose by 5 the state treasurer. 6 (3) One copy of every audit report and 1 copy of the report 7 of auditing procedures applied shall be filed with the state 8 treasurer. 9 (4) The copy of the audit report and the copy of the report 10 of auditing procedures applied required by subsection (3) shall 11 be filed with the state treasurer within120 days6 MONTHS 12 after the end of the fiscal year of a local unit for which an 13 audit has been performed pursuant to section 5. Thegoverning14body of alocal unit may request an extension of the filing date 15 from the state treasurer, and the state treasurer may grant the 16 request for reasonable cause.The state treasurer shall grant a1760-day extension if the local unit presents evidence to the state18treasurer that the audit is in progress, and will be completed19within 180 days after the end of the fiscal year.20 Sec. 8. Every audit report shall do all of the following: 21 (a) State that the audit has been conducted in accordance 22 with generally accepted auditing standards and with the standards 23 prescribed by the state treasurer. 24 (b) State that financial statements in such reports have 25 been prepared in accordance with generally accepted accounting 26 principlesapplied on a consistent basisand with applicable 27 rules and regulations of any state department or agency. Any 05932'00 14 1 deviations from such principles, rules, or regulations shall be 2 described. 3 (c) Disclose any material deviations by the local unit from 4 generally accepted accounting practices or from applicable rules 5 and regulations of any state department or agency. 6 (d) Disclose any fiscal irregularities, including but not 7 limited to any deviations from the requirements of section 4; 8 defalcations; misfeasance; nonfeasance; or malfeasance that came 9 to the auditor's attention. 10 Sec. 14. (1) Unless otherwise provided by law, charter, 11 resolution, or ordinance, the chief administrative officer shall 12 have final responsibility for budget preparation, presentation of 13 the budget to the legislative body, and the control of expendi- 14 tures under the budget and the general appropriations act. 15 (2) Unless another person is designated by charter, the 16 chief administrative officer in each local unit shall prepare the 17 recommended annual budget for the ensuing fiscal year in the 18 manner provided in sections 15 to 20a. The budgetary centers of 19 the local unit shall provide to the chief administrative officer 20 information which the chief administrative officer considers nec- 21 essary and essential to the preparation of a budget for the ensu- 22 ing fiscal period for presentation to the local unit's legisla- 23 tive body. Each administrative officer or employee of a budget- 24 ary center shall comply promptly with a request for information 25 which the chief administrative officer makes. 26 (3) The chief administrative officer shall transmit the 27 recommended budget to the legislative body according to an 05932'00 15 1 appropriate time schedule developed by the local unit. The 2 schedule shall allow adequate time for review AND ADOPTION by the 3 legislative body before commencement of the budget year. The 4 recommended budget, when transmitted by the chief administrative 5 officer, shall be accompanied by a suggested general appropria- 6 tions act to implement the budget. The suggested general appro- 7 priations act shall fulfill the requirements of section 16. 8 (4) The recommended budget transmitted by the chief adminis- 9 trative officer shall be considered by the legislative body. 10 (5) The chief administrative officer shall furnish to the 11 legislative body information the legislative body requires for 12 proper consideration of the recommended budget.This may13include expenditure and revenue data on the local unit's most14recently completed fiscal year.Before final passage of a gen- 15 eral appropriations act by the legislative body, a public hearing 16 shall be held as required byAct No. 43 of the Public Acts of17the Second Extra Session of 1963, being sections 141.411 to18141.415 of the Michigan Compiled Laws1963 (2ND EX SESS) PA 43, 19 MCL 141.411 TO 141.415, andAct No. 267 of the Public Acts of201976, as amended, being sections 15.261 to 15.275 of the Michigan21Compiled LawsTHE OPEN MEETINGS ACT, 1976 PA 267, MCL 15.261 TO 22 15.275. 23(6) The responsibilities and duties imposed by this section24upon the chief administrative officer shall be discharged by the25fiscal officer in a local unit which has not elected or desig-26nated a chief administrative officer.05932'00 16 1 Sec. 15. (1) The recommended budget shall include at least 2 the following: 3 (a) Expenditure data for the most recently completed fiscal 4 year and estimated expenditures for the current fiscal year. 5 (b) An estimate of the expenditure amounts required to con- 6 duct, in the ensuing fiscal year, the government of the local 7 unit, including its budgetary centers. 8 (c) Revenue data for the most recently completed fiscal year 9 and estimated revenues for the current fiscal year. 10 (d) An estimate of the revenues, by source of revenue, to be 11 raised or received by the local unit in the ensuing fiscal year. 12 (e) The amount of surplus or deficit that has accumulated 13 from prior fiscal years, together with an estimate of the amount 14 of surplus or deficit expected in the current fiscal year. The 15 inclusion of the amount of an authorized debt obligation to fund 16 a deficit shall be sufficient to satisfy the requirement of fund- 17 ing the amount of a deficit estimated under this subdivision. 18 (f) An estimate of the amounts needed for deficiency, con- 19 tingent, or emergency purposes., and the amounts needed to pay20and to discharge the principal and interest of debt of the local21unit due in the ensuing fiscal year.22(g) The amount of proposed capital outlay expenditures,23except those financed by enterprise, public improvement or build-24ing and site, or special assessment funds, including the esti-25mated total cost and proposed method of financing of each capital26construction project and the projected additional annual27operating cost and the method of financing the operating costs of05932'00 17 1each capital construction project for 3 years beyond the fiscal2year covered by the budget.3(h) An informational summary of projected revenues and4expenditures of any special assessment funds, public improvement5or building and site funds, intragovernmental service funds, or6enterprise funds, including the estimated total cost and proposed7method of financing each capital construction project, and the8projected additional annual operating cost and the method of9financing the operating costs of each capital construction10project for 3 years beyond the fiscal year covered by the11budget.12 (G)(i)Other data relating to fiscal conditions that the 13 chief administrative officeror, in local units which have not14elected or designated a chief administrative officer, the fiscal15officerconsiders to be useful in considering the financial 16 needs of the local unit. 17 (2) The total estimated expenditures, including an accrued 18 deficit, in the budget shall not exceed the total estimated reve- 19 nues, including an available unappropriated surplus and the pro- 20 ceeds from bonds or other obligations issued under the fiscal 21 stabilization act or the balance of the principal of these bonds 22 or other obligations. 23 Sec. 16. (1) Unless another method for adopting a budget is 24 provided by a charter provision in effect on April 1, 1980, the 25 legislative body of each local unit shall pass a general appro- 26 priations act for all funds except trust or agency, 27intragovernmentalINTERNAL service, enterprise,public05932'00 18 1improvement or building and site, or special assessmentDEBT 2 SERVICE OR CAPITAL PROJECT funds for which the legislative body 3 may pass a special appropriation act. 4 (2) The general appropriations act shall set forth the total 5 number of mills of ad valorem property taxes to be levied and the 6 purposes for which that millage is to be levied. The amendatory 7 act that added this subsection shall be known and may be cited as 8 "the truth in budgeting act". 9 (3) The general appropriations act shall set forth the 10 amounts appropriated by the legislative body to defray the expen- 11 ditures and meet the liabilities of the local unit for the ensu- 12 ing fiscal year, and shall set forth a statement of estimated 13 revenues, by source, in each fund for the ensuing fiscal year. 14 (4) The general appropriations act shall be consistent with 15 uniform charts of accounts prescribed by the state treasurer or, 16 for local school districts and intermediate school districts, by 17 the state board of education. 18 (5) This act shall not be interpreted to mandate the devel- 19 opment or adoption by a local unit of a line-item budget or 20 line-item general appropriations act. 21 (6) The legislative body shall determine the amount of money 22 to be raised by taxation necessary to defray the expenditures and 23 meet the liabilities of the local unit for the ensuing fiscal 24 year, shall order that money to be raised by taxation, within 25 statutory and charter limitations, and shall cause the money 26 raised by taxation to be paid into the funds of the local unit. 05932'00 19 1 (7) Except as otherwise permitted by section 102 of the 2 state school aid act of 1979,Act No. 94 of the Public Acts of31979, being section 388.1702 of the Michigan Compiled Laws1979 4 PA 94, MCL 388.1702, or by other law, the legislative body shall 5 not adopt a general appropriations act or an amendment to that 6 act which causes estimated total expenditures, including an 7 accrued deficit, to exceed total estimated revenues, including an 8 available surplus and the proceeds from bonds or other obliga- 9 tions issued under the fiscal stabilization act,Act No. 80 of10the Public Acts of 1981, being sections 141.1001 to 141.1011 of11the Michigan Compiled Laws1981 PA 80, MCL 141.1001 TO 141.1011, 12 or the balance of the principal of these bonds or other 13 obligations. 14 Sec. 17. (1) Except as otherwise provided in section 19, a 15 deviation from the original general appropriations act shall not 16 be made without amending the general appropriations act. Subject 17 to section 16(2), the legislative body of the local unit shall 18 amend the general appropriations act as soon as it becomes appar- 19 ent that a deviation from the original general appropriations act 20 is necessary and the amount of the deviation can be determined. 21 An amendment shall indicate each intended alteration in the pur- 22 pose of each appropriation item affected by the amendment. The 23 legislative body may require that the chief administrative offi- 24 cer or fiscal officer provide it with periodic reports on the 25 financial condition of the local unit. 26 (2) If, during a fiscal year, it appears to the chief 27 administrative officer, or the fiscal officer in local units05932'00 20 1which have not elected or designated a chief administrative2officer,or to the legislative body that the actual and probable 3 revenues from taxes and other sources in a fund are less than the 4 estimated revenues, including an available surplus upon which 5 appropriations from the fund were based and the proceeds from 6 bonds or other obligations issued under the fiscal stabilization 7 act,Act No. 80 of the Public Acts of 1981, being8sections 141.1001 to 141.1011 of the Michigan Compiled Laws1981 9 PA 80, MCL 141.1001 TO 141.1011, or the balance of the principal 10 of these bonds or other obligations, the chief administrative 11 officer or fiscal officer shall present to the legislative body 12 recommendations which, if adopted, would prevent expenditures 13 from exceeding available revenues for that current fiscal year. 14 The recommendations shall include proposals for reducing appro- 15 priations from the fund for budgetary centers in a manner that 16 would cause the total of appropriations to not be greater than 17 the total of revised estimated revenues of the fund, or proposals 18 for measures necessary to provide revenues sufficient to meet 19 expenditures of the fund, or both. The recommendations shall 20 recognize the requirements of state law and the provisions of 21 collective bargaining agreements. 22 Sec. 18. (1) A member of the legislative body, chief admin- 23 istrative officer,fiscal officer,administrative officer, or 24 employee of the local unit shall not create a debt or incur a 25 financial obligation on behalf of the local unit unless the debt 26 or obligation is permitted by law. 05932'00 21 1 (2) The chief administrative officeror the fiscal officer2 may cause the appropriations made by the legislative body for the 3 local unit and its budgetary centers to be divided into allot- 4 ments if the allotments are based upon the periodic requirements 5 of the local unit and its budgetary centers. 6 (3) Except as otherwise provided in section 19, an adminis- 7 trative officer of the local unit shall not incur expenditures 8 against an appropriation account in excess of the amount appro- 9 priated by the legislative body. The chief administrative offi- 10 cer,the fiscal officer,an administrative officer, or an 11 employee of the local unit shall not apply or divert money of the 12 local unit for purposes inconsistent with those specified in the 13 appropriations of the legislative body. 14 Sec. 19. (1) A member of the legislative body, the chief 15 administrative officer,fiscal officer,an administrative offi- 16 cer, or an employee of a local unit shall not authorize or par- 17 ticipate in the expenditure of funds except as authorized by a 18 general appropriations act. An expenditure shall not be incurred 19 except in pursuance of the authority and appropriations of the 20 legislative body of the local unit. 21 (2) The legislative body in a general appropriations act may 22 permit the chief administrative officeror fiscal officerto 23 execute transfers within limits stated in the act between appro- 24 priations without the prior approval of the legislative body. 25 Sec. 20. A violation of sections 17 to 19 by the chief 26 administrative officer,the fiscal officer,an administrative 27 officer, employee, or member of the legislative body of the local 05932'00 22 1 unit disclosed in an audit of the financial records and accounts 2 of the local unit in the absence of reasonable procedures in use 3 by the local unit to detect such violations shall be filed with 4 the state treasurer and reported by the state treasurer to the 5 attorney general. For local and intermediate school districts, 6 the report of a violation shall be filed with the state superin- 7 tendent of public instruction instead of the state treasurer. 8 The attorney general shall review the report and initiate appro- 9 priate action against the chief administrative officer, fiscal 10 officer, administrative officer, employee, or member of the leg- 11 islative body. For the use and benefit of the local unit, the 12 attorney general or prosecuting attorney may institute a civil 13 action in a court of competent jurisdiction for the recovery of 14 funds of a local unit, disclosed by an examination to have been 15 illegally expended or collected as a result of malfeasance and 16 not accounted for as provided in sections 17 to 19, and for the 17 recovery of public property disclosed to have been converted or 18 misappropriated. 05932'00 Final page. LBO