House Introduced Bill 4421

HOUSE BILL No. 4421

March 6, 2001, Introduced by Reps. Thomas, DeWeese, Schauer, Kolb and Garza and referred to the Committee on Appropriations.

A bill to create a child loan guarantee commission and its

powers and duties; to create a child care loan guarantee fund; to

prescribe the powers and duties for certain state agencies and

officers; to prescribe limits on the use of the fund; and to make

an appropriation.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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Sec. 1. This act shall be known and may be cited as the

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"child care loan guarantee act".

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Sec. 2. The purpose of this act is to increase the quality

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and availability of child care in low-income areas of this

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state.

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Sec. 3. As used in this act:

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(a) "Child care and development block grant" means the block

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grant established by the child care and development grant act of

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1990, subchapter C of chapter 8 of subtitle A of title VI of the

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omnibus reconciliation act of 1981, Public Law 97-35, 42

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U.S.C. 9858 to 9858e, 9858g to 9858q.

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(b) "Child care provider" or "provider" means a person who

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provides child care when both of the following apply:

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(i) The care is for less than 18 hours in a 24-hour period.

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(ii) The care is provided in a place other than the child's

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residence unless both of the following are true:

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(A) The provider is the child's primary caregiver.

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(B) The provider provides care for other children in the

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residence who are not related to the provider.

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(c) "Commission" means the child care loan commission cre-

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ated in section 4.

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(d) "Department" means the department of treasury.

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(e) "Fund" means the child care loan guarantee fund created

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in section 5.

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(f) "Resource and referral agency" means an organization

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that does all of the following:

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(i) Informs child care providers about applicable federal,

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state, and local regulations.

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(ii) Explains existing child care programs to parents.

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(iii) Refers parents to existing child care programs.

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(iv) Suggests criteria, including basic health and safety

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guidelines, for parents to use when selecting a child care

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provider.

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(v) Informs parents how to file complaints about a child

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care provider and how to determine the status of an ongoing or

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previously substantiated complaint.

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Sec. 4. (1) The child care loan guarantee commission is

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created within the state treasury.

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(2) The commission shall consist of the following members,

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appointed by the governor, and subject to the advice and consent

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of the senate:

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(a) Two members who have experience in investment finance

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and experience in assembling capital, starting new businesses,

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and expanding small businesses.

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(b) One member who represents a philanthropic organization

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with experience in evaluating funding proposals.

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(c) One employee of a state agency that has responsibility

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for child care or other social programs.

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(d) One state employee who has responsibility for banking

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regulation.

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(e) One member who is an expert in early childhood

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development.

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(f) One home-based child care provider.

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(g) One member who represents a center-based child care

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provider.

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(h) One member who represents a resource and referral

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agency.

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(i) One parent whose child is under 12 years of age at the

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beginning of that member's term.

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(3) A member appointed under this section shall not serve

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more than 3 terms. The governor shall appoint the members of the

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child care loan guarantee commission within 30 days after the

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effective date of this act.

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(4) A commission member shall serve for a term of 2 years or

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until a successor is appointed, whichever is later, except that

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of the members first appointed 4 shall serve for 1 year, 3 shall

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serve for 2 years, and 3 shall serve for 3 years. If a vacancy

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occurs on the commission, the governor shall make an appointment

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for the unexpired term in the same manner as the original

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appointment. The governor may remove a commission member for

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incompetency, dereliction of duty, malfeasance, misfeasance, or

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nonfeasance in office, or any other good cause.

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(5) The first meeting of the commission shall be called by

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the appointee under subsection (2)(d). At the first meeting, the

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commission shall elect from among its members a chairperson and

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other officers as it considers necessary or appropriate. After

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the first meeting, the commission shall meet at least quarterly

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or more frequently at the call of the chairperson or if requested

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by 5 or more members. A majority of the members of the commis-

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sion constitute a quorum for the transaction of business at a

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meeting of the commission. A majority of the members present and

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serving are required for official action of the commission.

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(6) The business that the commission may perform shall be

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conducted at a public meeting of the commission held in compli-

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ance with the open meetings act, 1976 PA 267, MCL 15.261 to

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15.275. A writing prepared, owned, used, in the possession of,

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or retained by the commission in the performance of an official

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function is subject to the freedom of information act, 1976 PA

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442, MCL 15.231 to 15.246.

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(7) A commission member shall serve without compensation

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except that a public commission member may be reimbursed for his

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or her actual and necessary expenses incurred in performing his

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or her official duties as a commission member.

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Sec. 5. (1) The child care loan guarantee fund is created

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within the state treasury.

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(2) The state treasurer may receive money or other assets

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from any source for deposit into the fund. The state treasurer

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shall direct the investment of the fund. The state treasurer

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shall credit interest and earnings to the fund from fund

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investments. Money in the fund at the close of the fiscal year

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shall remain in the fund and shall not lapse to the general

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fund.

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(3) Upon appropriation, the department of treasury shall

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expend money from the fund only for 1 or more of the following

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purposes:

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(a) Construction, purchase, lease, or improvement of a

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building or other facility.

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(b) Purchase or improvement of land.

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(c) Purchase or loan of equipment, including a vehicle.

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(d) Staff training.

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(e) Payment of initial operating expenses.

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(f) Payment of salaries.

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(g) Marketing.

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Sec. 6. (1) The commission shall promulgate rules concern-

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ing the application and approval of loan guarantees. The rules

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shall give priority to loan guarantees. As directed by the

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rules, loan guarantees shall be awarded so that each of the

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following is achieved:

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(a) The loan guarantees are awarded to providers who serve

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or intend to serve families with below median income.

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(b) The loan guarantees are awarded in communities that

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demonstrate the greatest need for child care services.

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(c) The loan guarantees are awarded in geographic distribu-

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tion throughout the state.

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(2) The commission shall not approve a loan guarantee

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greater than $30,000.00. The commission shall not guarantee an

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amount greater than 80% of a loan. The commission shall not

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guarantee an aggregate amount greater than 5 times the amount in

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the fund.

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(3) In selecting a child care provider for a loan guarantee,

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the board shall use the following criteria:

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(a) The staff and programming quality of the applicant.

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(b) Ratio of children to staff.

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(c) Quality of the facilities.

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(d) Degree of coordination with head start or other

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programs.

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(e) Quality of administrative and financial management.

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(4) An applicant for a child care loan guarantee shall pro-

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vide all of the following:

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(a) A detailed description of the project.

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(b) A disclosure of the money available to the applicant

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without assistance from the commission.

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(c) Information that relates to the inability of the

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applicant to obtain adequate financing on reasonable terms

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through normal lending channels, such as a letter from a lender

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certifying that it would not approve credit without the loan

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guarantee.

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(d) Credit references for the applicant if available.

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(e) A 2-year projected budget.

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(f) A comprehensive, 2-year business plan that includes the

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applicant's plans in all of the following areas:

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(i) Debt reduction.

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(ii) Marketing.

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(iii) Staff training.

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(iv) Facility improvement.

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(v) Program improvement.

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(vi) Other information that the commission requests.

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Sec. 7. An applicant shall provide collateral to the com-

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mission in an amount equal to 10% of the loan guarantee amount.

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The commission may seize collateral if the applicant defaults.

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The collateral shall be used to offset the cost to the fund.

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Sec. 8. (1) There is appropriated an amount of

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$1,000,000.00 for the fiscal year beginning October 1, 2001. The

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money shall be deposited into the fund.

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(2) The legislature shall appropriate sufficient money to

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carry out the purpose of this act.

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Enacting section 1. This act takes effect October 1, 2001.

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