Mich. Gov. Snyder determines that financial emergency exists in Benton Harbor area schools

By: NewsCenter 16 Staff Email
By: NewsCenter 16 Staff Email

BENTON HARBOR, Mich.--- Michigan Gov. Rick Snyder on Monday agreed with an independent financial review team in determining that a financial emergency currently exists in Benton Harbor Area Schools.

School district officials now have seven days to request a hearing before the State Superintendent or his designee.

Gov. Snyder in reaching this determination cited numerous conditions in the review team's report. Highlighted conditions include:

·While the district’s cumulative general fund deficit decreased from $16.1 million on June 30, 2012, to $15.5 million on June 30, 2013, that was primarily due to a $2 million emergency loan. Without the loan, the deficit would have increased nearly a million and half dollars to $17.5 million over the same period.

·District officials violated the state’s Uniform Bud­geting and Accounting Act (Section 17 of Public Act 2 of 1968) by permitting expenditures in excess of budgeted appropriations.

·General fund liabilities were $21.4 million, while general fund assets totaled only $5.9 million.

·As of June 30, 2014, the district owed more than $3.6 million in total accounts payable to vendors, including more than $1.3 million that was more than 211 days past due.

Should a hearing be requested, it will be held on Wednesday, Aug. 20, 2014, at 1 p.m., in Lansing, before State Superintendent Mike Flanagan or his designee.

Following the hearing, or if no hearing is requested, the governor will either confirm or revoke his determination that a financial emergency exists in the district.

If a financial emergency is confirmed, the state’s emergency manager law ensures local officials have a strong voice in how a financial crisis in their district is addressed by choosing one of four options: consent agreement; emergency manager; neutral evaluation; or Chapter 9 bankruptcy.

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