“AN INDEPENDENT review team concludes that a financial emergency exists in the Benton Harbor Area Schools under the provisions created by Public Act 436 of 2012,” states a press release from Michigan Gov. Rick Snyder’s office.
Five Michigan school districts are under now the control of emergency managers. All of the districts serve predominantly black students.
The review team, appointed on June 23, conducted meetings to consider the district’s finances and interviewed school administrators, department heads, union leaders, and others with knowledge and relevant information. The team also conducted a public information meeting with district residents, as required by law.
The team’s report indicates numerous conditions led to the determination that a financial emergency exists in the district, including:
According to the district’s 2013 fiscal year financial audit, the cumulative general fund deficit decreased by 3.6 percent, from $16.1 millionon June 30, 2012, to $15.5 million on June 30, 2013. However, the net change was primarily the result of a $2 million emergency loan. Without the loan, the cumulative general fund deficit would have increased 8.8 percent, from $16.1 millionto $17.5 million.
School district officials are in violation of Section 17 of Public Act 2 of 1968, the Uniform Budgeting and Accounting Act, by permitting expenditures in excess of budgeted appropriations.
According to the district’s 2013 fiscal year financial audit report, general fund liabilities as of June 30, 2013, were $21.4 million, while general fund assets totaled only $5.9 million.
As of June 30, the district owed more than $3.6 million in total accounts payable to various vendors, including more than $1.3 million that was more than 211 days past due.
Members of the Benton Harbor Area Schools review team were: Michael Krouse, administrator, State Finance Division, Department of Treasury; Kyle Guerrant, deputy superintendent, Michigan Department of Education; Mike Gilliland, director, Office of Financial Services, Department of Technology, Management & Budget; Bret Witkowski, Berrien County treasurer; Max Chiddister, president, Chiddister and Associates; and Frederick Headen, legal advisor, Department of Treasury.