Friday, January 20, 2012
Highland Park Schools makes pitch to avoid emergency manager
"The district does have a plan to alleviate the crisis — it's called a Deficit Elimination Plan and it gives us targets to accomplish over a four-year period," said Randy Lane, financial director for the district. He testified before state treasury officials and members of an independent review team, which determined a financial emergency exists at HPS.
"An emergency manager is not needed in Highland Park Schools," Lane testified. "We have a competent staff that reflects the community that can solve problems."
Lane said the state has been well aware of financial problems in the district dating to 2007, and district officials have reduced the budget by 48 percent since 2009.
But over the last year, Lane said the state chose to use "a heavy hand" with the district, pulling money back when enrollment came in lower than projected, denying a request to defer state aid to avoid cash shortages and losing federal dollars. Those actions created some of the district's cash shortfalls, he argued.
"But no matter how hard we tried, the state decided not to work with us," Lane said.
Members of the state review team defended the report, saying the state simply followed the law on pupil counts and making adjustments, which it does to all districts, that the Treasury office made a $4.1 million payment to HPS, which it declared a hardship in July and was on site recently to help resolve a food service contract issue.
"While you are valiantly trying to save the district, you are going in the opposite direction," Carol Wolenberg, a review team member, said.
On Jan. 2, a review team recommended to Snyder that an emergency manager be installed to take over the district's finances. Last week, Snyder declared a financial emergency the same day the state Department of Treasury was forced to give the district an advance of $188,000 to make payroll.
The district's deficit has increased from $6.6 million to $11.3 million over the past fiscal year. Last week, the district told state Treasurer Andy Dillon it needed an extra $3.4 million — on top of $4.2 million it got in August — to get through the rest of the school year.
Jan Ellis, spokeswoman for the Michigan Department of Education, said the meeting is not a fact-finding hearing.
"The purpose is to afford district officials an opportunity to indicate whether the findings of the Review Team report were supported by competent, material and substantial evidence," Ellis said.
Following the hearing, a record of the proceedings will be transmitted by the hearing officer to the governor, who will make the final determination as to whether his original determination stands that a financial emergency exists, Ellis said.
During the hearing, district attorney George Butler asked the state to send the review team back to look further at the progress the district has made and will make if it's given the opportunity.
Deputy Treasurer Roger Fraser said he would file a report with the governor by the end of the day Monday. The report will agree or disagree there is a financial emergency in HPS. The governor then will issue a decision on installing an emergency manager.
Terry Stanton, a treasury spokesman, said Fraser does not have the option of asking the governor to send the team back.
Highland Park Schools President John Holloway said the district needs more time and money to correct its financial problems. Holloway said he believes the state is seriously considering consolidating the district with a nearby school system. Detroit Public Schools and Hamtramck Schools are two likely candidates, observers have said.
"I'm a traditionalist. We'd like to remain a separate entity, but let's face it — many communities cannot afford to exist. They can't afford themselves," Holloway said.
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