04/19/2010
LANSING – The State Board of Education last week called for greater oversight of Emergency Financial Managers for school districts. The Board unanimously passed a motion to support improvements to Public Act 72 to ensure accountability and transparency of an Emergency Financial Manager (EFM).
Current law gives no authority or role to the State Board or state Superintendent of Public Instruction of day-to-day operations, decisions, review of contracts or contracting practices and decisions of an Emergency Financial Manager or his/her staff. According to the law, the role of the State Superintendent is to ensure that the Emergency Financial Manager works to eliminate the financial emergency at that school district.
“More needs to be done to make sure that Emergency Financial Managers are doing what is right for our school districts and our school children,” said State Board of Education President Kathleen N. Straus.
The current provisions of P.A. 72 limit the role of the state Superintendent to declaring a Financial Emergency of a school district; recommending names to the Governor for appointment of an Emergency Financial Manager; and authority to allow the Emergency Financial Manager to hire a few staff members to assist the EFM in addressing the financial emergency.
“This has nothing to do with any current court case and goes beyond the current situation at Detroit Public Schools,” said state Superintendent of Public Instruction Mike Flanagan. “Financial emergencies may need to be declared in other school districts across Michigan, as they continue to struggle to make the necessary reforms to bring their finances into balance.”
P.A. 72 addresses financial emergencies and Emergency Financial Managers for both local municipalities and school districts. On the municipal side of P.A. 72, there is an oversight board that is designed to review and monitor the work of the Emergency Financial Manager of those municipalities. There is no such independent oversight board on the school side of P.A. 72.
It is being recommended that if and when the state Legislature revises P.A. 72, the law be amended to include an oversight board for an Emergency Financial Manager of a school district.
Discussions on this point included that to prevent any suggestion of conflict of interest and provide the proper measure of checks and balances, any such oversight board should not include the Governor, who appoints an Emergency Financial Manager, or the Superintendent of Public Instruction, who declares the financial emergency.
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