January 12, 2012

Educating Students is Top Prioirity Amidst Financial Crisis

Gov. Rick Snyder today informed the Highland Park School District that he has determined a financial emergency exists in the district, following the report and recommendations of a 10-member, independent financial review team which assessed the district’s finances late last year and reported its findings to the governor last week.

“It is critical that students in the Highland Park School District get the education they need and deserve,” Snyder said. “For that to continue, the Highland Park School District must have stable finances. Through the comprehensive reviews that have been conducted, it is clear the district faces monumental financial challenges.”

Governor Snyder cited the following conditions, as reported by the financial review team, in making his determination.

• The HPS cumulative deficit increased by 51 percent over the past fiscal year, from June 30, 2010, to June 30, 2011, growing from $6.6 million to $11.3 million, according to the district’s fiscal year 2011 financial audit. Expenditures exceeded revenues by $3.8 million in FY 11.

• The district has incurred an operating deficit in five of the last six fiscal years. These operating deficits have ranged from $597,733 during the 2007 fiscal year to more than $3.5 million during the 2010 fiscal year. The district’s average operating deficit in recent years has been $2.3 million.

• As of Nov. 15, 2011, HPS owed more than $1.7 million in accounts payable, which range from 30 days to 6 months old.

• The district’s pupil enrollment has decreased by 58 percent since 2006, dropping from 3,179 pupils to 1,331 for FY 2011. Current estimates show a pupil count of 969.

Under Public Act 4 of 2011, the Local Government and School District Fiscal Accountability Act, the appropriate next step is the appointment of an emergency manager.

The district may request a hearing upon the governor’s deter­mination that a finan­cial emergency exists.

For more information about PA 4, visit the Local Government Fiscal Health page on the Department of Treasury’s website at www.michigan.gov/treasury.

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