Michigan school districts will receive help more quickly if the state determines they are at risk of a financial emergency, making sure they have the resources needed to best educate students, under a package of bills signed Tuesday by Gov. Rick Snyder.
“We need to enable school districts to resolve potential financial issues before they become unmanageable and this bill package provides the assistance they need to get on solid footing and make better financial decisions,” Snyder said. “Having funding parameters and planning ahead has put the state budget in order, and this proactive approach must be replicated by schools so that students are not negatively impacted.”
House Bill 4325, sponsored by state Rep. Earl Poleski, requires school districts with a fund balance of less than 5 percent for the last two fiscal years to submit to the state budget assumptions used when determining its annual budget. Also under the bill, the state treasurer determines if any school districts are financially stressed and notifies the district and its intermediate school district. School districts would then have the option of working with an intermediate school district to develop recommendations for the district.
The state treasurer may require periodic reporting if the district does not elect to work with an intermediate district or implement the intermediate district’s recommendations, and may eventually require an enhanced deficit elimination plan. It is now Public Act 109 of 2015.
HB 4326, also sponsored by Poleski, includes the state treasurer in the definition of State Financial Authority instead of the state superintendent for those districts subject to deficit elimination plans, and requires the State Financial Authority to conduct a preliminary financial stress review for districts that do not submit or comply with deficit elimination plans.
HB 4327, sponsored by state Rep. Al Pscholka, provides for an enhanced deficit elimination plan if required by the state treasurer. It is now PA 111.
HB 4328, sponsored by state Rep. Lisa Posthumus Lyons, allows the state to withhold certain funding if a district is required to submit deficit elimination plans and fails to do so. It is now PA 112.
HB 4329, also sponsored by Lyons, allows the state treasurer to declare a financial emergency within a district if it fails to submit or comply with an enhanced deficit elimination plan, and recommend that the governor appoint an emergency manager. It is now PA 113.
HB 4330, sponsored by state Rep. Tim Kelly, allows the Treasury Department to withhold up to 10 percent of state school aid if a district does not comply with the Uniform Budget and Accounting Act. It is now PA 114.
HB 4331, sponsored by state Rep. Brad Jacobsen, increases the cap on emergency loans to municipalities and prohibits the loan board from authorizing a loan to Detroit Public Schools. It is now PA 115.
HB 4332, sponsored by state Rep. Daniela Garcia, removes references in statute on prior loan limits and updates current law to the loan limits pursuant to HB 4331. It is now PA 116.
For additional information on this and other legislation, visit http://www.legislature.michigan.gov.
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