Gov. Rick Snyder on Wednesday confirmed his determination that the Pontiac School District is in a financial emergency. Pontiac district leaders now have seven days to
select one of four options in determining how to address the financial emergency: a consent agreement; an emergency manager; a neutral evaluation process; or Chapter 9 bankruptcy.
"We need to make sure that Pontiac School District can open its doors and be ready for students," Gov. Snyder said. "Our goal here is to set a course that restores financial stability in the district so Pontiac students can get the education they need. I’m looking forward to working with district leaders to determine that path."
On August 6, Gov. Snyder determined that a local government financial emergency exists in Pontiac Schools, pursuant to Public Act 436 of 2012 -- the Local Financial Stability and Choice Act – based on a detailed report from an independent, six-member financial review team. The report noted several conditions, including:
- The district’s general fund deficit for the 2012 fiscal year was $37.7 million, having quadrupled since 2009. The deficit increased by 53.6 percent -- from $24.5 to $37.7 million -- between 2011 and 2012.
- As of June 30, the district had about $33 million in unpaid bills to vendors.
- Audit reports for the last three years show significant differences between revenue and spending as budgeted versus actual revenue and spending, with the district spending more than planned.
- District staff members appear to have violated state law by using debt retirement funds to cover payroll.
- A $7.8 million civil judgment was ordered by the 6th Judicial Circuit Court against the district on Jan. 18, 2013 on behalf of Michigan Education Special Services Association.
- The district on May 1 defaulted on a $1.4 million debt service payment related to energy bonds issued in 2006.
- By law, the school board has until Aug. 21, 2013 to select a local government option.