Review finds 'financial emergency' in Highland Park schools

Report sent to Michigan Gov. Rick Snyder


DETROIT – The 10-member independent Financial Review Team appointed to assess the financial situation of the Highland Park School (HPS) District concluded and issued its final report to Gov. Rick Snyder on Tuesday.

The report determined that a financial emergency exists within the district and no satisfactory plan exists to resolve that emergency and recommends the appointment of an emergency manager, in accordance with Public Act 4 of 2011.
"The Highland Park school district is in a financial free-fall and we must do everything we can to protect the students and educators from feeling the brunt of the impact," said state Superintendent of Public Instruction Mike Flanagan. "The quality education of the Highland Park students is our top priority."
The review team cited the following conditions that led to the unanimous 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'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.
  • The district has incurred an operating deficit in five of the last six fiscal years.
  • As of Nov. 15, 2011, HPS owed more than $1.7 million in accounts payable, which range from 30 days to 6 months old. These accounts payable, particularly the most aged, pose serious risk that HPS residents would be required to pay additional property taxes if one or more of the accounts payable were converted to a court-ordered judgment levy.

DOWNLOAD: Report of the Highland Park School District

"The thorough review completed by the Financial Review Team clearly shows that HPS is facing monumental financial challenges," said State Treasurer Andy Dillon. "The looming threat of missed payments necessitates that action be taken immediately to ensure the students of
Highland Park continue to receive a quality education."
Snyder now has 10 days to review the report and concur or not on whether a financial emergency exists in Highland Park Schools, as outlined in the review team report. Once this determination is made, the district has seven days to request a hearing on the matter.
After the hearing, or if no hearing is requested, the governor must reaffirm or revoke his initial determination. If the declaration of a "financial emergency" is affirmed, then an emergency manager would be appointed. The district has 10 business days to appeal the governor's final
determination to Ingham Co. Circuit Court by a resolution adopted by 2/3 of the members of the HPS School Board.

The review team consisted of Carol Wolenberg, deputy state superintendent (State Superintendent's designee), Tom Saxton, deputy state treasurer (State Treasurer's designee), Doug Ringler, director, Office of Internal Audit Services in the Department of Technology, Management and Budget (DTMB Director's designee), Rob Bovitz, certified public accountant (nominee of the Speaker of the House of Representatives), Robert Charles, Chairman/CEO of North Star Advisors, Bloomfield Hills, MI (nominee of Senate Majority Leader), Phil Pierce, Pierce Monroe and Associates (representing persons with relevant professional experience), David Martell, executive director, Michigan School Business Officials Association
(representing persons with relevant professional experience), John C. Clark, Giarmarco, Mullins & Horton, P.C. (representing persons with relevant professional experience), Brom Stibitz, senior policy advisor in Department of Treasury (representing state officials with relevant professional experience), and Frederick Headen, director of the Michigan Department of Treasury's Local Government Services Bureau (representing state officials with relevant professional experience).