January 12, 2012
Without Advance, District Faced Payless Payday
State Treasurer Andy Dillon and State Superintendent of Public Instruction Mike Flanagan today announced that the State of Michigan will advance the Highland Park School District’s January State Aid payment to ensure the district can meet its financial obligations, including this week’s payroll and that students can learn and teachers can teach. Highland Park Superintendent Edith Hightower and the HPSD Board submitted the request this week.
“Staff from both Treasury and the Department of Education has been in daily contact with representatives from Highland Parks Schools, at times more than once a day, to get the most current and accurate representation of the district’s finances,” said State Treasurer Dillon. “Given the difficulty we have had getting consistent data, I directed staff to visit the district today to determine exactly where things stand relative to the district’s cash balance and its immediate financial obligations including payroll.”
The district originally requested $251,000 and after verification today by Treasury staff it was determined that the amount required to make this week’s payroll was $188,000.
Superintendent of Public Instruction Mike Flanagan says the district’s State Aid payment, scheduled for January 20th, will be advanced to ensure the students of Highland Park Schools remain in class.
“Children who attend Highland Park Schools deserve the best education possible,” Flanagan said. “We cannot and will not let this financial emergency impact these young people and their hopes for the future.”
Earlier today, Gov. Rick Snyder determined that a financial emergency exists in the district, based on a review and recommendation from the independent 10-member financial review team he appointed Nov. 3. The financial review team noted the following in its reports to the governor:
- According to the district’s fiscal year 2011 audit, the cumulative general fund deficit increased by 51 percent over the previous fiscal year, from approximately $6.6 million to more than $11 million.
- In fiscal year 2011, general fund expenditures and transfers out exceeded general fund revenues by approximately $3.8 million.
- The district has incurred an operating deficit in five of the last six fiscal years. These operating deficits have ranged from nearly $600,000 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 next appropriate step is the appointment of an emergency manager. The district may request a hearing, which would be held next week.
The district may request a hearing upon the governor’s determination that a financial emergency exists. Given that the Highland Park Board of Education has, by resolution indicated an intention to request a hearing, one has been scheduled for 10 a.m., Tuesday Jan. 17, 2012. The hearing, before Superintendent of Public Instruction, Mike Flanagan, will be held at the Hannah Building in Lansing.
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.