Fiscal Accountability

The School Review and Fiscal Accountability Division has two methods at which the division can be proactive in identifying school districts or public-school academies that may be facing potential fiscal stress. Section 1219 of The Revised School Code, Public Act 451 of 1976 gives the division and district the opportunity to work collaboratively to provide technical support and additional resources to avoid future decline in fund balance (commonly referred to as the “Early Warning Process”). The Early Warning Process is the first response when declining fiscal health is identified. It is not a trigger for preliminary review under the Local Financial Stability and Choice Act, Public Act 436 of 2012, and is not presumptive evidence that a financial emergency (as defined in the Act) will be declared for a district in the future should a review under the Act be required. The Early Warning Process was developed in efforts to prevent financial emergencies.

The School Review and Fiscal Accountability (SRFA) Division applies a financial projection model to the three most recent years of Financial Information Database (FID) data. The model incorporates four key financial indicators: enrollment, revenue, expenditure, and fund balance. The school districts, intermediate school districts, and public-school academies that are projected to incur a deficit are contacted by SRFA to determine if corrective action has occurred. Districts that have not taken SRFA-approved corrective action will be identified as having potential fiscal stress.

The projection model spreadsheet linked below contains the formula used to project fund balances. This is the first step in identifying potential fiscal stress. This spreadsheet allows districts to input financial data to produce the projection model's result.

View the Sample Projection Model Spreadsheet

Another method in identifying potential fiscal stress is reviewing district and public-school academy budgets and amendments. SRFA reviews the financial transparency pages of all districts and public-school academies three times a year. Districts and public-school academies that are projecting to spend a majority of their fund balance are contacted by SRFA to determine if corrective action has occurred. Districts that have not taken SRFA-approved corrective action will be identified as having potential fiscal stress.

REMINDER: MCL 388.1618(2) requires districts to post budgets within 15 days after adopting its annual operating budget and after each subsequent revision to that budget.

A Community Engagement Advisory Committee (CEAC) is established to facilitate the on-going exchange of information between the various community, local, and state stakeholders concerning operations, financial, budgetary and other matters that are essential to the long-term viability of the impacted school district or local government unit.

Visit the CEAC

The Financial Review Commission (FRC) is responsible for oversight of the City of Detroit, the School District for the City of Detroit (DPS), and the Detroit Public Schools Community District (DPSCD). It ensures both are meeting statutory requirements, reviews and approves their budgets, and establishes programs and requirements for prudent fiscal management, among other roles and responsibilities.

Visit the Detroit FRC