CHICAGO — Michigan Gov. Rick Snyder signed into law a package of bills that broaden the state's power over distressed school districts.
The legislation also creates an early-warning system for districts that are under financial pressure and face a deficit.
The eight-bill package is the latest attempt by Snyder to address the rising number of distressed school districts across the state. Michigan currently has more than 50 districts that carry deficits, according to the state education department. Snyder has been working on a comprehensive early-warning system since 2013.
Snyder signed the legislation, which includes House Bills 4325 through 4332, on July 7.
Under the new law, the state treasurer has the power to recommend to the governor that an emergency manager take over a district if it does not have or is not following an approved deficit elimination plan.
The law also shifts oversight of districts with deficit elimination plans to the treasurer from the state education superintendent. Under the bills, either the treasurer or state superintendent can now determine whether probable fiscal stress exists at the district, bypassing the previous process of appointing a review team.
The law also gives the state the power to withhold state aid payments to districts that have deficits until they comply with state-approved deficit elimination plans.
House Bill 4325 requires certain districts to report more financial information, including budget assumptions, earlier to the state.
One of the bills creates enhanced deficit elimination plans, which would include assistance and guidance from treasury, as well as the appointment of an auditor or inspector to review the plan and the treasurer to set a timeline for the plan.
The legislation also boosts the state's emergency loan fund for needy schools to $70 million from $48 million. But a provision restricts Detroit Public Schools from tapping the loan fund, with lawmakers saying DPS is going to need much more than an emergency loan to solve its problems. The Legislature later this fall is expected to take up Snyder's proposal for a restructuring of DPS.
"This package of bills addresses the systematic challenges faced by local school districts with persistent financial concerns," Rep. Daniela Garcia, R-Holland, one of the main sponsors, said in a statement. "This legislation will ease the unmanageable situations that affect education communities in West Michigan and across the state."
