Michigan releases last remaining school district from fiscal consent agreement

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Benton Harbor Area Schools, was released from its consent agreement with Michigan on Friday.

While its fiscal emergency has ended, state officials said the district will remain under academic and fiscal oversight through an arrangement with the Michigan Department of Education.

It's an academic agreement, but the state-appointed chief executive officer under the cooperative agreement has authority over the expenditure of all district money attributable to district students, including proceeds of bonded indebtedness.

The district in southwest Michigan signed a consent agreement with the state’s department of Treasury in 2014 due to its high debt levels. In June it signed a cooperative agreement with the education department to tackle poor academic performance and turnover of administrative personnel on a district-wide basis.

“Benton Harbor Area Schools has a plan in place that focuses on both improving finances and educational services through its partnership with the state Education Department,” state treasurer Nick Khouri said in statement. “The consent agreement is no longer needed to address the financial emergency.”

The district’s release means no school districts remain under state oversight through a Treasury consent agreement.

Under the consent agreement, the Benton Harbor Area Schools adopted and implemented a financial and operating plan, including entering into an agreement with Berrien County Regional Education Service Agency for business administration and information technology services.

The district had a $15.5 million deficit when it entered into the agreement with the state. The district’s revenues have since increased to $32.3 million, as of June 20, 2017. The district has no bonds outstanding and $11.1 million of long-term debt, including roughly $9.5 million of emergency loans.

Robert Herrera was appointed CEO of Benton Harbor Area Schools under the 5-year agreement between the district and the education department. Herrera is responsible for setting goals and developing and implementing plans that will bring about necessary improvements and school board members act as advisors to the CEO when it comes to both academics and the financial stability of the district. The board retains its borrowing and taxation responsibilities for the district.

The district had previously entered into a partnership agreement with the education department in May 2017 to tackle poor academic performance at three district schools, each of which were among the lowest-achieving five percent of all public schools in Michigan. That agreement was terminated once the cooperative agreement was signed.

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