01/05/2012 09:19 am ET

Highland Park Schools Fail Emergency Manager Review

A state review board advised Gov. Rick Snyder on Tuesday to appoint an emergency manager to the Highland Park Schools. The district failed to pass the 10-member review team's financial stress test.

Public Act 4, passed earlier this year by the state legislature, allows the governor to install emergency managers in cities and school districts that do not meet a review board's standards of financial solvency. These managers have the authority to dismiss elected officials, sell public assets and renegotiate contracts.

In their report to the governor, the board gave the following reasons for its recommendation:

  • According to the fiscal year 2011 financial audit, the school district's cumulative deficit increased by 51 percent, from $7,467,527 as of June 30, 2010 to $11,251,484 as of June 30, 2011.
  • The school district owed $1.7 million to various vendors.
  • Pupil enrollment decreased by 58 percent, from 3,179 pupils for the 2006 fiscal year to 1,331 pupils for the 2011 fiscal year. Current estimates place pupil enrollment at 969 students.
  • The school district has incurred an operating deficit in five of its last six fiscal years.

The board also cited a lack of cooperation from the district, inaccurate and conflicting information, and a failure to supply records in a timely manner as justifications for the decision.

Gov. Snyder now has 10 days to appoint an emergency manager.

State Treasurer Andy Dillon told the Free Press that once appointed, a manager will not leave the district until finances have stablilized and the the schools are on a path to recovery.

"This district has a pretty serious situation, so I think that it's going to take a little more analysis," he said. "This won't be a three-months solution. It will be a much longer slog."

Highland Park School Board member Robert Davis told the Detroit News he plans to challenge the review board's recommendation in court.

"The new superintendent and [school] board are working diligently to enact recommendations suggested by the state," he said. "The process was very flawed and illegal. I am contemplating legal action."

The Detroit Public Schools are currently the only district under the authority of an emergency manager. Muskegon Heights' school board in December requested an emergency manager be appointed to handle the district's $10 million deficit.

Three Michigan cities are also currently run by emergency managers, and the city of Detroit is currently under review.

State-appointed emergency financial managers ran the city of Highland Park during the 2000s. Last year, a Wayne County jury convicted former Highland Park Emergency Financial Manager Art Blackwell II of fraud and breach of fiduciary duty committed while managing the city.