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Posted: Monday, 11 August 2014 2:00PM

Gov. Snyder Determines Financial Emergency Exists In BHAS

Governor Snyder has agreed with an independent financial review team which says a financial emergency currently exists in Benton Harbor Area Schools. Terry Stanton with the Michigan Department of Treasury says the district now has seven days to request a hearing for Wednesday, August 20 with State Superintendent Mike Flanagan.



If an emergency is confirmed, the district will choose one of four options to handle the crisis.



The School Board and District Superintendent Dr. Leonard Seawood have been preparing for a consent agreement with the state for a while. Seawood says it's the best option for the school system which faces a $15-million deficit.

Official release from Michigan Department of Treasury:

Gov. Rick Snyder today agreed with an independent financial review team in determining that a financial emergency currently exists in Benton Harbor Area Schools. School district officials now have seven days to request a hearing before the State Superintendent or his designee. In reaching his determination, Gov. Snyder cited several conditions outlined in the review team’s report, which was submitted to the governor Aug. 1. Highlighted conditions include:

·While the district’ cumulative general fund deficit decreased from $16.1 million on June 30, 2012, to $15.5 million on June 30, 2013, that was primarily due to a $2 million emergency loan. Without the loan, the deficit would have increased nearly a million and half dollars to $17.5 million over the same period.   
·District officials violated the state’s Uniform Bud­geting and Accounting Act (Section 17 of Public Act 2 of 1968) by permitting expenditures in excess of budgeted appropriations.
·General fund liabilities were $21.4 million, while general fund assets totaled only $5.9 million.
·As of June 30, 2014, the district owed more than $3.6 million in total accounts payable to vendors, including more than $1.3 million that was more than 211 days past due.

District officials now have seven days (until 5 p.m. on Monday, August 18) to request a hearing on the governor’s determination. Should a hearing be requested, it will be held on Wednesday, Aug. 20, 2014, at 1 p.m., in Lansing, before State Superintendent Mike Flanagan or his designee. Following the hearing, or if no hearing is requested, the governor will either confirm or revoke his determination that a financial emergency exists in the district. If a financial emergency is confirmed, the state’s emergency manager law (Public Act 436, the Local Financial Stability and Choice Act) ensures local officials have a strong voice in how a financial crisis in their district is addressed by choosing one of four options: consent agreement; emergency manager; neutral evaluation; or Chapter 9 bankruptcy. For more information, visit the Local Government Fiscal Health page on the Department of Treasury’s website at


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