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Posted: Friday, 01 August 2014 3:40PM

Review Team Finds Financial Emergency In BHAS, Report Sent To Gov. Snyder



Governor Snyder has ten days to consider a report which indicates Benton Harbor Area Schools is in a financial emergency. A state appointed review team issued its report Friday. It cites a number of factors which led to the determination a financial emergency exists. Terry Stanton is with the Michigan Treasury Department, he says the district's deficit decreased by 3.6% over the last fiscal year, but that was primarily the result of a $2-million emergency loan.

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The report also shows the district owes more than $3.6-million in total accounts payable to various vendors, including $1.3-million of that was 211 days past due. Snyder now has until August 11 to determine if the district is in a financial emergency. In recent months, Superintendent Dr. Leonard Seawood has been very transparent about the district's willingness to enter into a consent agreement with the state.

Official Michigan Treasury Department release:
 

Review team finds financial emergency in Benton Harbor Area Schools, Report sent to Gov. Snyder for review


An independent review team concludes that a financial emergency exists in the Benton Harbor Area Schools under the provisions created by Public Act 436 of 2012.

Gov. Rick Snyder by law has 10 days to consider the review team’s report and reach a determination on the district’s financial condition.

The review team, appointed on June 23, conducted several meetings to consider the district’s finances and interviewed school administrators, department heads, union leaders, and others with knowledge and relevant information. The team also conducted a public information meeting with district residents, as required by law.

The team’s report indicates numerous conditions led to the determination that a financial emergency exists in the district, including:

· According to the district’s 2013 fiscal year financial audit, the cumulative general fund deficit decreased by 3.6 percent, from $16.1 million on June 30, 2012, to $15.5 million on June 30, 2013. However, the net change was primarily the result of a $2 million emergency loan. Without the loan, the cumulative general fund deficit would have increased 8.8 percent, from $16.1 million to $17.5 million.    

· School district officials violated Section 17 of Public Act 2 of 1968, the Uniform Bud­geting and Accounting Act, by permitting expenditures in excess of budgeted appropriations.  

· According to the district’s 2013 fiscal year financial audit report, general fund liabilities as of June 30, 2013, were $21.4 million, while general fund assets totaled only $5.9 million.  

· As of June 30, the district owed more than $3.6 million in total accounts payable to various vendors, including more than $1.3 million that was more than 211 days past due.

Members of the Benton Harbor Area Schools review team were:   

Michael Krouse, administrator, State Finance Division, Department of Treasury; Kyle Guerrant, deputy superintendent, Michigan Department of Education; Mike Gilliland, director, Office of Financial Services,  Department of Technology, Management & Budget;  Bret Witkowski, Berrien County treasurer;  Max Chiddister, president, Chiddister and Associates; and  Frederick Headen, legal advisor, Department of Treasury.

For more information about Local Financial Stability and Choice Act, visit the Local Government Fiscal Health page on the Department of Treasury’s website at www.michigan.gov/treasury






 

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