Politics & Government
2:50 pm
Tue August 6, 2013

Snyder agrees, Pontiac schools in a 'financial emergency'

Gov. Rick Snyder announced this afternoon that he agrees with a state review panel's report finding that the Pontiac school system is in a "financial emergency."

Under the state's "Local Financial Stability and Choice Act," the school system will have until August 13 to challenge the determination. After that, Pontiac Schools can decide among four options going forward:

  1. a consent agreement;
  2. an emergency manager;
  3. a neutral evaluation process;
  4. or Chapter 9 bankruptcy.

In their press release, the Governor's office listed several reasons for the "financial emergency" finding:

  • The district’s general fund deficit for the 2012 fiscal year was $37.7 million, having quadrupled since 2009. The deficit increased by 53.6 percent -- from $24.5 to $37.7 million -- between 2011 and 2012. 
  • As of June 30, the district had about $33 million in unpaid bills to vendors.
  • Audit reports for the last three years show significant differences between revenue and spending as budgeted versus actual revenue and spending, with the district spending more than planned.
  • District staff members appear to have violated state law by using debt retirement funds to cover payroll.
  • A $7.8 million civil judgment was ordered by the 6th Judicial Circuit Court against the district on Jan. 18, 2013 on behalf of Michigan Education Special Services Association.
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