Benton Harbor Area Schools

Lindsey Smith / Michigan Radio

Three of the five school districts that face more scrutiny from Michigan’s Department of Treasury have reduced their general fund deficits last school year. That’s according to independent audits recently filed to the state. But some still face serious, ongoing problems. Here’s a breakdown of how the districts ended the 2013-14 school year.

Steve Carmody / Michigan Radio

The Benton Harbor Board of Education may take a step this evening toward getting its financial house in order. 

Benton Harbor Area Schools faces a $15 million deficit.

Last month, a state panel determined the school district is in a "financial emergency."

Monday, the state Treasury department announced that an agreement has been crafted that will “restore financial stability to Benton Harbor Area Schools as quickly and efficiently as possible.”

As part of the agreement, a consultant will assist district leaders in implementing the plan.

Lindsey Smith / Michigan Radio

A state review team is hosting a public meeting today in Benton Harbor. The six-member team is trying to determine if Benton Harbor Area Schools is in financial stress.

The Benton Harbor school district has been running a deficit since 2006. It's cut costs, but at the same time, it also has low-performing schools that need to improve test scores to meet state and federal standards. Plus, it’s lost students every year.

It’s already closed buildings, privatized support services and gotten concessions in wages and benefits from teachers.

Lindsey Smith / Michigan Radio

Benton Harbor Area Schools has taken the next step in process that could result in an emergency manager.

Gov. Rick Snyder announced today his appointment of a six-member review team. The team has 60 days to determine if the district is in financial stress.

The district’s superintendent, Leonard Seawood, told state officials a few weeks ago it is. 

Lindsey Smith / Michigan Radio

State law gives a special board up to $50 million to loan to schools in financial distress. The long-term, low-interest loans are supposed to help school districts restructure and pay down their debt.

But it appears $50 million isn’t going to be enough.

With the loans the Emergency Loan Board issued Monday, it's nearly reached that cap, four years ahead of schedule. Treasury Spokesman Terry Stanton says the board has issued $48.5 million to schools so far.

Lindsey Smith / Michigan Radio

Benton Harbor Area Schools has been running a deficit since 2007. A review in 2011 found financial stress, but the district was in the middle of making changes to save money. No emergency manager was appointed under a previous version of the law.

But State Superintendent Mike Flanagan says BHAS isn’t making enough progress on the deficit.

The deficit is $14.7 million. For perspective, its revenues this year were $31.8 million.

Lindsey Smith / Michigan Radio

Benton Harbor Area Schools is already campaigning to get students enrolled in the fall. That’s because the district hopes to dig out of a major budget deficit by attracting more students.

Benton Harbor schools narrowly avoided a state appointed emergency manager a couple of years ago.

Superintendent Leonard Seawood says since then, they’ve balanced the budget for two years in a row.

Lindsey Smith / Michigan Radio

Michigan schools superintendent Mike Flanagan says a review of the Benton Harbor schools finds evidence of "probable financial stress." But Flanagan is not recommending a deeper, 60-day review. He says that’s because the district has taken “several steps in recent days to correct the deficit including:”

Lindsey Smith / Michigan Radio

Teachers in Benton Harbor have agreed to an across-the-board cut of pay and benefits. Teachers ratified the contract with a vote of 85 yes and 65 no. Tuesday afternoon the school board voted 5 to 2 to approve a new contract that will reduce teachers’ pay by 10-percent beginning in February (the contract runs through August 2012). Teachers will pay 20-percent of their health care benefits.  In the past three weeks alone the school board has closed two schools and laid off 20 employees. They’ve also put buildings up for sale.

“That will help us with our cash flow and will allow us to continue our operation without a stoppage,” Superintendent Leonard Seawood said. “That’s a lot for this community to be proud of,” Seawood said, in terms of addressing the financial problems. Seawood has been with the district since August 2010. 

Lindsey Smith / Michigan Radio

Benton Harbor Area Schools will get results from the state’s preliminary review of the district’s finances this week. The school district blames cash flow problems on a lower-than-expected-student count this fall.

The 30-day preliminary review is the first step in a process to determine if a school district or municipality needs a state-appointed emergency manager. It does not mean one will be appointed for certain.

The State of Michigan is reviewing Benton Harbor Area Schools’ finances. That’s the first step in a process to determine if the school district needs a state-appointed emergency manager. It does not mean one would be appointed for certain.

But the rumors are already flying in the community about a takeover.

The State of Michigan will conduct a preliminary review of the "critical and alarming financial situation" at Benton Harbor Area Schools. This is the first step in a process that would determine if the school district needs a state-appointed emergency manager. It doesn’t mean one would be appointed for certain.

Leonard Seawood has been superintendent of Benton Harbor Area Schools for a little more than a year. “When you are in a deficit like I inherited…there are no easy answers in terms to digging yourself out of this hole as a district,” Seawood said.