emergency loans

Mercedes Mejia / Michigan Radio

Michigan lawmakers have approved loaning more money to schools facing serious financial problems.

Long term, low interest emergency loans help school districts restructure and pay down their debt.

But the state’s Emergency Loan Board already offered more than $48 million dollars in loans to school districts, almost all the money state law allowed. Now the cap has been lifted to $70 million.

This is what a $2,000 FOIA request looks like.
Lindsey Smith / Michigan Radio

In order for parents to make the best decisions for their children, they need to know what’s going on. So do taxpayers and voters.

In my years of writing about school districts all over the state, I’ve learned everyone wants to brag about the successes. No one is in a hurry to admit when things aren’t working for students.

Lindsey Smith / Michigan Radio

Michigan is nearly out of money to lend school districts in case of financial emergencies.

The state treasury department had up to $50 million total to lend school districts facing financial emergencies. That amount was supposed to last through 2018. But that apparently it isn’t going to be enough.

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’s emergency manager is planning his exit. That’s after the state agreed to loan the city more than $2 million.

When Benton Harbor officially began its financial emergency, Jennifer Granholm was the governor. During the last four years, the city has operated under three different versions of Michigan’s emergency manager law. That’s how long it’s been.

Lindsey Smith / Michigan Radio

Elected leaders in Benton Harbor are rejecting the emergency manager’s plan to take on debt to pay down the city’s deficit.

Benton Harbor has been under state control for three years. It's cut its deficit by a third; from $3.4 million in 2010 to $1.2 million, according to the latest audit.

Lindsey Smith / Michigan Radio

A state appointee has run the cash-strapped city for more than two years. Former Governor Jennifer Granholm appointed Joe Harris the city’s emergency financial manager in March 2010.

Now elected leaders have set a goal for him to leave by December 2013. They hope to get a $7 million emergency loan from the state to help get Benton Harbor out of its “financial emergency”.

Mayor James Hightower says the loan would be “a game changer”.

The recession has made it harder for local governments and school districts to balance their budgets. This summer the governor signed a new law creating a board that will help those hardest hit cope with short term cash flow problems.

Earlier this month the emergency financial managers of both Muskegon Heights Public Schools and Highland Park schools got emergency loans to pay off other state loans. MHPS borrowed $7.65 million while Highland Park schools borrowed $4.4 million.

“It’s not a handout; it’s a loan in order to help get people on their feet, in order to make the changes that are necessary going forward,” said Caleb Buhs, a spokesman for Michigan’s Department of Treasury. The school districts have 30 years to pay the state back.