Michigan Legislative Bills to Dissolve Insolvent School Districts on Fast Track (Update: Pontiac Schools)

Bills to end some school districts on fast track

Plan would have state pick up tab for students forced to switch

By Lori Higgins Detroit Free Press Education Writer

   Bills that would allow the state to dissolve financially insolvent school districts as a last resort are being fast-tracked through the Michigan Legislature. But the bills could come with a hefty price tag for the state.

   Three districts — Buena Vista, Inkster and Pontiac — were cited during a legislative hearing Tuesday as being likely candidates for dissolution.

   “It’s imperative that we move forward with this” legislation, Rep. Bill Rogers, R-Brighton, said before a joint meeting of the House and Senate education committees. “This is, unfortunately, a necessary, proactive approach to make sure we can accommodate the kids.”

   Rogers and Rep. David Rutledge, D-Ypsilanti, have introduced bills that would allow state Superintendent Mike Flanagan and Treasurer Andy Dillon to dissolve a troubled district if it fails to submit a viable plan to eliminate its deficit, doesn’t submit a plan at all or cannot continue to offer an education program to students.

   If the district is dissolved, the students would be assigned to nearby school districts. But the district’s debt would remain. The dissolved district would continue to collect the local millage and use that revenue to pay off the debt.

   “The debt burden would not follow the students into the receiving district,” Rut-ledge said.

   Until the debt is paid off, the state School Aid Fund would have to cover per-pupil payments to the district that takes inAgency analysis released Tuesday estimates that if the Buena Vista, Inkster and Pontiac districts were to be dissolved, the state aid fund would need to kick in $34 million annually in per-pupil funding.

   Michigan has 55 school districts and charter schools operating in a deficit, the largest number ever.

   Some of the most urgent problems are in the three districts cited. The Buena Vista School District in Saginaw County closed for two weeks because it couldn’t pay staff. Many of its problems stem from a drastic drop in enrollment and having to repay hundreds of thousands of dollars this year for a program the district no longer runs.

   In Pontiac, the Local Emergency Financial Assistance Loan Board formally found last week that “probable financial stress” exists in the Pontiac school district, which is dealing with a deficit of nearly $30 million. The declaration is the next step toward the possible appointment of an emergency manager, a consent agreement, a neutral evaluation process or Chapter 9 bankruptcy.

   And Inkster Public Schools, which is having cash-flow problems, is moving forward with ceasing to operate its high school and turning it over to a charter management company.

   Some lawmakers expressed frustration that the bills are being fast-tracked in the next two weeks, before the Legislature takes its summer break. “I just hate rushed votes like this,” said Rep. Tom McMillin, R-Rochester Hills.

   The tight time frame is also one of the reasons some aren’t willing to support the bills.

   Vickie Markavitch, superintendent of Oakland Schools, the intermediate school district for Oakland County, told lawmakers that there are too many issues to be resolved.

   “I don’t know if it can be crafted well and passed in time for implementation for this fall,” Markavitch said. “There are some questions, some issues, some details we think this legislation has yet to address.”

   The legislation is getting the backing of Gov. Rick Snyder. Dick Posthumus, a Snyder adviser who spoke at the hearing, said the Buena Vista and Inkster districts “are not likely to have money to open schools in the fall.”

   “There’s no place for the kids to go to school. We need to take emergency action,” Post-humus said.

   Flanagan, in a statement read to lawmakers Tuesday, said he’s willing to take on the responsibilities the legislation would give him, saying, “It will help keep our state’s children in schools and their educations continuing.”

   Concerns were raised about residents in the communities where districts are dissolved not having elected representation. And many of the lawmakers who spoke questioned why the Michigan Department of Education and the state Treasury Department had not acted sooner to address issues in the struggling districts.

   “Someone has to be held accountable for this,” McMillin said. “We need to make sure this doesn't happen again.”

   Lawmakers clashed during the hearing, as Democrats on the committees tried to make the point that cuts in funding are a key reason many of these districts are struggling.

   But Rep. Pete Lund, R-Shelby Township, said that’s not the problem.

   “We’re here because of mismanagement, gross mismanagement. That didn’t take place over one year or two years.”

   Sen. Coleman Young, D-Detroit, said funding can’t be ignored.

   “Long term, this is a conversation about funding. Quite frankly, we have to decide long term how we’re going to fund our children’s future.”