Dozens of school districts running in the red, state says

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Capital News Service
LANSING — Nearly 50 school districts and public charter schools across the state ended last year with a deficit, according to the Department of Education, prompting action from state officials and legislators.
Although the state expects many of those districts and schools were expected to eliminate or at least reduce their deficits by the end of this fiscal year, Sept. 30, 22 are projected to slip even further into the red.
One of the financially direst situations involves Benton Harbor Area Schools, which has a 50 percent deficit — meaning the district is only taking in half the revenue it needs to cover expenses— the result of bleeding enrollment that means less per-pupil state aid.

The district’s school board agreed to work with the state on an austerity plan after Gov. Rick Snyder declared a financial emergency in August.
“The number-one cause, if you will, of deficit districts in Michigan is declining enrollment,” said Bill DiSessa, a communications officer for the Department of Education. “Sometimes we find school districts have curiously rosy glasses.”
Districts such as Benton Harbor are generally given two years to execute a deficit reduction plan. Districts that fail to meet the deadline can be subject to further state intervention, including the appointment of an emergency manager.
School officials in Benton Harbor are still in talks with the state to figure out what specifically the plan will include, DiSessa said.
Districts in Flint and Pontiac have similarly agreed to long-term deficit reduction plans Flint Community Schools, which posted a 20 percent deficit, is under a seven-year austerity plan.
In addition to large districts in debt — Detroit Public Schools faces a ¬17 percent shortfall — many smaller ones are struggling as well.
For example, Mackinaw City Public Schools was projected to end the year with a deficit of 25 percent, one of the worst in the state. The Education Department has approved the district’s deficit elimination plan..
In Mackinaw City’s case, its schools rely on a funding structure that doesn’t rely as heavily on the state’s per-pupil aid. That can make the declining enrollment problem even more difficult to solve, Mackinaw City Public Schools Trustee Daniel Durant said.
“It’s a piece of the puzzle, it’s a contributing factor to our debt,” Durant said.
Among the other districts running a deficit are the Alpena Public Schools, Vanderbilt Area School District, White Cloud School District, Atlanta Community Schools and Menominee Area Public Schools, Suttons Bay Public Schools, according to mid-September figures from the Education Department.
Republican lawmakers have introduced a package of bills that would tighten regulations on districts operating with high deficits. Sponsored by Sens. Roger Kahn, R-Saginaw, and Howard Walker, R-Traverse City, the bills would permit the Department of Education to withhold state aid if district leaders don’t submit a deficit reduction plan approved by the department, according to an analysis by the nonpartisan Senate Fiscal Agency.
The plan also includes measures intended to serve as early warning signs for the state, including requiring administrators to notify the state as soon as they realize their district’s general fund might be depleted.
The plan is opposed by some educators who argue the requirements are too rigid.
The Michigan Association of School Boards testified against the legislation in committee hearings, arguing the proposed formula could ensnare too many school districts — about 250 by its calculation — by adding about 20 new metrics, any one of which could trigger action from the state.
“Conceptually, the idea of an early warning system would be good to know,” said Don Wotruba, the group’s deputy director. “We want to make sure it’s not creating more problems.”
Two districts, Inkster in Wayne County and Buena Vista in Saginaw County, were forced to close in 2013 when their financial struggles were realized too late.
The legislation is pending in the Senate Appropriations Committee.

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