Lansing — Gov. Rick Snyder is expected to decide as early as next week whether to appoint an emergency manager to take over Highland Park Schools after a hearing Friday on his declaration of a financial emergency in the district.
State Treasury officials held the hearing for district officials to respond to the findings of a state-appointed review team.
At the hearing, district officials accused state officials of contributing to the district's financial crisis and implored them not to install an emergency manager.
"The district does have a plan to alleviate the crisis — it's called a Deficit Elimination Plan and it gives us targets to accomplish over a four-year period," said Randy Lane, financial director for the district.
He testified before treasury officials and members of an independent review team that had determined a financial emergency exists in the Highland Park schools.
"An emergency manager is not needed in Highland Park Schools," Lane testified. "We have a competent staff that reflects the community that can solve problems."
Lane said the state has been well aware of financial problems in the district dating to 2007, and officials have reduced the budget by 48 percent since 2009.
But over the last year, Lane said the state chose to use "a heavy hand" with the district, pulling money back when enrollment came in lower than projected, denying a request to defer state aid to avoid cash shortages and losing federal dollars.
Those actions created some of the district's cash shortfalls, he argued.
"But no matter how hard we tried, the state decided not to work with us," Lane said.
Carol Wolenberg, deputy state superintendent of education and a member of the state review team, defended the report.
She said the state simply followed the law that ties state funding to districts' enrollment reports. Wolenberg also said the Department of Treasury advanced $4.2 million to the school district in August after it issued a hardship request. The department also was on site recently to help resolve a food service contract issue, she added.
"While you are valiantly trying to save the district, you are going in the opposite direction," Wolenberg said.
Last week, the state advanced the district $188,000 so it can make payroll and stay open through mid-February.
Last week, the district told state Treasurer Andy Dillon it needed an extra $3.4 million — on top of the cash it got in August — to get through the school year.
The district's deficit has increased from $6.6 million to $11.3 million over the past fiscal year.
During the hearing, district attorney George Butler asked the state to send the review team back to look further at the progress the district has made and the progress it will make if given the opportunity.
Deputy Treasurer Roger Fraser said he would file a report with the governor by the end of Monday agreeing or disagreeing there is a financial emergency in HPS. The governor will then make a decision on installing an emergency manager.
Terry Stanton, a treasury spokesman, said Fraser does not have the option of asking the governor to send the team back to the district.
Highland Park Schools President John Holloway said the district needs more time and money to correct its financial problems. Holloway said he believes the state is seriously considering consolidating the district with a nearby school system. Detroit Public Schools and Hamtramck Schools are two likely candidates, education experts have said.
"I'm a traditionalist. We'd like to remain a separate entity, but let's face it — many communities cannot afford to exist," Holloway said.
If Snyder names an emergency manager for Highland Park Schools, that person would have broad powers to close schools and cancel or modify contracts, including imposing pay cuts.
Under Michigan law, only elected school boards — or an appointed emergency manager — can request consolidation of one school district with another.
And for a merger to take place, state officials and voters in both districts must approve, said state Department of Education officials.
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