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Highland Parks Financial Emergency By Kaif Syed. Determination of F.E. On January 30 th, Michigans Republican Governor Rick Snyder determined that the.

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Presentation on theme: "Highland Parks Financial Emergency By Kaif Syed. Determination of F.E. On January 30 th, Michigans Republican Governor Rick Snyder determined that the."— Presentation transcript:

1 Highland Parks Financial Emergency By Kaif Syed

2 Determination of F.E. On January 30 th, Michigans Republican Governor Rick Snyder determined that the municipalities of Highland Park and Royal Oak meet the criteria for financial emergencies as per Public Act 436 of 2012 – Local Financial Stability and Choice Act. This determination was in agreement with the findings of two independent review teams that assessed both the cities fiscal situations. From Jan. 30 th, both municipalities had 7 days (until February 6 th ) to request hearings for appeals. On Wednesday, February 5 th, Mayor Windom and the City Council of Highland Park, requested a hearing which will take place on Tuesday February 11 th.

3 Financial Conditions Gov. Snyder highlighted several conditions that entailed a financial emergency, including: From States Treasury website: According to the citys most recent financial audit, the ending balance in the Water and Sewer Fund more than doubled, from a negative $5.5 million as June 30, 2012, to a negative $12.5 million as of June 30, 2013. The 126 percent increase in the negative fund balance was attributable to a $7.7 million operating loss during the 2013 fiscal year. City officials consistently have been unable to issue timely and accurate bills to residential and commercial users of water and sewer services, despite the growing deficit in the Citys Water and Sewer Fund.

4 Financial Conditions City officials violated the Uniform Budgeting and Accounting Act by making unbudgeted expenditures in several funds, during the citys 2012 fiscal year. As of October 31, 2013, the City owed approximately $19.5 million in total accounts payable to various venders. This total included an estimated $18.2 million owed to the City of Detroit for water and sewer services; $311,380 owed to DTE Energy; $142,265 owed to Wayne County for property assessing; $125,370 owed to Wayne County for prisoner maintenance; $105,667 owed to the City of Hamtramck for municipal income tax collection and administration; and $101,284 owed to the State of Michigan for principal and interest upon outstanding emergency loans.

5 Financial Conditions According to the review teams report, the city failed to comply with 5- year deficit elimination plan made in 2009 with the Michigan Department of Treasury From Report: Except for fiscal year 2011, each fiscal year of the City since the plan was filed ended with a higher deficit than for the preceding year. As of June, Highland Park had more than $48.5 million in long-term debt and $44.8 million in unfunded retirement benefits, according to the review. (Crains Detroit) Additionally, the city engaged in a large amount of inter-fund borrowing.

6 Public Schools Since 10.27/2012, Highland Parks public schools have been assigned an emergency manager by the governor. Since 10/16/2013, Highland Park public schools have been under the management of state-appointed emergency manager Gregory D. Weatherspoon, and previously managed under emergency manager Jack Martin, who was deactivated by Gov. Snyder due to a court ruling (failure to comply with Open Meeting act) Highland Parks school district was considered in financial free-fall by review team, facing an $11.3 million deficit. Thus, in 2012, the district went Charter, choosing to sell off its schools.

7 Back to the City If, after the hearings, the governor still determines that Highland Park is in a state of financial emergency, there are one of four routes the city could take: 1. A consent agreement 2. emergency manager 3. neutral evaluation Or 4. Chapter 9 bankruptcy

8 Mayors Reaction Mayor DeAndre Windom of Highland Park, according to Crains Detroit, has said that "We're not going to welcome an emergency manager in our city," …adding that the city of 3 square miles that lies within Detroit's borders has had three emergency managers since 2001. He said the city needs economic recovery, not just a balancing of its books. (Crains) "You can't cut your way out of problems that happen in a lot of urban communities," Windom said. "You have to create jobs and opportunity.

9 Sources Crains Detroit. http://www.crainsdetroit.com/article/20140130/NEWS01/140139977/snyder-financial- emergencies-exist-in-royal-oak-township-highlandhttp://www.crainsdetroit.com/article/20140130/NEWS01/140139977/snyder-financial- emergencies-exist-in-royal-oak-township-highland City of Highland Park Bulletin. http://myemail.constantcontact.com/City-of-Highland-Park-News-Bulletin--- Financial-Emergency-Update-2-7-2014.html?soid=1111910354574&aid=_kH7wNvbpzIhttp://myemail.constantcontact.com/City-of-Highland-Park-News-Bulletin--- Financial-Emergency-Update-2-7-2014.html?soid=1111910354574&aid=_kH7wNvbpzI Financial Teams Report http://origin.library.constantcontact.com/download/get/file/1111910354574- 315/Highland-Park-Review-Team-Report-Final-1-24-14_445825_7.pdfhttp://origin.library.constantcontact.com/download/get/file/1111910354574- 315/Highland-Park-Review-Team-Report-Final-1-24-14_445825_7.pdf The Detroit Free Press. http://www.freep.com/article/20140124/NEWS06/301240082/Michigan-Treasury- review-Royal-Oak-Township-Highland-Park-financial-emergencieshttp://www.freep.com/article/20140124/NEWS06/301240082/Michigan-Treasury- review-Royal-Oak-Township-Highland-Park-financial-emergencies The Treasure Department. http://www.michigan.gov/treasury/0,4679,7-121-1755_1963-320862--,00.htmlhttp://www.michigan.gov/treasury/0,4679,7-121-1755_1963-320862--,00.html WXYZ News. http://www.wxyz.com/dpp/news/region/wayne_county/emergency-manager-appointed-for- highland-parks-schoolshttp://www.wxyz.com/dpp/news/region/wayne_county/emergency-manager-appointed-for- highland-parks-schools Huffington Post. http://www.huffingtonpost.com/2012/02/21/rick-snyder-jack-martin-highland-park-schools- emergency-manager_n_1291928.htmlhttp://www.huffingtonpost.com/2012/02/21/rick-snyder-jack-martin-highland-park-schools- emergency-manager_n_1291928.html


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