Hazel Park schools face financial review after deficit jumps to $3.3 million

HAZEL PARK, Mich (WXYZ) - A letter from Hazel Park Schools Superintendent James Meisinger that is posted on the district's website is confirming that State Superintendent Mike Flanagan has ordered a financial review of the district.

Under the state's emergency manager law, the review could lead to a state takeover.

According to published reports Hazel Park has a deficit that will reach reach $3.3 million by the end of the month.

In the letter  Meisinger addresses what he calls "confusion and misinformation."

Meisinger says the state has approved the district's Deficit Elimination Plan, which includes an extension that will carry it out to a sixth year. He writes that the extension and the down-sizing and reductions the district has implemented should have the district back in the black. 

However, Meisinger also writes that the district had been on the path to eliminating its deficit, until a sudden drop in enrollment triggered the current situation.

You can read the letter in its entirety below:

June 26, 2013

 Dear Fellow Citizens of the Hazel Park School District,

      There has been a great deal of confusion and misinformation afoot concerning the financial condition of the Hazel Park School District. I will attempt to clarify these matters and assuage some of the fears generated by rumors, misinformation in the media and hearsay.

       To begin, our Deficit Elimination Plan (DEP) has been approved. That approval includes an extension of an additional, sixth year. The administration is confident that, with this additional time coupled with the down-sizing and reductions we have implemented, the Hazel Park Schools will emerge with a positive fund balance – i.e. in the black. It should be remembered that – more than any other factor – it was the sudden drop in enrollment that triggered our current status. Prior to this past year's enrollment decline our district was well on its path to emerging out of deficit.

        It is true that the approval of our DEP came with a number of contingencies. Most of those contingencies are standard operating procedures and are neither new nor specific to our district. They include following through with the reductions out-lined in the plan, getting from the state the anticipated cost offset for the retirement system, posting our DEP on the district web site, timely submitting to the state any budget revisions that would impact the DEP, submitting standard Monthly Budgetary Control Reports to the MDE, promptly submitting our pupil count information and lastly – and most importantly – maintaining our enrollment projections.

      It is true that the State Superintendent of Schools, Mike Flanagan, has initiated a Preliminary Review of the district's finances and operations so as to assess the district's level of financial stress. In his letter announcing this review the State Superintendent explains that this "does not automatically mean that the end result would be for the Governor to declare a financial emergency in the district." This Preliminary Review began on June 26. The results of this Preliminary Review will be reported to the school district on July 8. The district will then have five days to respond to this review. On the basis of this review and our response, the State Superintendent will then submit a Final Report to the Local Emergency Financial Assistance Loan Board. If that Board concludes that there is probably long-term financial stress, the Governor will appoint a Review Team for the school district. Within 60 days, that team will provide a report to the Governor. Should both the Review Team and the Governor determine that a financial emergency exists in the Hazel Park School District, the local School Board will be required to choose one of the following four (4) options to address the emergency:

          1. Consent Agreement

          2. Emergency Manager

          3. Neutral Evaluation Process

          4. Chapter 9 Bankruptcy

      I reiterate that I am confident that, with the additional time we have been given to retire our debt and with the additional steps we have taken, we will emerge with a positive fund balance. The key element in this entire picture is maintaining our enrollment projections and – ideally – increasing our enrollment. To that end, the district is planning an aggressive recruitment effort within the county as well as outside the county within the quotas established by the Hazel Park School Board.

Sincerely,

James D. Meisinger

Superintendent

Hazel Park School District

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