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Education, K-12, News

Cities & Schools Reach Crisis Point Due to States’ Low Economic Reserves

A recent article in the Wall Street Journal (Many States Are Unprepared for Next Economic Downturn) caught my attention because it highlighted a key factor adding to the fiscal stress of municipalities and schools.  The article suggested that most states are unprepared for an inevitable economic downturn as they lack the necessary fiscal reserves or rainy-day funds to cushion the next financial blow, and, it’s already having a negative trickle-down effect.

Forced to do more with less since the last recession, cities and schools are continually struggling with reduced revenue sharing from their states while scrambling to meet the demands of unfunded mandates, retiree obligations, an aging infrastructure and even increased student testing. Add this to the anticipated silver tsunami caused by public sector retirements in the next decade, we see a myriad of local governments that are already stretched too thin and have reached a crisis point.

One of the most alarming things noted in the WSJ article was that some states appear to have little sense of urgency and limited tools to address these budgetary shortfalls. Forget crisis point—this dilemma will have far-reaching and long-term consequences for the populations served by those who gloss over the unavoidable hard truth and do nothing about it now.

Fiscal Health, Municipal, News, Opinion

At least for now, Michigan closes the chapter on Emergency Financial Managers

By: Bob Kittle and Katrina Powell

The State of Michigan Department of the Treasury sent out a press release on June 27, 2018 announcing that for the first time in 18 years, neither a school district or municipality in Michigan has an emergency manager. You can read the press release in its entirety here, but following is an excerpt.

“LANSING, Mich. – State Treasurer Nick Khouri today announced that no Michigan municipality or school district is under state financial oversight through an emergency manager for the first time in nearly 18 years. The…announcement comes after releasing Highland Park School District from receivership under the Local Financial Stability and Choice Act. Since 2000, there has been an emergency manager providing financial oversight somewhere in Michigan.”

For many years the Emergency Financial Manager (later changed to Emergency Manager or EM) concept was regularly maligned by some constituents, citing it as an overreach of state government at the loss of local control and racially motivated. The term carpetbagger was bandied about as well. One respected national government trade publication headlined a 2012 article, Emergency Financial Managers: Michigan’s Unwelcome Savior. As local government financial advisors ourselves, (Katrina was the State-appointed City Manager for Hamtramck from 2014 to 2017) we, but especially Katrina, have been on the receiving end of some hurtful and untrue verbal attacks about roles and motives.

Municipal, News, Opinion

Can Open Checkbooks Promote Transparency In Local Governments and Prevent Theft?

The recent news in the Oakland Press about the City of Oak Park’s former clerk siphoning $433,000 out of the city’s coffers over a 2-year period made me think … would a higher level of transparency by the city have been able to thwart such an incident?

Within the Munetrix toolbox is a Dynamic Check Register that takes the transparency discussion to the next level.  Local governments have the ability to export their vendor accounts payable files directly from their accounting software into a publicly accessible, searchable database.  Some refer to this as “Open Checkbook” but it by itself is only a fraction what it takes to truly be transparent.

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