B.V. schools given 5 days to prove district's viability - WNEM TV 5

B.V. schools given 5 days to prove district's viability

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Today's meeting in Lansing. Today's meeting in Lansing.
LANSING, MI (WNEM) -

WNEM TV5's Brian Wood was in Lansing on Thursday for a special meeting between the Michigan's state treasurer Andy Dillon and state schools superintendent Mike Flanagan.

Wood reports that Buena Vista schools have been given until Monday, July 22, at 5 p.m. to prove they can come up with a bank line of credit and that their auditor gives the plan their stamp of approval.

Whatever plan the school district can come up with, it must keep classroom doors open and funded through the whole school year.

If the school district cannot come up with a plan, the state said they will be dissolved.

>>Watch to Brian Wood's report above for more details on the situation<<

If the Buena Vista district is dissolved, the Saginaw Intermediate School District will then place the students into neighboring schools.

The board members are not happy. On Wednesday, in what they admitted is a last-ditch effort, they agreed to work with a charter school company in an attempt to keep the doors open. 

The Lansing-area based Leona Group has volunteered to try to negotiate with state officials in an attempt to keep the district's doors open. If the Leona Group can strike some type of deal, board members say they'll investigate whether to turn all operations of the district over to the charter school. Some are even willing to sacrifice their positions.

On Wednesday night, TV5 spoke with the Leona Group. A representative said Buena Vista would join other districts in the area under their control and if Buena Vista Schools are allowed to continue to operate, the charter company will do what it can to get the district back on track financially.

Late Thursday afternoon, Flanagan and Dillon released this detailed statement on the situation:

State Superintendent, Treasurer determine Buena Vista and Inkster Schools no longer "Financially Viable," unable to educate K-12 pupils Districts given until close-of-business Monday to demonstrate funding for a full 2013-'14 school year State Superintendent Mike Flanagan and State Treasurer Andy Dillon today, determined that the Buena Vista and Inkster School Districts are no longer financially viable and are unable to educate students, pursuant to Public Act 96 of 2013, which was signed into law on July 2, 2013. The Superintendent and Treasurer did, though, agree to give officials in both districts until 5:00 p.m. Monday, July 22, 2013 to provide documentation that they have the financial ability to operate their districts for the next full school year.

Flanagan's and Dillon's joint determination is effective at 5 p.m. July 22nd, unless either of the districts can provide documentation showing they have a commitment from a credible lending institution for enough money to get the district through the next school year, and an opinion letter from their accounting/audit firm, confirming the cash would allow for the district to remain open through the end of the next school year. If either district can provide that documentation, a subsequent public meeting will be held to discuss the district's financial situation.

Prior to reaching their joint determination today, Superintendent Flanagan and Treasurer Dillon heard testimony from representatives of the Departments of Education (MDE) and Treasury, who had been working to determine whether any school districts met conditions noted in Section 12(1)(b) of the Act.

Following the presentation of facts and public comment, the State Superintendent and Treasurer jointly determined the Buena Vista and Inkster School Districts lack capacity to remain financially viable and to meet the respective District's obligation to provide public educational services to pupils and other residents of the school district in a manner that complies with the Revised School Code, the State School Aid Act of 1979, and rules promulgated by MDE.

"This joint determination, by Treasurer Dillon and me, is based solely on the financial data and conditions of the two districts, as required by statute," Flanagan said. "We have a responsibility and burden to follow State law, but more importantly, we want to ensure that students in those communities have viable schools to attend for the upcoming school year."

Numerous conditions were noted in the departments' joint report, including:

Buena Vista Schools

· The District has shown unsatisfactory progress in eliminating its deficit. MDE's approval of the district's Deficit Elimination Plan (DEP) was rescinded in February, 2013 as a result of the district's failure to implement strategies to reduce the 2012-2013 deficit to projected levels. The district began the fiscal year with an operating general fund deficit of $1 million but projects the deficit has more than tripled to $3.7 million.

· The District projects a pupil count decline of 16-percent for the 2013-2014 school year, which represents a revenue reduction of approximately $540,000.

· In a June 12, 2013 communication to the State, the district's legal counsel stated "the District's

2013-14 budget will more than likely forecast no operational capacity in 2013-14." As a result, the Local Emergency Financial Assistance Loan Board authorized a $2 million emergency loan to ensure payment of the District's 2012 state aid note. This will require debt service payments on that loan in subsequent years and the Emergency Loan precludes the district from participating in the state aid note pool through the Michigan Department of Treasury.

Inkster Public Schools

· The District went into deficit on June 30, 2007, by $1.9 million. The deficit increased to $9.3 million as of June 30, 2010 despite a 76-percent pupil count increase (1,803 to 3,173).

· The District's pupil count has steadily decreased since FY 2010 from 3,173 to 2,292 (28-percent) and the District projects its deficit as of June 30, 2013, to grow to $15.8 million (prior to receipt of an emergency loan to cover the August, 2013 repayment of the district's 2012 state aid note).

· While the emergency loan has the effect of reducing the projected deficit by the amount of the loan (approximately $12 million), the District still maintains the corresponding debt, long term, and must pay debt service on the loan for 30 years. Participation in the Emergency Loan Program effectively eliminates the district from the State Aid Note program borrowing that the district has used for cash flow purposes in the past.

· The District's DEP is based on maintaining the same 1,200 pupil count in grades K-8 in the district as in FY 2013. The district lost an average of 93 pupils per year in grades K-8 from 2009 to 2012. With a foundation of $7,623, a loss of 93 pupils would equate to a revenue reduction of over $700,000 for fiscal year 2013-14.

After reaching their joint determination, the Superintendent and Treasurer agreed to give each district until Monday to provide documentation showing they have access to cash and/or a commitment letter from a lending institution as well as an opinion letter from their respective audit/accounting firm, indicating the cash would allow for the district to remain open through the end of the next school year.

"When a school district is no longer able to effectively operate and educate children, the State has a responsibility to step in," Treasurer Dillon said. "It is imperative that we act quickly so parents and students in these districts know they will be in classrooms when school begins this fall."

If either district does not provide documentation by the July 22nd deadline, the joint determination will be forwarded to its respective ISD, which would then declare the District dissolved and immediately order attachment of the territory of the Districts, in whole or in part, to one or more other school districts within the respective Intermediate School district, in accordance with Statute.

Stay with WNEM.com and TV5 as we continue to follow this story.

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