Knowledgeable Navigation to Avoid the Iceberg: Considerations in Proactively Addressing School District Fiscal Stress in Michigan
12 Pages Posted: 30 Aug 2015
Date Written: January 20, 2015
School districts in fiscal crisis are highly unlikely to provide educational environments in which students learn, grow, and thrive; yet in Michigan, 57 school districts and public school academies ended the 2014 fiscal year either in deficit or with a deficit projected for the subsequent year. These districts’ deficits range from slightly more than $5,000 to more than $169 million in the Detroit Public Schools (Michigan Department of Education, 2014). Helping these districts return to a position of fiscal health from which they can deliver quality education is an immediate concern of incredible importance. Although less pressing, implementing a system that could help prevent other districts from being mired in fiscal crisis is equally significant and the focus of this paper.
In response to the increasing number of districts experiencing fiscal stress, in December 2014, the Michigan legislature proposed an early warning finance system to allow the state government to intervene in districts that are either experiencing financial stress or appear to be headed in that direction. In this paper, the authors first describe the evolution of Michigan’s state-level response to school districts’ fiscal crises. Subsequently, the authors will compare the early warning system being discussed in Michigan in late 2014-early 2015 with such systems in other states as well as research related to indicators of school district fiscal distress. Finally, the authors will provide recommendations for consideration when developing an effective and efficient early warning system for school districts.
Keywords: school, education, school finance, financial crisis, financial early warning
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