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Governor: Pontiac Schools In Financial Emergency

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PONTIAC (WWJ/AP) - Gov. Rick Snyder confirmed Wednesday that Pontiac’s public schools are in a financial emergency, leaving district officials seven days to choose one of four government options to correct the problems.

The options include accepting a consent agreement with the state, appointment of an emergency manager, a neutral evaluation process or a Chapter 9 bankruptcy filing.

“We need to make sure that Pontiac School District can open its doors and be ready for students,” Snyder said in a release. “Our goal here is to set a course that restores financial stability in the district so Pontiac students can get the education they need. I’m looking forward to working with district leaders to determine that path.”

Snyder received a report earlier this month from an independent, six-member team that reviewed the district’s finances. He determined Aug. 6 that a financial emergency existed in the district that serves more than 5,500 students. That was confirmed Wednesday.

The review team found that Pontiac Schools’ general fund budget deficit increased by almost 54 percent from $24.5 million to $37.7 million between 2011 and 2012. Unpaid bills to vendors totaled about $33 million as of the end of June.

District staff also may have violated state law by covering payroll with debt retirement funds. Pontiac Schools on May 1 defaulted on a $1.4 million debt service payment related to energy bonds issued in 2006.

If an emergency manager is appointed, Pontiac Schools would join districts in Detroit, Highland Park and Hamtramck who currently have their own state-appointed managers.

The city of Pontiac, north of Detroit, also has a manager and is under state oversight.

TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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