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Emergency financial managers: What are the facts?

June 14, 2011
By Richard Clark - columnist , Daily Press

ESCANABA - The legislature passed Emergency Financial Manager Law as a threat to cities and school districts to put their finances in order. So why do our the representatives who voted for the law rationalize their votes and ignore its unfairness and anti-democratic provisions?

The Citizens Research Council of Michigan - - says when the financial manager law is implemented the state will appoint an emergency manager "who would assume all of the authority and responsibility of local officials, as well as have power to terminate collective bargaining agreements and contracts, and even to dissolve the unit of government."

The April 8, 2011, Daily Press quoted Rep. McBroom as saying that collective bargaining is retained under the act and that governing officials would not be removed for life. A bit of sophistry here. Councils and boards will have no authority and must behave as directed by the manager, and collective bargaining is out.

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Richard Clark

State officials say former Gov. Blanchard is responsible for the law. The April 16, 2011, Daily Press quoted Greg Andrews, Gov. Snyder's U.P. Representative, as saying, "The appointment of an emergency financial manager dates back to 1988, when it was signed into law by then-Gov. Jim Blanchard."

In the June 7, 2011, Daily Press, Sen. Casperson is cited as saying the current law is an improvement over the bill that "has been in place since Jim Blanchard was governor. Gov. Blanchard implemented the policy after the Benton Harbor school district went bankrupt."

In the April 8, 2011, Daily Press, Rep. McBroom said, "(i)t should also be noted that this is not a new concept, but one that had been introduced back in the Blanchard administration."

Rep. McBroom was creative in rationalizing his support of the law. He said, "For over 20 years municipalities and school districts would ask for assistance before becoming insolvent and the state's reply was they were on their own."

Local governments could always ask for a manager, but understandably they didn't want state-appointed managers nosing around local government. It is the same under the new law. The qualitative difference is that the new law strips all authority from local government and allows the manager to terminate collective bargaining.

When Delta County Administrator Nora Viau asked the governor's representative, Greg Andrews, who would be responsible to pay the manager, he said that since the state hired the managers they would be state employees and paid by the state. This is 100 percent wrong! Managers are not state employees. Managers enter into a contract with the state and the local people will pay the manager what the state and manager agree upon. In the case of the Detroit Public Schools, the district will pay the manager $250,000.

If the financial manager thinks there is a need for staff or professional assistance, the financial manager can hire those people and guess who pays? The city or school district.

It gets better. Suppose the manager, who need not be from the local area, does something abusive to residents? The law makes the manager immune. But if a wronged citizen challenges the manager in court, guess who pays the costs? The city, township or school district not the state or financial manager.

According to the April 8, 2011 Daily Press, Mr. McBroom said that he "presented" or "imparted" the 18 criteria that allowed cities to get help before it was too late. His claim is highly doubtful. He did not sponsor or write the bill. The 18 events triggering appointment of a financial manager was in the original bill and he was not a sponsor. Cities do not get help, they get dictatorship.

Local governments and school districts will work hard avoiding the appointment of an emergency financial manager because it would mean that the local community will lose its representative form of government.

Ironically, struggling schools are exposed to emergency financial managers by the same legislators who put schools at financial risk by using the school aid fund to pay for business tax breaks.


EDITOR'S NOTE - Richard Clark, Escanaba, practices personal injury law throughout the Upper Peninsula. He can be reached at



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