The struggles between Detroit School Board and Detroit Public School Emergency Financial Manager Robert Bobb created a lot of steam last year. The tensions subdued as the court ruled Bobb as abusing his role as Emergency Financial Manager. In the wake of the court decision, a lot of discussion has stemmed from Bobb’s comment: “Public Act 72 should be revisited.”
What is Public Act 72? Simply put, it is the emergency financial manager act. It states that the governor has the power to declare a Financial Emergency in cities and school districts after running through certain steps. Afterwards, the secretary of treasury convenes a committee to pick and appoint an emergency financial manager in hopes to overturn the city or school district.
According to the Michigan Treasury, there have been seven declarations of a Financial Emergency and nine emergency financial managers appointed. As more and more municipalities and school districts become potential candidates of Financial Emergencies due to the gloomy economy in the past few years, Public Act 72 become more important as one of the state’s financial last steps.
As there are success stories and failures of emergency financial managements, it is still too early to see if the notion presented by Public Act 72 is overall beneficial or not. However, Public Act 72 is not perfect. Experts and journalists have identified some problems in Public Act 72. Most importantly, people believe Public Act 72 introduces steps that slow down the speed of sending an emergency financial manager. The financial problems stack up so fast that when the emergency financial manager is finally appointed, there is not much left to do. Furthermore, the emergency financial managers were not given enough power to trim some of the tricky parts in state finance, including labor contracts.
Lou Schimmel, the former emergency financial manager in the city of Hamtramck, wrote in an article on necessary changes to make the role of emergency financial managers suitable. His points are summarized as follows,
1) Emergency Financial Managers should be protected from lawsuits by law.
2) Emergency Financial Managers should be given the power equivalent to those in the governing body(mayor and council or school board)
3) Emergency Financial Managers should have the power to review charter provisions
4) Public Act 312, which mandates that when a municipality and union cannot agree on the terms of a new contract they must go to binding arbitration, should be repealed
Governor Rick Snyder mentioned reviewing Public Act 72 as one of the fixes for Michigan. There is also a seminar held in Michigan State University to train potential candidates for Emergency Financial Managers. All the pieces are set in place, it’s up to the governor and the legislators how this will go.