Excerpt from June 2011 Newsletter
A Message from Mike Boudreau CPA, CTP, CFF

June 2011 – Municipalities and School Districts/Emergency Manager

Many municipalities and school districts are facing the same viability issues the private sector has been experiencing since 2008. As a result, the Michigan Public Act #4 was signed into law earlier this year and introduced the concept of an Emergency Manager (EM). The EM has broad statutory authority to rectify a financial emergency. For example, the EM can:

• Hire, direct and/or layoff staff
• Reduce pay and benefits for local officials
• Prepare a financial and operating plan
• Change existing labor contracts without negotiation (requires approval from State Treasurer)
• Approve or reject vendor contracts
• Eliminate departments and recommend consolidation of municipal governments
• Recommend a Chapter 9 bankruptcy filing (requires the Governor’s approval)

If the local government cannot solve their problems on their own, then I believe the best strategy may be an out of court workout (with or without the EM appointment) followed by a pre-packaged bankruptcy filing needed to either a) Reject a Collective Bargaining Agreement (CBA) or b) Adjust the debt accordingly.