O'Keefe in the News

Boudreau Business Brief

Boudreau Business Brief

June 1, 2011

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.