News Column

Review Team Appointed to Examine Lincoln Park Finances

February 10, 2014



LANSING, Mich., Feb. 10 -- The Michigan Department of Treasury issued the following news release:

Gov. Rick Snyder today appointed a financial review team to examine the finances of the City of Lincoln Park, under Public Act 436 of 2012 (Local Fiscal Stability and Choice Act). The appointment of a review team is the second step in the PA 436 process, if the Local Emergency Financial Assistance Loan Board (ELB) determines "probable financial stress" exists in a local unit of government following a preliminary review by the Department of Treasury. The ELB reached that conclusion for Lincoln Park last month.

The Department of Treasury's preliminary review of the City of Lincoln Park's finances found numerous conditions, including:

* During fiscal year 2013, the city's General Fund (GF) borrowed $2.5 million from the Water and Sewer Fund to make its annual pension payment. The city has stopped making required debt service payments to SunTrust Bank. Due to nonpayment of the loan, SunTrust has filed a federal lawsuit against the city;

* The city has violated requirements of the Uniform Budgeting and Accounting Act. For fiscal year 2012, there were several activities in the GF that went over budget with General Government being the largest at $501,892. All GF activities that went over budget totaled more than $711,302;

* The city has experienced a decline in revenues for several years. The city's taxable value has declined 31.5% over the past four years ($793,184,868 in 2009 compared to $543,044,201 in 2013). As a result, the city's GF revenue has declined from $24.6 million as of June 30, 2009 to $20.3 million as of June 30, 2013. Property tax revenue accounts for 60% of the city's GF revenue;

* In 2003, the city's pension plans, the Municipal Employees' Pension Plan and the Police and Fire Retirement System, were 70.1% and 101.3% funded respectively. The actuarial valuation as of June 30, 2013 (Municipal Employees') and December 31, 2013 (Police and Fire), indicates the city has a $69.1 million unfunded pension liability and a funding status of 28.0% and 34.6% respectively.

Review team members are:

Representing members required by PA 436

Michael Krouse, administrator, State Finance Division within the Department of Treasury (State Treasurer's designee)

Krouse was named administrator of the State Finance Division within Treasury's Bureau of State and Authority Finance, in March 2012. Prior to that, Krouse was assistant director and cash management specialist for the division. In addition to his experience as a revenue auditor, he has also managed payroll operations within the State Budget Office. Krouse, a certified public accountant, holds a bachelor's degree in accounting from Marywood University in Scranton, Pennsylvania.

Doug Ringler, director, Office of Internal Audit Services within the Department of

Technology, Management and Budget (DTMB Director's designee)

Ringler is the chief audit executive and director of DTMB's Office of Internal Audit Services, where he's served since 2008. He previously worked in the state's Office of Financial Management and Office of Auditor General. Ringler, a certified public accountant and internal auditor, holds a bachelor's degree from Ferris State University.

Steve Schiller, consultant to Muskegon Heights/Highland Park schools' emergency manager (nominee of Senate Majority Leader)

Schiller has been a consultant to the Muskegon Heights and Highland Park schools' emergency manager since 2012. Prior to that, he was an instructional technologist and director of technology for Muskegon Heights Public Schools. Schiller also spent more than 30 years in the classroom as a teacher in Muskegon Heights. Schiller holds a bachelor's degree from Western Michigan University.

Max Chiddister, president, Chiddister and Associates (nominee of the Speaker of the House of Representatives)

Chiddister was formerly the executive director of the Detroit Public Safety Foundation, which worked to promote public safety by enhancing the capabilities of the Detroit Police and Fire Departments. Prior to joining the foundation, Chiddister was an independent business consultant after having spent 18 years as vice president of government affairs for J.P. Morgan Chase/Bank One. He also served two terms as mayor of Goshen, Indiana. Chiddister attended Indiana University.

Representing state officials with relevant professional experience

Frederick Headen, legal advisor for the Michigan Department of Treasury

Headen served with the Bureau of Local Government Services from 1997 to 2012, when he was appointed to his current position. Headen also served as acting chair of the State Tax Commission. Prior to joining Treasury, he worked as legal counsel for the Citizens Research Council. Headen holds a bachelor's and master's degree from Michigan State University and a law degree from Thomas M. Cooley Law School.

Under PA 436, a review team must report to the Governor within 60 days of its appointment, whether specific statutory conditions exist or are likely to occur, and must determine whether a financial emergency exists in the local government. A review team may request a 30-day extension. A review team's report is also sent to the State Treasurer, officials of the local government, legislative leaders, and those legislators representing the local government.

For more information about PA 436, visit the Local Government Fiscal Health page on the Department of Treasury's Web site at www.michigan.gov/treasury.

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Source: Targeted News Service


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