Michigan released Pontiac School District from a consent agreement following five years of state oversight.
It is now free to manage all operations and finances independently.
“The financial success that is now being experienced at the Pontiac School District is a direct result of hard work and great collaboration between the state and the district,” Gov. Rick Snyder said in a press release Friday. "Pontiac is a vital part of Michigan’s strong comeback and the future of this district now looks much brighter.”
The Pontiac district entered the consent agreement with the state in 2013 after its deficit ballooned to $45 million from $38 million in just one year.
Under the consent agreement, the school district adopted and implemented a financial and operating plan to provide for greater financial stability, including entering into an agreement with Oakland Schools for business administration and information technology services to enable the school district to better provide public education to its students.
“This five-year partnership with the state Treasury Department has gotten the school district stable enough to sustain operations,” said Pontiac School District Superintendent Kelley Williams. “We have shown growth academically and have shown fiscal responsibility with the passing of audits and a boost in our school district’s credit rating.”
The school district has managed to reduce its deficit to $6.6 million and its cash flows have significantly improved supported by two large state emergency loans, strengthened financial management, and operational adjustments. The school district continues to follow its state emergency loan agreement.
The district’s severely pressured cash flows led it to miss a May 2013 debt service payment. The missed payment sparked downgrades from Moody’s Investors Service. The district fully repaid its bond insurer, with interest, in June 2014.
Pontiac school’s efforts to trim its budget deficit earned it a two notch upgrade to B2 — still well below investment grade — from Moody’s in May. The outlook is stable.
The district’s debt load includes $20 million in outstanding emergency loans via the State of Michigan, $13.4 million of general obligation limited tax debt issued via the Michigan Finance Authority and $10.5 million of GOLT debt secured by its sinking fund levy.
The district is in the city of Pontiac, about 30 miles from Detroit. The city exited state oversight in 2017. It has six elementary schools, a middle school and a high school.
After Pontiac's release from the consent agreement, only two school districts remain under state oversight in Michigan.
