CHICAGO — The Michigan treasurer this week will launch a new training program for would-be municipal emergency financial managers as the state braces for a rise in the number of fiscally stressed local governments.
The two-day class will train 50 potential emergency financial managers. It comes as new Treasurer Andy Dillon warns that dozens of municipalities and school districts across the state face major fiscal stress, and that an unnamed few are on the brink of insolvency.
Gov. Rick Snyder, meanwhile, is expected any day to unveil a bill that features an overhaul of Public Act 72, Michigan’s law for dealing with distressed governments.
The bill, like the new class, is expected to emphasize early intervention by carving out a formal process for the state to get involved with a troubled municipality or school district before a full takeover is necessary.
Snyder targeted Michigan’s emergency financial management act in his first state of the state address last month, saying it needed to be improved in part by allowing for earlier intervention as well as by strengthening the authority of the EFM.
Michigan State University and the Michigan chapter of the Turnaround Management Association are hosting the two-day seminar, which will be held in Lansing Wednesday and Thursday on the MSU campus.
Top state bond experts, including bond counsel from Miller, Canfield, Paddock and Stone PLC, will teach sections on debt.
Robert Bobb, the high-profile EFM for Detroit Public Schools, will also speak.
“This is an innovative approach that no one else in the country is doing to address what is clearly a national issue around municipal stress,” said Eric Scorsone, an MSU professor who focuses on local government stress and who is helping run the program.
He said the training will focus partly on helping local governments before they get to the point of needing a state takeover. “We want a cadre of people the treasurer can refer to communities to go in before problems get too serious,” Scorsone said.
Dillon has said the school will be a prerequisite for any new state-appointed EFMs.
Topics will include municipal bankruptcy, an EFM’s role, authority, and support, turnaround plans, municipal assets, and employment and contract law, according to the treasurer’s office.
“The training is part of an initiative to further assist local governments and school districts facing financial difficulties by ensuring that individuals are well prepared to handle the difficult challenges they would face as EFMs,” Treasury spokesman Terry Stanton said in an e-mail.
The Michigan chapter of the Turnaround Management Association typically focuses on corporate distress — particularly in the automobile industry — but is beginning to focus on government stress. Dillon, the former Michigan House speaker who took his new position in January, has said he wants to create a government turnaround group, which may or may not be part of the formal TMA, according to local reports.
The first session will train 50 potential EFMs who were chosen from more than 200 applications. MSU plans to follow up the two-day class with more specific training in a variety of public finance areas, including debt.
MSU will schedule the second round of training for a new batch of EFMs later this year, Scorsone said.
