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June 13, 2019

State to Decide Soon Whether to Breathe Life into its Dormant School Dissolution Law, with Benton Harbor in the Crosshairs

  • Governor Whitmer proposed school closure plan to address academic and financial crises facing Benton Harbor schools
  • Local community in an uproar over state’s plan to close high schools and convert to K-8 only district
  • If no plan adopted by June 14, state threatens to dissolve entire district

Benton Harbor Area Schools owns the dubious distinction of being one of the state’s lowest-performing public school districts. Student performance in all grades and subjects, as measured on statewide assessments, is abysmal and way below regional and statewide averages. Similarly, postsecondary outcomes, including college enrollment and completion rates, rank at the bottom statewide.

In late May, Governor Whitmer announced a plan that her administration claimed would address academic and financial challenges plaguing the district for over a decade. It’s a drastic one that hardly anyone in the district likes or wants. It would close Benton Harbor’s two high schools in fall 2020 and convert the district to K-8 only. What’s more, the Governor has indicated that if her plan, or another viable alternative, is not adopted by June 14, the entire district may have to be dissolved.

Dissolving any local government institution is a serious matter. It marks the end of an era, with all its history and cultural identity. This is especially true when the action is involuntary and not the direct result of local decisions by elected officials or a vote of the people. Dissolving an entire school district is no exception, given the emotional and sentimental attachment many residents have to their neighborhood school, and in light of Michigan’s strong traditions of local control of public K-12 education. Across the state, and especially in urban settings where jobs and people have fled at higher rates, public schools are more than just bricks and mortar. And so the decision to permanently shutter a couple of high schools, let alone all the schools in a majority-minority community, cannot be taken lightly.

Who holds the cards in school dissolution decision

Under current state law, a dissolution decision is based primarily on financial considerations as opposed to academic ones. While Benton Harbor’s financial situation is extremely stressed on a number of fronts, the academic picture for students is equally challenged. Simply put, the district is millions in debt and students are barely learning. Some action is called for.

The decision to dissolve a local school district rests with two non-elected state officials. State law allows the state superintendent of public instruction and the state treasurer, after consulting with the intermediate school district (ISD) in which the local district resides, to dissolve a district if it meets specific conditions laid out in law, including being deemed no longer financially viable and unable to deliver year-long educational services. Other financial criteria that must be met and determined through state review include the district’s failure to adopt or follow a deficit elimination plan, enrollment decline (state funding is tied to enrollment), and a growing deficit. It should be noted that the dissolution provisions only apply to districts with student enrollment between 300 and 2,400 pupils.

A close look at the most recent financial information reveals the Benton Harbor district meets many of the current thresholds in state law to proceed with dissolution. The district has operated a deficit budget (expenditures exceed revenues) in its general fund since the mid-2000s. And while the size of the accumulated deficit (the running total of annual deficits) has come down from its peak of $16 million in 2011, that is only because of the infusion of $13 million in state emergency loans between 2012 and 2016. The state loans effectively converted the short-term accumulated budget deficit into a long-term general fund debt to be paid off, with interest, over a number of years.

More recently, the accumulated budget deficit was pegged at $4.4 million at the end of the 2018 school year. It is expected to grow to $4.6 million by the end of the current year (June 30), satisfying two of the criteria for state dissolution – a worsening budget deficit and a failure to meet the district’s deficit elimination plan. In addition to having to settle its operating budget deficit, Benton Harbor has to repay the state nearly $11 million, plus interest, for outstanding emergency loans.

Another factor is enrollment, which has seen a steady and precipitous dive, falling 45 percent between the 2009-10 school year and 2018-19. More than half of resident school-age students attend school outside Benton Harbor, ether another district or a charter.

To proceed with district dissolution, pupil membership (a blended enrollment count used for state aid funding) for the most recently completed school year has to be at least 10 percent less than the number of pupils for the immediately preceding school year. The most recent pupil membership history shows a decline of 5.6 percent between 2016-17 and 2017-18; Benton Harbor does not meet the 10 percent enrollment decline threshold. However, effective July 1 the new school year begins and the enrollment decline calculation picks up 2018-19 data (i.e., the most recently completed year). At that time, the year-over-year decline is expected to be 13.4 percent, above the 10 percent level.


2016-172017-182018-19
Pupil Membership2,2652,1381,852
Annual change (%)
(5.6)(13.4)

Source: State of Michigan, State Aid Financial Status Reports

Five years since the last district was dissolved

Until 2013, the state’s primary mechanism for dealing with local government (both schools and general governments) fiscal emergencies was the Local Financial Stability and Choice Act. At the time, four school districts were operating under this emergency manager law (Detroit, Muskegon Heights, Highland Park, and Pontiac). State officials did not have the appetite to bring two more districts under the same degree of state control, and sought another policy response.

The new dissolution law allowed state officials to bypass the deliberative processes outlined in the emergency manager law and deal with troubled school districts much more expeditiously, by immediately closing all of a district’s schools, assigning its students to nearby districts, and leaving the “old” one in place to repay debts.

The ink on the new law was barely dry when Superintendent Mike Flanagan and Treasurer Andy Dillon conferred and determined that two districts, Buena Vista in Saginaw County and Inkster in Wayne County, would be dissolved before the start of the 2013-14 school year. At the time, Benton Harbor met all the financial-stress criteria for dissolution, but it was too large (over 2,400 pupils) to be considered for closure. Since adopting the state’s school district dissolution law and using it in these two limited cases, there has been no public mention of dissolving another district.  

That is, until last month, when Governor Whitmer raised the prospect for Benton Harbor. With the dissolution law still in effect, state leaders have revived this policy approach for dealing with school fiscal stress. Until the end of the current 2018-19 school year (June 30), Benton Harbor schools don’t meet all the conditions for dissolution. Come July 1, however, the district will likely satisfy all the conditions necessary for the state superintendent of public instruction and state treasurer to move forward with closing all Bentor Harbor schools as early as fall 2019.

State to Decide Soon Whether to Breathe Life into its Dormant School Dissolution Law, with Benton Harbor in the Crosshairs

  • Governor Whitmer proposed school closure plan to address academic and financial crises facing Benton Harbor schools
  • Local community in an uproar over state’s plan to close high schools and convert to K-8 only district
  • If no plan adopted by June 14, state threatens to dissolve entire district

Benton Harbor Area Schools owns the dubious distinction of being one of the state’s lowest-performing public school districts. Student performance in all grades and subjects, as measured on statewide assessments, is abysmal and way below regional and statewide averages. Similarly, postsecondary outcomes, including college enrollment and completion rates, rank at the bottom statewide.

In late May, Governor Whitmer announced a plan that her administration claimed would address academic and financial challenges plaguing the district for over a decade. It’s a drastic one that hardly anyone in the district likes or wants. It would close Benton Harbor’s two high schools in fall 2020 and convert the district to K-8 only. What’s more, the Governor has indicated that if her plan, or another viable alternative, is not adopted by June 14, the entire district may have to be dissolved.

Dissolving any local government institution is a serious matter. It marks the end of an era, with all its history and cultural identity. This is especially true when the action is involuntary and not the direct result of local decisions by elected officials or a vote of the people. Dissolving an entire school district is no exception, given the emotional and sentimental attachment many residents have to their neighborhood school, and in light of Michigan’s strong traditions of local control of public K-12 education. Across the state, and especially in urban settings where jobs and people have fled at higher rates, public schools are more than just bricks and mortar. And so the decision to permanently shutter a couple of high schools, let alone all the schools in a majority-minority community, cannot be taken lightly.

Who holds the cards in school dissolution decision

Under current state law, a dissolution decision is based primarily on financial considerations as opposed to academic ones. While Benton Harbor’s financial situation is extremely stressed on a number of fronts, the academic picture for students is equally challenged. Simply put, the district is millions in debt and students are barely learning. Some action is called for.

The decision to dissolve a local school district rests with two non-elected state officials. State law allows the state superintendent of public instruction and the state treasurer, after consulting with the intermediate school district (ISD) in which the local district resides, to dissolve a district if it meets specific conditions laid out in law, including being deemed no longer financially viable and unable to deliver year-long educational services. Other financial criteria that must be met and determined through state review include the district’s failure to adopt or follow a deficit elimination plan, enrollment decline (state funding is tied to enrollment), and a growing deficit. It should be noted that the dissolution provisions only apply to districts with student enrollment between 300 and 2,400 pupils.

A close look at the most recent financial information reveals the Benton Harbor district meets many of the current thresholds in state law to proceed with dissolution. The district has operated a deficit budget (expenditures exceed revenues) in its general fund since the mid-2000s. And while the size of the accumulated deficit (the running total of annual deficits) has come down from its peak of $16 million in 2011, that is only because of the infusion of $13 million in state emergency loans between 2012 and 2016. The state loans effectively converted the short-term accumulated budget deficit into a long-term general fund debt to be paid off, with interest, over a number of years.

More recently, the accumulated budget deficit was pegged at $4.4 million at the end of the 2018 school year. It is expected to grow to $4.6 million by the end of the current year (June 30), satisfying two of the criteria for state dissolution – a worsening budget deficit and a failure to meet the district’s deficit elimination plan. In addition to having to settle its operating budget deficit, Benton Harbor has to repay the state nearly $11 million, plus interest, for outstanding emergency loans.

Another factor is enrollment, which has seen a steady and precipitous dive, falling 45 percent between the 2009-10 school year and 2018-19. More than half of resident school-age students attend school outside Benton Harbor, ether another district or a charter.

To proceed with district dissolution, pupil membership (a blended enrollment count used for state aid funding) for the most recently completed school year has to be at least 10 percent less than the number of pupils for the immediately preceding school year. The most recent pupil membership history shows a decline of 5.6 percent between 2016-17 and 2017-18; Benton Harbor does not meet the 10 percent enrollment decline threshold. However, effective July 1 the new school year begins and the enrollment decline calculation picks up 2018-19 data (i.e., the most recently completed year). At that time, the year-over-year decline is expected to be 13.4 percent, above the 10 percent level.


2016-172017-182018-19
Pupil Membership2,2652,1381,852
Annual change (%)
(5.6)(13.4)

Source: State of Michigan, State Aid Financial Status Reports

Five years since the last district was dissolved

Until 2013, the state’s primary mechanism for dealing with local government (both schools and general governments) fiscal emergencies was the Local Financial Stability and Choice Act. At the time, four school districts were operating under this emergency manager law (Detroit, Muskegon Heights, Highland Park, and Pontiac). State officials did not have the appetite to bring two more districts under the same degree of state control, and sought another policy response.

The new dissolution law allowed state officials to bypass the deliberative processes outlined in the emergency manager law and deal with troubled school districts much more expeditiously, by immediately closing all of a district’s schools, assigning its students to nearby districts, and leaving the “old” one in place to repay debts.

The ink on the new law was barely dry when Superintendent Mike Flanagan and Treasurer Andy Dillon conferred and determined that two districts, Buena Vista in Saginaw County and Inkster in Wayne County, would be dissolved before the start of the 2013-14 school year. At the time, Benton Harbor met all the financial-stress criteria for dissolution, but it was too large (over 2,400 pupils) to be considered for closure. Since adopting the state’s school district dissolution law and using it in these two limited cases, there has been no public mention of dissolving another district.  

That is, until last month, when Governor Whitmer raised the prospect for Benton Harbor. With the dissolution law still in effect, state leaders have revived this policy approach for dealing with school fiscal stress. Until the end of the current 2018-19 school year (June 30), Benton Harbor schools don’t meet all the conditions for dissolution. Come July 1, however, the district will likely satisfy all the conditions necessary for the state superintendent of public instruction and state treasurer to move forward with closing all Bentor Harbor schools as early as fall 2019.

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