Why the Michigan GOP took the “Financial” out of “Emergency Financial Manager”


When Michigan Republicans passed the legislation that became Michigan Public Act 4 of 2011 or P.A. 4 or the “Emergency Manager Act” or “local government and school district fiscal accountability act” or, as I call it, the Financial Martial Law Act, they took a subtle step that few noticed. They changed the name of “Emergency Financial Manager” to simply “Emergency Manager”.

Why did they do this? A quick look at the new law tells the tale.

In P.A. 4, there is a “Definitions” section and one of the items there is this:

“Emergency manager” or “manager” means the emergency manager appointed under section 15. An emergency manager includes an emergency financial manager appointed under former 1988 PA 101 or former 1990 PA 72.

The new law has a set of 18 conditions that can trigger the imposition of an Emergency manager. Only one of these conditions needs to be present in order to trigger the process. The last of the “conditions” is:

The existence of other facts or circumstances that in the state treasurer’s sole discretion for a municipal government are indicative of municipal financial stress, or, that in the superintendent of public instruction’s sole discretion for a school district are indicative of school district financial stress.

Pretty all-encompassing, eh? In other words, the 18 conditions are really just a smokescreen that conceal the fact that it’s entirely up to the state treasurer or superintendent as to what constitutes and “emergency”.

But why take out the word “Financial” from the job title? Isn’t this law all about restoring fiscal soundness to municipal governments or school districts? The answer to that question, despite what the Republicans, including our governor, tell us, is “NO!” Take a look at some of the things that an Emergency Manager can do:

  1. Assuming complete control over local governments and can prohibit elected officials’ access to office facilities, email and internal information systems
  2. Remove current department heads, administrators
  3. Sell, lease, convey, assign or other use or transfer assets of the local government or school district
  4. Dissolve or disincorporate the local government and assign its assets
  5. Developing academic and educational plans
  6. Receiving and disbursing all federal, state and local funds earmarked for the local government or school district
  7. “Take any other action or exercise any power or authority of any officer, employee, department, board, commission or other similar entity of the local government whether elected or appointed”

Got Big Government TakeoverTM???

While some of these can be categorized as fiscal-related, what about #1 there? Controlling elected officials’ access to facilities, emails and internal information systems? Eh? #2, #3, #4 and #5 give the keys to the kingdom to the Emergency Manager, giving that person the ability to control public assets (i.e., owned by the tax payers) and even sell them off, give them away and make determinations on who receives incoming funds. That last one, of course, is yet another catch-all that lets the Emergency Manager whatever he or she damn well pleases. It expands the entire list of things they can do to nearly infinity.

But let’s take a closer look at #5: “Developing academic and educational plans”.

In the requirement for an Emergency Manager as spelled out by the law, the only specific requirement in terms of experience is “The emergency manager shall have a minimum of 5 years’ experience and demonstrable expertise in business, financial, or local or state budgetary matters.”

What part of that gives them the expertise needed to develop academic and educational plans? If you look at who is taking the Emergency Manager training classes offered by the state, it is mostly accountants and other financial-types. In fact, the trainings themselves are primarily conducted by accounting firms and other vendors who eventually stand to benefit if an Emergency Manager hires them to take over some aspect of the operations currently handled by public employees. There is no training on developing academic or educational plans. None.

So now we begin to see why “Financial” was, at least in part, removed from the title. This is no longer simply about getting a municipality or a school district on solid financial footing. It has transformed into what can only be seen as a power grab. It gives a political appointee control over publicly-owned assets and resources and, more sinisterly, control over the academic and educational plans used by our school systems to educate Michigan’s kids. It’s placing that control in the hands of people who need not have any training, experience or expertise in that area.

Coming soon to a state near you. Are you listening Wisconsin???