MI HB4327

School districts, intermediate school districts, and public school academies are prohibited from adopting or operating under a deficit budget and must immediately notify the superintendent of public instruction and state treasurer if they have an existing deficit, incur a deficit in the most recently completed fiscal year, or adopt a budget projecting a deficit.

Within 30 days of notification, the school entity must submit an amended budget and superintendent-approved deficit elimination plan to the state; the department may withhold and release state school aid funds under the state school aid act.

School entities must submit monthly monitoring reports on revenue and expenditures to the superintendent and state treasurer and post these reports on their websites.

If a school entity experiences rapidly deteriorating finances, declining enrollment, or other financial stress indicators, or if a deficit is not eliminated within 5 years, the state treasurer may require an enhanced deficit elimination plan subject to state treasurer approval and may require a financial recovery agreement.

Enhanced deficit elimination plans must be approved by the school entity's board and may include state assistance, financial operating plans, appointment of auditors/inspectors, remedial measures, and required retention of consultants or experts.