When Michigan Governor Rick Snyder signed Public Act 4 on March 16, 2011, he triggered a sweeping change in the way the state oversees financially troubled units of government and school districts.
While the governor already had the power to appoint an emergency financial manager to a city or school district in serious financial peril, the new law gives these appointees much greater authority. Also known as the Local Government and School District Fiscal Accountability Act, the law provides the emergency manager (EM) with the authority to void union contracts and strip school board members, city councilpersons and others of their powers as elected or appointed officials.
Currently, Michigan has EMs running the schools in Detroit, as well as the cities of Pontiac, Ecorse and Benton Harbor. All of them were appointed before PA 4 of 2011 took effect. Under PA 4 of 2011, their powers have expanded significantly.
Labor and local officials have cried foul and labeled the law "undemocratic." Snyder and the Republicans in the state Legislature who adopted PA 4 of 2011 say city officials and school board members should make their own cost-cutting decisions so EMs won’t be needed. But in the event an EM must be appointed, he or she must have the necessary tools to do the job, Snyder said.
We at the law firm of Warner Norcross and Judd recognize this as a fundamental change for local units of government, which is why we are closely monitoring the ins and outs of PA 4 of 2011. We have put together a clearinghouse of information from state and local sources, news reports, editorials, think tanks, research councils and others to help you stay on top of the issue, too. The information can be accessed here.
If we can answer any questions related to the legislation or help you figure out how PA 4 of 2011 may affect your unit of government, please contact one of our experts.