I read this stuff so you don't have to
Cross-posted from Eclectablog.
A mere 37 days after voters repealed Public Act 4, Michigan's notorious and anti-democratic Emergency Manager Law, Republican legislators passed a new version to replace it. It was signed into law as Public Act 436 thirteen days later. This defiant thumb-in-the-eye to the will of the voters was even more egregious since it contains two appropriations, one to pay Emergency Managers and another to hire consultants, lawyers, "work-out experts", and others to implement the law. These appropriations ensure voters won't have a chance to interfere with the business of our Very Serious GOP legislators on this matter again.
So, what, exactly, is in this new law? Well, for starters, let's have a look at the title:
"THE LOCAL FINANCIAL STABILITY AND CHOICE ACT"
I'm not kidding. That's what they call it. It's surprising they didn't figure out a way to include the words "FREEDOM" and "INDEPENDENCE" while they were at it. You can read the law HERE (pdf).
The new law has some of the same anti-democratic elements in it as Public Act 4 did along with some new things designed, one imagines, to make it more palatable to PA4's detractors.
The "choice" bit refers to what some have characterized as the "choose your poison" elements of PA 436. Instead of an Emergency Manager being assigned as the only option, local governments actually have four options:
- A consent agreement
- An emergency manager
- A "neutral evaluation process"
- Chapter 9 municipal bankruptcy
If they choose a consent agreement and it doesn't work out, they don't get a second chance.
If they choose Chapter 9 bankruptcy, a process that, as I have pointed out in the past, allows the local elected officials to retain control over their government, the Governor has the last say and force them to choose another option instead.
The "neutral evaluation process" is an attractive-sounding arbitration process where creditors and other "interested parties" negotiate with the help of a qualified arbitration specialist to resolve the city's debt problems. However, it requires all parties to agree and that may far more easily said than done. If it falls through, they go to directly to Chapter 9 bankruptcy.
That brings us back to our old friend the "Emergency Manager". You may have noticed that the terms "Emergency Financial Manager" (EFM) and "Emergency Manager" (EM) are often used interchangeably. They are, however, NOT the same. The original laws governing this, PA 101 and PA 72, called the position "Emergency Financial Manager" because the person's duties were limited exclusively to the realm of finances. However, with Public Act 4, the title was changed to "Emergency Manager". I explained why that is HERE:
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.
The job qualifications for an EM have not changed with PA 436 so these remarks are still completely valid and the title has once again returned to "Emergency Manager".
Here are some things you need to know about EMs. The bits in italics are directly from the 22-page law:
Finally, there 19 different situations that can trigger the preliminary review process that is the first step in putting a city into receivership and having to choose one of the four poisons offered. Only one of them needs to be met. The last one, carried over from PA 4, is this:
The existence of other facts or circumstances that, in the state treasurer’s sole discretion for a municipal government, are indicative of probable financial stress or that, in the state treasurer’s or superintendent of public instruction’s sole discretion for a school district, are indicative of probable financial stress.
That is so broad and so inclusive and so subjective that it almost begs the question as to why you would even bother to list the other 18 situations. At the end of the day, the state treasurer starts the process for any reason they want; it's entirely up to them.
This law kicks in on March 28th. Any current Emergency Financial Managers will have to get new business cards that say Emergency Manager but the law doesn't require any new reviews; they simply get grandfathered in.
So, there you have it: Stability and Choice. Not so pretty-sounding when you deconstruct it, is it?