DETROIT, MI – An independent review team concludes that a financial emergency exists in Wayne County under Public Act 436 of 2012, the Local Financial Stability and Choice Act.
Gov. Rick Snyder by law has 10 days to consider the review team’s report and reach a determination on the county’s financial condition.
The review team, appointed July 2 following a preliminary review requested by the Wayne County Executive Warren Evans, conducted several meetings to consider the county’s finances and interviewed elected officials, department heads, union leaders, and others with knowledge and relevant information. The review team also conducted a public information meeting with county residents, as required by law.
The team’s extensive report indicates that numerous conditions led to the determination that a financial emergency exists in the county. Those conditions include the following:
· The county’s last four annual financial audits revealed notable variances between General Fund revenues and expenditures as initially budgeted, as amended, and as actually realized. In addition, County officials underestimated actual expenditures in three of the fiscal years by amounts ranging from $16.7 million to $23.7 million.
· County officials engaged in unbudgeted expenditures in violation of Public Act 2 of 1968, the Uniform Budgeting and Accounting Act.
· Although there was agreement among county officials that existing detention facilities are inadequate, there is no consensus about whether to complete construction on a new jail or to renovate existing facilities.
· According to the county executive’s recovery plan, unfunded healthcare-related liabilities were estimated to be $1.3 billion as of the last actuarial valuation with funding set aside for this purpose of less than one percent of liabilities. Healthcare-related liabilities represent 40 percent of the county’s long-term financial obligations.
Members of the Wayne County review team were:
Clarence Stone, director of legal affairs, Michigan State Housing Development Authority (State Treasurer’s designee); Jeffrey Bankowski, chief internal auditor, State Budget Office within the Michigan Department of Technology, Management, and Budget (DTMB Director’s designee); Tom Davis, deputy director at Senate Majority Policy Office (nominee of Senate Majority Leader); Sharon Madison, owner, Madison Madison International (nominee of the Speaker of the House of Representatives); and Frederick Headen, legal advisor, Department of Treasury.
For more information about the PA 436 process, visit the Local Government Fiscal Health page on the Department of Treasury’s website (www.michigan.gov/treasury).