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Embattled Mich. emergency manager law threatened

MUSKEGON HEIGHTS, Mich. — Money problems are so severe in one Michigan school district that officials have given up hope of finding a solution themselves. They're ready for the extreme option: a take-over by a state-appointed "emergency manager."

A controversial law passed in Michigan last year gave the state expanded powers over foundering cities and schools and created this drastic possibility. Some local governments have responded by fighting desperately to keep their independence. Others have agreed to make painful sacrifices they long resisted. And at least one school district, Muskegon Heights, has asked to surrender local control as its best chance to avoid insolvency.

But as communities deal with the prospect of state takeovers— the latest consequence of Michigan's economic decline in recent decades — the fate of the law that empowered the emergency managers has now been placed in doubt. Opponents, primarily unions worried about managers canceling local labor contracts, have mounted a campaign to place the issue on a public ballot. If state election officials certify 161,305 valid voter signatures, the law would be suspended until the election was held in November. A decision is expected by late April.

A suspension would come as a severe blow to Republican Gov. Rick Snyder, who won legislative approval for the extreme measures as part of a program for putting public finances back on a sound footing. The new developments could throw into confusion the four cities and two school districts now run by emergency managers, as well as several more that could be candidates for intervention. And the issue would renew a fierce debate in Michigan about the limits of state authority and the rights of local democracy.

In Muskegon Heights, where the district is sagging under a $9.4 million deficit, the debate is largely over. The governor is expected to decide within 10 days whether to order a takeover after a state review team Monday recommended the appointment of an emergency manager.

"We need these schools. We need this district," said Avery Burrel, a pastor and the Muskegon Heights school board president who says an emergency manager is probably the best option. "I want to make sure this district remains solvent and that we do whatever it takes to make sure this district survives."

Muskegon Heights is a mostly black district of 1,400 students in a once-thriving industrial town near Lake Michigan. The Muskegon region shared the plight of many factory towns over the last 30 years, as the manufacturing economy declined, plants closed and residents moved away to find work. A major blow came in 2005 when the Brunswick Corp. bowling equipment company moved many of its manufacturing jobs to Mexico. Today, the site of Lift-Tech International, where more than 1,000 people once made industrial hoists and cranes, sits empty just blocks from a district middle school and elementary school.

State financial aid to schools is based on enrollment, so school revenue dropped sharply when the system lost a third of its students since 2006. Officials were slow to restructure employee retirement agreements set in the 1970s.

In December, after failing to cut costs enough to curb the deficit, the district's school board voted to seek state intervention. Under the new state law, an emergency manager has the power to toss out or change union contracts to bring costs in line.

District officials fear that the school system, which dates back to the 1890s, could be dissolved or consolidated with a neighboring district, cutting the heart out of a community that reveled this year when its boys' high school basketball team made it to the semifinals of the Michigan Class B tournament.

"This is the roots of everything in our community," said David McCall, a 1980 graduate of the high school, where he now works in security.

Some teachers, however, worry that an emergency manager would just cut costs regardless of the impact on the schools. "I don't think you can just fix the finances and expect the district to survive. You've got to look at it from an academic standpoint," said Krista Abbott, a regional officer with the Michigan Education Association.

Some school board members also wonder if there's a way to reach a legal agreement with unions and the state to cut costs and maintain local control. The city of Detroit is attempting a similar agreement for its $200 million deficit.

Greg Bowens, spokesman for the Stand Up for Democracy coalition working to repeal the emergency manager law, said local leaders should maintain responsibility for local problems in a democracy.

"It is important for the people who get elected to these positions to do the jobs they were elected to do, irrespective of the challenges that lie before them," Bowens said.

But district officials say it's too late for that now in Muskegon Heights, where unions have already balked at a proposed 30 percent wage cut.

If the emergency manager law is suspended and the state can't use its extraordinary powers to fix the district's finances, "I think it could be devastating," said interim superintendent Dave Sipka, including "the demise of the school district."