Emergency Financial Managers Reform Legislation and Training

In his State of the State address January 19th, Governor Rick Snyder called for legislative changes to the statute governing the appointment and powers of emergency financial managers ("EFMs") for financially distressed Michigan local governments and school districts (commonly called "Act 72" or the "Local Government Fiscal Responsibility Act"). He stated that the current Act does not allow intervention and assistance early enough and that clarity is needed regarding the powers of EFMs.

On February 9, 2011, House Bill No. 4214 and four related bills to reform the EFM process were introduced and referred to the Committee on Local, Intergovernmental, and Regional Affairs, which held a hearing on them the next day. State Treasurer Andy Dillon has publicly said that fast action by the Legislature is needed. A final version of the legislation may be enacted into law by the time of our March 2011 Municipal Law News. We will provide an update on this pending legislation in our next Bond Counsel Corner.

On February 9 and 10, also, Michigan State University and the Michigan chapter of the Turnaround Management Association hosted a basic training seminar in Lansing for potential EFMs. The Bond Buyer newspaper quoted a Michigan Department of Treasury spokesman: "The training is part of an initiative to further assist local governments and school districts facing financial difficulties by ensuring that individuals are well prepared to handle the difficult challenges they would face as EFMs."

• Read Full February 2011 Foster Swift Municipal Law News