Hazel Park schools face audit crisis after $6M overspending and financial mismanagement

In a recent special meeting of the Hazel Park School District Board of Education, the gravity of the district's financial turmoil was laid bare, revealing a series of missteps that have led to significant fiscal challenges. The meeting, held on May 27, 2025, highlighted the board's ongoing struggle to regain control over its financial management, a situation that has spiraled into a crisis affecting both operations and educational resources.

The board's discussion began with a stark acknowledgment of the district's financial state, which has deteriorated to the point where it now faces a $6 million overspend, drastically reducing its fund balance from 11% to just 1%. This alarming drop has placed the district on Michigan's treasury watch list, requiring monthly financial reports to the state. The board's chair emphasized the fiduciary duty they hold to taxpayers, noting that the cumulative mismanagement has resulted in over $755,000 in unplanned expenses, including higher audit fees and IRS compliance penalties.

The meeting also revealed the resignation of the district's auditing firm, Plant Moran, after nine years of service, due to unpaid fees and ongoing issues with timely financial reporting. The board subsequently hired UHY as the new audit firm, but the transition has not been smooth. Initial quotes of $55,000 ballooned to $130,000, largely attributed to the disarray in financial record-keeping. The board approved additional funding for training and staffing to address these issues, but delays in preparing necessary documentation have further complicated the audit process.

As the board navigates these challenges, they are also grappling with the implications of borrowing $12 million to cover payroll and operating expenses, a move necessitated by the inability to access state aid until the audit is completed. The interest on this loan is projected to reach approximately $500,000, underscoring the financial strain on the district.

The board's discussions were underscored by a commitment to transparency and diligence, with members reflecting on past mistakes that led to an $8 million deficit in 2015. The current leadership is determined to avoid repeating history, recognizing that the mismanagement of funds has direct consequences on the educational experience of students.

As the meeting concluded, the board reiterated its resolve to restore financial stability and accountability, emphasizing that the future of Hazel Park's educational resources depends on their ability to rectify these issues swiftly and effectively. The community watches closely, hopeful for a turnaround that will ensure the district can provide the quality education its students deserve.