Debt payments are sinking Detroit Public Schools, says transition manager
Apr 19, 2016 12:46 AM EDT
On Monday, a district transition manager said that nearly $64 million in debt payments are sinking the Detroit Public Schools, emphasizing the need for a long-term legislative fix.
According to The Detroit News, Governor Rick Snyder and the Legislature provided the Detroit school district $48.7 million in emergency assistance to prevent payless paydays. Meanwhile, the GOP-led state Senate approved $715 million budget as a rescue plan that would create a new Detroit Education Commission with broader authority to regulate new school opening for the next five years. However, the plan underwent some revisions in the state House,where Speaker Kevin Cotter opposes the idea as charter supporters argue it would close down new operators and would limit the choice of the student.
In March, former federal bankruptcy judge Steven Rhodes started running the district and said that while Michigan legislators approved $48.7 million last month to keep the Detroit school operating in the rest of the school year, action legislation is still badly needed.
Reuters reported that the largest public school system in Michigan, which caters 45,786 students, has been under state control since 2009. Rhodes and several analysts claimed that the annual debt payments are sucking revenues away from the state's classroom at the rate of about $1,394 for each student.
Rhodes issued a warning last month, saying that without an urgent infusion of state cash, the district would not be able to give salaries to the teachers and staff and would shut down after April 8. The senate passed a legislation to divide the school system in the Detroit Community District to operate schools and the current DPS to retire debt with the help of new state money, but the legislation is still pending in the House. Under the legislation, a nine-member school board for the new district will be elected in August, reports Detroit Free Press.
The projected revenue for fiscal 2016, which ends in June, is $710.5 million while the expenses are at $731.4 million, resulting a deficit of approximately $21 million.