DALLAS -- A Michigan House committee will take up the next round of discussions on the proposed Detroit Public Schools restructuring.
The proposal calls for the current Detroit Public Schools to be left intact only to levy taxes and repay its existing bond debts. A new school district, known as Detroit Community District, would own assets and operate the schools.
The bills propose $200 million in transition funds to form the new community district. An additional $515 million would be appropriated to fund the education needs and operation of the new community district.
The bills are now in front of the Michigan's House Appropriations Committee.
Gideon D'Assandro, press secretary for House Speaker Kevin Cotter, R-Mount Pleasant, said that lawmakers could decide to take up the DPS bills anytime now since the appropriation committee wrapped up work on Michigan's state budget on Wednesday.
On Monday, DPS transition manager Steven Rhodes, the retired bankruptcy court judge who presided over the city of Detroit's bankruptcy, released a report on the state of the school district, highlighting the mounting debt payments the school district faces.
"DPS's operating expenses are not sinking DPS. Nor are teacher salaries, which are significantly below suburban teacher salaries. Rather, the cause is DPS's debt service," stated Rhodes in the report.
"The Michigan Legislature has an opportunity to fix DPS's balance sheet and launch a new school system in Detroit with a fresh start," said Rhodes. "This opportunity is crucial not only for the revitalization of public education in Detroit, but also for the continued revitalization of the City of Detroit."
Michigan lawmakers have already approved $48.7 million in emergency funding to keep DPS schools open through the end of the current school year. However Rhodes said that without further help, the district would continue to sink under its debt burden that "has become too significant for the district to handle on its own."
DPS, which has been under emergency management for the last seven years, has seen debt balloon under state management. The Rhodes report showed the district's debt at $3.9 billion including $1.5 billion of unlimited-tax general obligation bonds, $199 million in borrowing from the state's School Loan Revolving Fund, and $259 million in limited-tax GO debt paid by district operating revenues, rather than a dedicated debt service levy.
The six-bill restructuring package cleared the Michigan Senate in March.
Ernst & Young is assisting the school district with constructing next year's budget. The budget needs to be adopted by June 30.
