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Distressed schools' debts continue to rise without legislative action

Apr 7, 2015

Credit Motown31 / Flickr - http://j.mp/1SPGCl0

Fifty-six Michigan school districts and charter schools started this school year in deficit. The Coalition for the Future of Detroit Schoolchildren, made up of community leaders in Detroit, is asking the state to assume $350 million in school debt. State lawmakers are being asked for $725,000 dollars to cover unpaid debts of the former Buena Vista school district, the one they dissolved two years ago.

These are just a few of the many signs of money troubles facing school administrators and state lawmakers.

Detroit News reporter Chad Livengood says the Detroit Public Schools' $350 million in debt service is simply money borrowed to pay the bills over the last 10 years. Paying this off will take $1,200 per student from the $7,300 the schools get in a grant from the state.

"This is an unusual amount of money per student that is going to operating debt services," Livengood says.

The coalition in Detroit is also asking for relief from paying the state pension system, which requires $100 million a year from its $700 million budget.

But Livengood believes the Legislature will deny this request.

"If the Legislature granted one school an exemption from paying its pension bill, they'd have to grant 500 school districts the same exemption," Livengood says.

As for Gov. Rick Snyder's take on the issue, Livengood says Snyder "included in his supposed school aid budget a $75 million line item for distressed schools."

However, Livengood says it was vague, and without a specific plan as for how to spend it, the Senate and House Appropriations Committees have chopped it down: $4 million in the House and $8.9 million in the Senate. But Livengood says this smaller amount of money could go toward helping Detroit Public Schools.

"Without state assistance, the coalition and the district will argue that DPS will continue to run up $100 million deficits and be unable to get a clean slate as their enrollment continues to decline with the declining population of school-aged children," Livengood says. 

As for when changes need to be made in order to improve next school year, Livengood says it’s hard to know.

"If Proposal 1 passes, there's suddenly going to be $300 million more revenue for education available, which will probably make this proposal to try to help out DPS or other distressed schools a lot more amiable," Livengood says.

But if it doesn't pass, the Legislature may have to spend more time in the summer working on budget issues, including funding for roads and education.

"There are still a lot of struggling schools and these financial struggles do correspond with academic struggles. We will see just how resolved the Legislature is trying to help these children who are essentially trapped in these failing schools," Livengood says.