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Some debt ridden school districts making progress, others still struggle

Jun 20, 2016

Most Michigan school districts operating at a deficit are making progress in balancing their budgets, according to the latest quarterly deficit report submitted to the state legislature by the Michigan Department of Education. 

Of the 40 schools that began the 2016 fiscal year with operating deficits, 18 project they'll be deficit-free by the end of June, and another 15 are planning on reducing their deficits by the end of the fiscal year.

The report wasn't all good news, as five of the districts projected increased deficits from the beginning of the year: Flint Community Schools and Beecher Community School District in Gennessee County; Detroit Public Schools and the Westwood Community School District in Wayne County; and South Lake Schools in Macomb County. 

The remaining two districts of the 40 on the list were converted to charter school systems after the 2013 fiscal year. 

Detroit Public Schools had the largest deficit at $236,834,234, equal to one-third of the general-fund revenues it received from the state and an increase of almost $21 million from June 2015. The Pontiac School District came in second at a $30,566,124 deficit, representing an even greater share of its general-fund revenues at 39.79%. Benton Harbor was the only other district with an eight-figure deficit, listing itself in the red by $14,702,759, or 49.17%of its general-fund revenues. 

Those three districts are all currently operating with emergency loans from the state. 

The remaining two districts on the list of 40, Muskegon Heights and High Park City Schools, were converted to charter schools in 2013. Those districts, along with those in Pontiac and Benton Harbor districts, are operating with declared financial emergencies. 

Muskegon Heights and High Park City Schools "are being eliminated through the capture of school operating taxes through (the) Department of Treasury." Those districts exist in part so they can authorize the charter school systems that replaced them.