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State House speaker: Bankruptcy for Detroit schools should stay on the table

Feb 18, 2016

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

The top lawmaker in the state House says bankruptcy should be on the table as a way to help resolve Detroit Public Schools’ financial crisis.

Both the state House and Senate have plans that would commit hundreds of millions of state dollars to help restructure the district and pay down debt.

Still, legislation to keep the state’s largest district from running out of money in April appears to be at an impasse. House Republicans want a laundry list of conservative-backed education and financial reforms. The state Senate is working on a plan that’s more palatable to Detroit Democrats.

State House Speaker Kevin Cotter, R-Mt. Pleasant, says he would not hold a vote on the Senate’s plan.

“Just simply cutting a check for $715 million and returning control I believe is only enabling the problem. It’s going to buy some time. But it’s not going to fix the problems that exist,” Cotter told reporters on Thursday.

He says he doesn’t see much hope for a bipartisan solution with Detroit lawmakers withholding support for either proposal at this point.

“To the extent that people want to hold out just for money and return of control, I am perfectly comfortable keeping the option of bankruptcy on the table,” he said.

The district’s financial situation is worse now than when the state took over the district seven years ago.

Cotter is endorsing a plan that would reduce retirement benefits for new teachers, impose measures to promote third-grade reading, and set teacher salaries based on student performance. It would also restrict union activities, end some collective bargaining rights, and delay a return to a fully-elected school board for eight years.

The state Department of Treasury estimates a bankruptcy would cost Michigan taxpayers at least twice as much as a bailout.