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State lawmakers warned Detroit schools could run out of money

Oct 27, 2015

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

The emergency manager of the Detroit school district took a trip to Lansing today to ask state lawmakers for help. Darnell Earley was hoping to win support for Governor Rick Snyder’s plan to bail out the district.

  

Earley told the state House budget subcommittee on K-12 school spending that the district’s massive debt is standing in the way of improving academic performance and fixing the business side of the operation.

“Everything revolves around, how are we going to deal with this debt issue?” he said. “I’m telling you now, I can’t do it without the Legislature.”

The governor’s plan would create a new, debt-free Detroit school district funded by the state to the $715 million over 10 years. The old district would exist solely to collect taxes and pay off $515 million in old debt.

State Treasurer Nick Khouri warned the Detroit school district could be insolvent as soon as early spring of 2016. He said the state is liable for a lot of the pension costs, and, if there’s litigation, the price tag goes up.

But lawmakers like state Representative Earl Poleski, R-Jackson, are not ready to sign on.

“We’re re-arranging deck chairs on the Titanic here,” he said.

Poleski, who is a CPA, said the district’s debts are even bigger than what’s been outlined by the administration. Poleski says he wants to see plans for a much leaner district before he’d consider supporting the plan.