WUOMFM

State treasurer to lawmakers: Bankruptcy for DPS makes no sense

Feb 24, 2016

Credit Sarah Hulett / Michigan Radio

Michigan’s top treasury official is warning lawmakers to not let the state’s largest district go bankrupt.

A state House panel on Wednesday held its first hearing on legislation to keep Detroit Public Schools from going broke in April.

State Treasurer Nick Khouri told lawmakers bankruptcy would likely cost taxpayers more than twice as much as a state bailout.

“The total cost to the state and others is about $700 million with this package. It’s probably about $1.8 billion or so if the district actually files and we work through bankruptcy,” said Khouri.

“Certainly, both for control reasons, for uncertainty reasons during the process, and just pure numbers reasons, I just don’t see how bankruptcy makes any sense for DPS.”

State House Speaker Kevin Cotter, R-Mt. Pleasant, says bankruptcy should stay on the table as a way to resolve the district’s financial crisis.

  

A string of state-appointed emergency managers have controlled DPS since 2009. Deficits have continued to increase and debt has ballooned during that time.