Robert Bobb, the emergency financial manager of the Detroit Public Schools, came to Lansing yesterday to ask for something he has to know he’s probably never going to get.
He wants the legislature to give what amounts to a loan guarantee to the company that insured the schools’ last round of borrowing. If that firm, Assured Guaranty Municipal Corporation, doesn’t get that assurance, it may block the schools from borrowing more money? Why? Because it worries DPS will go bankrupt.
Which would leave Assured Guaranty holding the bag. And it’s a pretty unpleasant bag, The schools are hemorrhaging money and students. Bobb came in two years ago, full of confident promises to eliminate the deficit. But it has only gotten worse.
Assured Guaranty insured a loan for a little over a quarter of a billion dollars the schools borrowed in 2005. Now, the schools need more. They have a new deficit of $327 million dollars.
That’s more than half their entire general fund budget. To make ends meet, Bobb says he needs to borrow $219 million next month.