Detroit Public Schools maintains a heavy debt load that, left unaddressed, will only exacerbate long-standing problems in the district, writes Curt Guyette, investigative reporter for the American Civil Liberties Union of Michigan. A coalition's report on recommendations to fix the district's issues offered a number of proposals that generated a significant response: remove the appointed emergency manager for the district, which DPS has had four in six years; create a new entity (the Detroit Education Commission) to oversee operational aspects of the district like the opening and closing schools; and have the state assume DPS debt.
On the latter, Guyette writes, "Regardless of where people stand on that debate, the coalition made clear in its report that if DPS is going to be able to compete on an equal footing with the 97 charter schools operating within the city, dealing with the district's crushing debt burden is crucial." More from Guyette:
The DPS debt issue is the elephant in the room that nobody wants to deal with. But it has to be dealt with,” Richard DeVore, a regional president for PNC Bank, said in the report.
The district actually has two primary types of debt.
The first is capital debt — bonds issued to fund school construction and building upgrades; that obligation is repaid through a property millage that costs residents and business owners about $174 million a year, according to the report. Local taxpayers will continue to foot that bill.
The other is debt incurred to cover accumulated operating deficits. In order to make up for annual shortfalls, emergency managers have repeatedly borrowed in an attempt to keep the district financially solvent.
“The state of Michigan should take responsibility for past operating debt that occurred on its watch: $53 million a year,” stated the report.
Debt is such a burden in DPS that, the coaliton's report states, the district spends 13 percent of its operating funds to pay interest on debt — while other districts use only 2-3 percent.
Check out Guyette's entire report here.