Plan to shed Detroit schools debt would spread costs to other districts, according to report

Apr 22, 2015 at 2:43 pm
The proposal to have the state of Michigan assume Detroit Public Schools' debt would spread the costs to "all other taxpayers and school districts" in the state, according to a report from the nonpartisan Citizens Research Council

The concept — something not unprecedented, says the council — was first offered by a coalition that issued a set of recommendations last month on how to fix DPS. It also comes on the heels of a plan from Gov. Rick Snyder, who reportedly will seek to split DPS into two separate entities

DPS has a required $53 million annual tab in principal and interest payments on its long-term debt, the report notes, which is covered by the state's per-pupil foundation allowance. The coalition, in its recommendations, said the state should assume $124 million annually of DPS' financial obligations for debt service and legacy costs. 

The district currently receives $72 million from an 18-mill non-homestead property tax, according to CRC. If that money was instead spent to cover DPS debt, that means the state would require the state to spend an additional $72 million to cover the lost per-pupil funding amount. In doing so, that would cost about $50 per pupil in the state, according to CRC's analysis. 

Check out the full report here