Coming out of bankruptcy in late 2014, Detroit had a new lease on life – it had shed some $7 billion in debt and restructured another $3 billion, and could finally move forward, or so it was thought.
Detroit has hit two significant potholes on its recent road to recovery, one being the fact that it was "discovered" that there was an enormous pension shortfall, and now we learn that the Michigan legislature has just narrowly approved a $617 million bailout of Detroit's Public Schools.
The Republican controlled Senate and House passed the bill by the thinnest of margins, 19-18 and 55-54 respectively, paving the way for the bailout.
From AP
The financially and academically ailing 46,000-student Detroit Public Schools has been managed by the state for seven years, during which it has continued to face plummeting enrollment, deficits and, more recently, teacher sick-out protests.
Under the bills, the district would be split in two and control would be returned to an elected school board. A commission of state appointees would oversee the district's finances, similarly to how it now reviews the city's budgeting as part of a $195 million state rescue in 2014.
The new debt-free district would educate students. The old district would stay intact for tax-collection purposes to retire $617 million in debt over 8½ years, including $150 million in transition costs to launch the new Detroit Community Schools.
The vote came more than a year after the overhaul was proposed by Republican governor Rick Snyder, who said debt was crushing Detroit Public Schools and warned that insolvency would leave the state with billions of dollars in liabilities and stifle Detroit's recovery post-bankruptcy.
It was a contentious debate, with Democrats saying the bill would fall short of what is needed to adequately help a district decimated by declining enrollment, both due to population loss and publicly funded charter schools or suburban schools. Some Republicans were even reluctant to offer taxpayer support to the state's largest school district that has grappled with mismanagement and corruption.
Republican Senate majority leader Arlan Meekhof called it a "realistic compromise", adding "I know many will weigh in with opinions on how we could have done better, and (we) all hear criticism about this compromise. But at the end of the day, our responsibility is to solve the problem. There are more than 45,000 students who depend upon DPS and deserve a stable, quality education option."
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After all of this, we have just two questions – first, what is the next "surprise" that Detroit has to offer taxpayers, and second, what time does the city file for bankruptcy again?
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