Michigan Board Approves Detroit Schools Bailout Deal

(Photo: Pixabay, Creative Commons)

(Photo: Pixabay, Creative Commons)

A Michigan board has approved an emergency loan in an effort to implement a $617 million bailout of Detroit's school system that will result in some control offered to locally elected officials after more than seven years of state management.

The unanimous vote by the Local Emergency Financial Assistance Loan Board approved three measures that had been proposed by Emergency Manager Steven Rhodes, who was appointed by Governor Rick Snyder to oversee the struggling district, including a $150 emergency loan and $235 million in school financing stability bonds. The loan board had previously rejected several alternatives that had been proposed by school board members.

School board supporters could be heard shouting "Racist" and "Shame on you" after the vote.

The board previously rejected the creation of a new, debt-free district as part of a $617 million rescue package that had been approved last month by state lawmakers, saying that the state had created hundreds of millions of dollars in debt since they took control of DPS in March 2009.

Lamar Lemmons, president of DPS, argued that the loan board members were siding with Governor Rick Snyder, who had signed the rescue package.

"Those were three Snyder appointees and they know what side their bread is buttered on," Lemmons said right after the vote. "We wanted to go on record, we want them to know the consequences of their actions in terms of public as well as we wanted to make sure that we get certain things read to the record when we go to court," he added.

An injunction has already been filed against the restructuring of the district with the Michigan Court of Claims by the DPS board. Lemmons said they had assumed the recent decision by the board would occur, and he will take the issue to the US Supreme Court if he needs to.

Tom Bleakley, an attorney for the current board, called a provision that would allow the new district to hire uncertified teachers unconstitutional, adding that Detroit is the worst-performing district in the state, reports David Eggert for WSBT.

"There's a message loud and clear that the children of the Detroit Public Schools are second-class citizens," he said.

Lemmons went on to claim that the Detroit district would need to pay an 18% interest rate on the loan from the state, referring to that as "usury." A vote last month by the school board resulted in a rejection of state financing, writes Evan Carter for The Detroit News.

The new laws will divide the 46,000-student district into two in an effort to deplete the current operating debt. The district has continually seen a drop in enrollment due to the population decline in the city in addition to the increase in students leaving the district in favor of publicly-funded charter schools and traditional suburban districts.

In addition, the current school board will be dissolved, with city voters selecting a new board in November. A commission of state appointees will also oversee the city's budgets post-bankruptcy and review the schools' finances.

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