Lawmakers pledge Detroit bailout won't hurt other districts

David Eggert
Associated Press

LANSING, MI - Lawmakers looking at a plan to spend $715 million over a decade rescuing Detroit's ailing school district said Thursday they will not pass legislation that affects the funding in other districts across the state.

Instead, Republican and Democratic legislators are talking with Gov. Rick Snyder's administration about other funding sources, such as diverting a portion of tobacco tax revenue or the state's settlement with tobacco companies.

The Senate Government Operations Committee on Thursday held the first of a number of hearings on legislation to split the state-managed district in two this summer and gradually return control to a locally elected board.

The district's 46,000 students would attend school in a new district, while the old one would remain intact to retire $515 million in operating debt over eight to 12 years. A commission of state appointees created to review Detroit's finances in the wake of bankruptcy would oversee the new district's budget until the debt is repaid and other conditions are met.

The Republican governor's strategy director, John Walsh, told the GOP-controlled panel that "we fear inaction."

"One of the worst things that can happen in our opinion to the state, to the students, to the district is bankruptcy," he said. "DPS would be operating under judicial order."

The district is burdened by debt, falling enrollment, inadequate buildings and low morale among employees whose recent absences have closed schools. It has been under state financial management for almost seven years, and Snyder officials have warned the district could start being unable to pay some bills in the spring.

Others testifying included Detroit Mayor Mike Duggan, education advocates and the lead sponsor of the bills, Republican Sen. Goeff Hansen of Hart.

Hansen said in the months before the legislation was introduced in January, he made concessions to Detroit Democrats such as retaining employees' union contract when they are transferred to the new district, more quickly transitioning to a fully elected board and keeping the lowest-achieving schools from being closed for at least two years to give them a chance to turn around.

He also committed to ending the Snyder-backed Education Achievement Authority, which opened in 2013 and took over 15 Detroit schools through an agreement between Detroit schools' state emergency manager and Eastern Michigan University.

"School districts across the state should be shielded from efforts to financially assist the Detroit Public Schools," Hansen added.

Sen. Hoon-Yung Hopgood, D-Taylor, is working on legislation to use tobacco tax revenue to help the district. Hansen also raised the possibility of the state's tobacco settlement, telling reporters it could replace school aid funds sent to Detroit.

Duggan raised concerns that the legislation does not call for a commission — like Snyder proposed previously — to "bring order" to the opening and closing of schools, including independent publicly funded charters that account for half the city's schools. Eighty percent of schools in the city either opened or closed in the last seven years, he said.

"There's no standard of accountability," Duggan said.