Less Than A Year After Bailout, Detroit Schools Again Scramble to Stay Afloat

District sold property and left open teacher slots vacant to cover overspending

In June 2016, the newly reconstituted Detroit public school district received a $617 million bailout from the Michigan Legislature, wiping some $415 million in accumulated debt from its books. The full bailout amount included a projected interest expense and an additional $150 million grant to the district for so-called transition costs.

But by the end of that same year, the “new” school district had to leave 300 vacant positions unfilled, sell $10 million in property, and use a one-time transfer of $15.7 million left on the “old” district’s books to keep from racking up another round of deficits and debt. That’s according to documents received from the Detroit school district in response to a Freedom of Information Act request, along with reports from the Michigan Department of Treasury.

The state bailout placed the district under the oversight of the Financial Review Commission, created in 2014 to oversee municipal finances after the city of Detroit’s own state bailout and a trip to federal bankruptcy court.

Stay Engaged

Receive our weekly emails!

In May, Detroit school officials filed a report with the commission indicating the district would have overspent its revenue in 2017 if not for “one-time transfers,” “one-time asset sales” and “underspending in personnel-related expenses.”

Not filling the vacant positions saved the district about $36 million in the 2016-17 school year. The district also collected just over $10 million from the sale of 33 properties in 2016 and early 2017. The largest of these was a $6 million sale of a radio station the district owned, WRCJ-FM.

Having taken these and some other steps, the school district had a positive fund balance in May of $40.3 million, rather than being in debt again.


Related Articles:

Detroit Ignores State Law, Turns Down Money to Avoid Selling Abandoned School

Detroit Schools Will Sell to a Prison, But Not a Charter School

Did School Choice Opposition Help Doom Detroit’s Bid For Amazon HQ?

Detroit School District Still Needs Teachers

Four Questions About the Detroit Public Schools Plan

Feds: Multimillion Dollar Detroit Public School Scam Ran for 13 Years

Stay Engaged

Simply enter your email below to receive our weekly email:

Facebook
Twitter

The Republican Party fully controls most states and at the national level has captured the House, Senate and presidency. By many measures, the party has more power than it has had in many decades. But will that control last? And, more importantly, what policy priorities are coming about from these political victories?

Related Sites