News Story

Detroit School District’s Deficit Spending Margin Getting Tighter

Factors preventing overspending in 2017 apply less, and new pressures are tightening

In late May 2017, just 11 months after Detroit’s public school system received a $617 million bailout, the executive director of the state-appointed review board reported that the district would once again be spending more than it takes in if not for three things.

Romaneir Johnson, then the executive director of the Detroit Financial Review Commission, said that the district would be kept from overspending, because it had not filled 300 teacher positions, the district had received $10 million from the sale of school property and still had $15.7 million from the 2016 bailout by the state to cover costs.

But more than a year after that statement, the school district has hired 230 teachers and now has just 70 vacancies. The district has budgeted for all 300 teaching positions this year. Detroit Public Schools had been in deficit from 2007-08 to 2016-17 before receiving the state bailout. 

The tighter margins will also make more challenging the school district’s plan to increase teacher pay as part of a recruiting effort.

According to the school district, teacher compensation increased by $5 million in 2017-18 and then increased by another $8 million in 2018-19.

And $25 million in bailout money, designated for “transition costs,” will be gone by the end of this year.

District officials are not worried. “DPSCD is not concerned about going back into debt,” said Chrystal Wilson, the spokeswoman for the school district. Detroit Public Schools Community District stated it had about $96.4 million set aside in reserves as of March 2018.

According to the most recent annual city financial report available, total revenue for the school district was $219.3 million as of June 30, 2017, while total spending was $202.4 million, giving it a $16.9 million margin.

The state Legislature approved a $617 million bailout for the Detroit school district in 2016. It used state money to assume the district’s debt and included extra an $25 million to cover anticipated “transition costs” during what those involved called a “fresh start” for the newly renamed Detroit Public Schools Community District.