The Detroit school district may sue the state over paying off historic debt. (Anthony Lanzilote for Chalkbeat)
The Detroit school district may take the state of Michigan to court to ensure revenue from an operating millage can be used to pay off all of the debt the district incurred over many years, much of it while the state was overseeing the city’s traditional public schools.
Superintendent Nikolai Vitti said during a school board meeting Tuesday that the Michigan Department of Treasury has ruled that state law only allows revenue from the 18-mill operating millage to be used to pay off operating debt, which is expected to be paid off by March of 2025.
But the district still has $348 million in debt to the state’s School Loan Revolving Fund and nearly $1.4 billion in capital debt, which was accrued during the state’s control of the district to improve infrastructure.
This all stems from a $617 million legislative deal in 2016 that addressed massive debt in Detroit Public Schools by creating a new district — the Detroit Public Schools Community District — to operate schools using revenue from the state school aid fund. Detroit Public Schools remained intact, but only to collect millage revenue and pay off debt.
DPSCD officials insist that state law requires the operating millage to pay off all of the debt.
“That would mean that DPSCD would be debt free by 2031 and dramatically reduce the amount of money that the average Detroit homeowner would have to pay, basically, in paying off interest from emergency management and DPS debt,” said Vitti during the meeting.
Vitti discussed the dispute during his report at Tuesday’s meeting. Earlier that day, the legislature’s House Education Committee gave initial approval to a bill that would clarify that the operating millage can pay off the School Loan Revolving Fund debt. The legislation doesn’t address the capital debt.
The bill comes as Democratic lawmakers rush to finish their legislative agenda before they lose complete control of the state legislature.
Rep. Regina Weiss, a Democrat from Oak Park who introduced the bill, said Tuesday that the state’s interpretation of the 2016 law has created an unforeseen obstacle for the district.
The bill would clarify the existing law’s definition of operating obligations — the debt incurred by a school districts’ operating costs — to include debts from the state’s revolving loan fund.
The change would mean DPS could use its millage revenue to pay off the nearly $348.5 million in revolving loan debt. The state would continue to fund the district’s local foundation allowance until the revolving loans are paid off.
Weiss said if the change is not made, DPSCD won’t be able to generate additional money to address dire building needs until around 2040.
“These crumbling facilities are often not only unconducive to learning, but are often unsafe,” Weiss said.
The lawmaker, a former district teacher, said she’s taught in buildings infested with rats, cockroaches, and mold, with crumbling roofs.
“The district has taken a lot of steps to improve the massive facility needs, but without this fix, we will slow down this imperative progress, and if we don’t fix it, unfortunately, it is the children of Detroit who will suffer,” she said.
The district dedicated $700 million in federal COVID relief funds to address facility needs. It was the first time the district was able to dedicate a substantial amount of money to improving infrastructure.
The Democratic members of the committee on Tuesday voted to move the bill forward for a vote in the full House. Four Republican committee members voted against moving the bill forward, though they did not say why they were against it during the hearing.
The legislation would need to pass a vote in the House and the Senate before it could be signed into law.
Read the full story on Chalkbeat Detroit.
