CHICAGO - As Michigan lawmakers return to Lansing this week for the fall session, legislation outlining a controversial restructuring of Detroit Public Schools remains elusive but may come in the next few weeks.
Gov. Rick Snyder has said repeatedly he wants lawmakers to tackle the controversial restructuring this fall. Snyder released an initial proposal in April that would divide the long-troubled school district into an 'old company - new company' structure. At the time, Snyder said he would send legislation to lawmakers within two weeks.
But he has yet to publicly announce release bills, and the timeline remains uncertain, according to a Snyder spokesman.
"The governor continues working with our partners in the Legislature on a comprehensive approach to public school education in Detroit," spokesman Dave Murray said in an email. "There are on-going discussions with city and community leaders and educators, and it's possible that more information will be available about legislation in the coming weeks. We know the district has struggled academically and financially and it's vitally important to address both of those challenges to give students the best possible education. It's still a work in progress."
DPS has been under state management for six years, but still faces daunting deficits tied largely to falling enrollment.
The junk-rated district has $2.1 billion of bond debt. That includes $1.5 billion of capital bonds, which are structured as unlimited-tax general obligation bonds, and are paid for with a local millage approved by voters. Another $165 million is owed to the state's school loan revolving fund.
Under Snyder's original plan, the district would be divided into two entities, an 'old co.' that would be maintained strictly to manage the district's legacy debt, and a 'new co.' that would take over all education duties. Snyder said he wants the old district to take over at least $483 million of state aid-backed bonds and some of the pension liability. It's unclear which entity would take over the remaining ULTGOs.
The bulk of the ULTGOs are part of Michigan's Qualified School Bond and Loan Program, but a February official document for a DPS bond sale warned that the fate of the enhanced bonds would be uncertain in a bankruptcy.
