CHICAGO — Detroit Public Schools got the green light from a financial oversight board Wednesday to issue $111 million of notes to boost cash flow.
The district, which is under state controlled emergency financial management, will repay the notes with per-pupil state aid it's slated to receive later this year.
DPS, like many Michigan districts, typically borrows for cash flow purposes. This year's proposal was marred by a dispute between DPS Emergency Manager Jack Martin and the school board, which voted down Martin's $111 million proposal in favor of an $81 million borrowing.
The Michigan Emergency Loan Board, as allowed under state law, considered both proposals, and opted to approve the $111 million transaction.
The district last August sold $92 million of notes with a 4.37% interest rate, a rate that is in keeping with the steep market penalty the district is historically forced to pay.
The new deal's timing and finance team has not yet been announced.
Also Wednesday, Michigan School Superintendent Michael Flanagan approved DPS' five-year deficit elimination plan, which would implement 10% salary cuts for DPS employees, including teachers. It also means the likely closure of 24 schools and buildings next year. The district has a $127 million deficit that it has struggled to bring down for years.
"It's important that Detroit Public Schools continues to receive sufficient state aid as the district works through its longer-term financing options," Flanagan said in a statement. "Having an approved deficit elimination plan is a component in that process."