CHICAGO -- A Michigan board Monday approved two emergency loans to help a pair of distressed local school districts cover payroll.
The state Emergency Loan Board gave the Pontiac School District a $10 million loan. The district is already under emergency management. It is located in the city of Pontiac, which recently emerged from eight years of state control.
Located 25 miles outside Detroit, the school district has six elementary schools, a middle school, and a high school with a total of 5,500 students.
The district missed a May 1, 2013 debt payment, making it one of the few public school districts in the nation to default. Syncora Guarantee Inc. wraps the debt.
The Pontiac district faces a nearly $52 million deficit, according to local reports. The superintendent told the state board that the district hopes to continue to whittle that down.
"We have shown some progress in our finances," Superintendent Kelley Williams said, according to the Detroit News. "We are moving forward with initiatives to increase our academic achievement." The district operates under a consent decree with the state.
The board also gave a $1.4 million loan to the Muskegon Heights school district. The district will use about half of that loan to pay a debt owed to the private charter operator that runs the district. The charter company reportedly helped to cover payroll for the last few months. The state provided money to cover payroll in early April, according to reports.
The state board also Monday determined that the Benton Harbor school district faces fiscal stress, a finding that follows the Michigan Department of Education's preliminary review.
In related news, Gov. Rick Snyder Monday affirmed his earlier decision that the Detroit suburb of Highland Park is in a state of financial emergency. The move means local officials have one week to choose one of four options for how to handle the emergency: sign a consent agreement with the state; ask for an emergency manager; ask for a neutral evaluator; or ask to declare Chapter 9.
