DALLAS-- State legislation to deal with about $500 million in Detroit Public Schools debt is headed to Michigan's full House after winning approval Wednesday.
Lawmakers began Wednesday's session by reassuring Detroit School teachers that lawmakers were committed to resolving the district's funding problems. Teachers brought the district to a halt on Monday and Tuesday in protest over news that their pay for work they've already completed, couldn't be guaranteed past June 30.
Detroit teachers are paid on either a 22-paycheck per school year or cycle receive 26 checks per school year. Both options spread pay beyond the end of the school year. The district had warned it would be unable make payroll after June 30.
"At no point did we say we wouldn't provide a solution -- teachers, you are going to get paid," said Rep. Al Pscholka, R-Stevensville, chairman of the House Appropriations Committee, which advanced the restructuring package.
Similar to the Senate plan passed last month, the House plan would divide the district into two. The current school district would be left intact only to levy taxes and repay existing bonds. The new district, known as Detroit Community District, would own assets and operate the schools.
The package would divert $72 million per year from the state budget for the next seven years to fund the new district. Funding from DPS' existing 18-mill property tax levy would then be used to pay down the old district's debt.
It also proposes to appropriate $33 million in transition funds to help the district with operating costs through the summer and into the new school year, far short of the $200 million approved under the Senate DPS rescue package.
On Tuesday, DPS transition manager Steven Rhodes wrote a letter to Detroit school teachers, guaranteeing payment of wages and benefits for the 2015-16 school year
"DPS recognizes the contractual obligation to pay teachers what they have earned and we assure all teachers that we will honor that legal obligation," he wrote.
Rhodes told lawmakers ahead of Tuesday committee hearing that the district would need $50 million to cover costs between June 30 and through the summer. In March, shortly after the retired bankruptcy judge took over as transition manager, DPS received $48.7 million in emergency funding, which was aimed at keeping the district solvent through June 30.
The new $50 million funding gap, lawmakers said, highlights the lack of accurate information they've received on DPS' financials, which has been under state management for the last seven years.
"The treasury doesn't even know how many of its teachers are on a 22-week pay period and how many are on a 26-week pay period," said Rep. Sam Singh, D-East Lansing.
"I don't understand how this package of bills can be characterized as a solution," said Rep. Adam Zemke, D-Ann Arbor. "It's not."
A representative of Michigan's Treasury who spoke at the hearing said that some of that $50 million figure cited by Rhodes is likely debt that the district is currently servicing out of its operating revenue. Once legislation is passed, the state Treasury would act quickly to implement a funding mechanism where debt payments would be made from the $500 million appropriation, the official said.
"We're looking at the debt, we're looking at $30 million in transition costs," said Pscholka, who said relieving the district of its legacy debt obligations will free up $1,100 per student for academics.
The House package does not include a mayor-appointed Education Commission, and the residents of Detroit would be required to wait several years before being permitted to elect the board that governs the new district.
This bill includes some positive steps, but the omission of the Detroit Education Commission is a glaring one," said Brad Williams, vice president of government relations at the Detroit Regional Chamber.
"The DEC is absolutely necessary to providing accountability and ensuring the quality schools that Detroit children deserve," he said.
Gideon D'Assandro, spokesman for House Speaker Kevin Cotter, R-Mt. Pleasant, said lawmakers would be working on possible revisions on the floor Wednesday. "If we hit a point where everyone's concerns are addressed, we might decide to take it up on the spot," he said. "If we pass the House version, there won't be any need to take up the Senate version."