DPS board approves $92 million loan
The Detroit Board of Education approved a resolution Aug. 1 to borrow $92 million through a bond sale to cover the cost of the upcoming school year for Detroit Public Schools. All but two board members supported the resolution. Board member Elena Herrada abstained and board member Wanda Redmon voted “no.”
“I didn’t have enough information … they didn’t give us enough time to really deal with this,” Herrada told the Michigan Citizen. “We’re in a position (like) countries ruled by the World Bank; we’re forced into austerity. So, when we’re empowered again, there will be no money.”
Board President Lamar Lemmons said without the loan, the district would have payless paydays. Lemmons, who chaired the five-minute special meeting, said the board has concerns about past emergency managers not sharing financial information with them so that they can make a well-informed decision. “(But) we had to put our trust in the EM and his staff,” he said.
Helen Moore of Keep the Vote No Takeover was present at the meeting. Moore says while she disapproves of borrowing more money, it’s something all the districts are doing. “The district, like many others, has gone through a similar process in cash flow borrowing,” Moore said. “It means school districts will be able to complete the process.
DPS Chief Financial Officer William Aldridge, who was also in attendance, said the EM’s administration is appreciative of the board for approving the resolution.
“We’re going to do the right thing,” said Aldridge, who came on board as CFO in 2011. He was also the CFO of DPS just before the district went under state control in 1999. He’s the one that discovered the surplus we had then, Moore said, which was “ironically $93 million.”
Board member Herman Davis, chairman of the board’s finance committee, said after meeting with President Lemmons and new EM Jack Martin and his legal staff, he felt comfortable with his “yes” vote. “We needed it, and we’re gong to do some other things to not have to go this route (in the future).”
Some board members had concerns that because the EM had not shared financial information in the past, they could not in good faith approve the loan amount. Earlier this year, EM Roy Roberts boasted that the district was now in the black.
“Mr. Roberts has done a lot to stabilize the district,” Aldridge said. “It is not unusual for districts to engage in cash flow borrowing.”
Aldridge said over 200 districts statewide have, in the last 30 days, gone through the process for the 2013-14 school year. He said he apologizes for the delay in getting the resolution to the board, but the administration itself had to go through a laborious process over the past 60 days. “It’s my intent as CFO to be transparent and to be respectful of the board as I’ve always been.”