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State gives Detroit Public Schools Emergency Manager the green light to borrow $111 million

Detroit School Board only allows $81 million

By T. Kelly
The Michigan Citizen

The state Emergency Loan Board ignored the elected Detroit Public Schools board, and voted Aug. 20 to grant Emergency Manager Jack Martin’s request to borrow $111 million for the upcoming school year.

Under PA 436, the current EM law, a public body has the opportunity to counter any proposal from the EM involving more than $50,000. The elected board met Aug. 14 to approve their counter proposal to Martin’s request for $111 million.

The elected body, which has no powers under emergency management, voted to approve an $81 million cash flow loan and sent that figure to the State Emergency Loan Board, which by law decides between the proposals.

The elected body arrived at its figure based on Martin’s own statements of savings he created during the past school year, Board President Herman Davis said. The elected board also hired two certified public accountants to help determine an appropriate sum to borrow.

However, Martin did not provide the CPAs or the board access to complete financial data, they said.

“My concern,” board member Lamar Lemmons said, “is the district expects us to make a decision without affording any staff input. In a normal world, these decisions are not made in a vacuum but with the advice of experts.”

Martin lost $14 million from his prepared 2014-15 budget when voters rejected the Wayne RESA millage question on the Aug. 5 ballot. 

The additional $30 million in borrowing will have no impact on class size, Martin told the board. Martin’s deficit reduction plan allows for 43 students in a class room in the coming term.

The EM’s Chief Financial Officer William Aldridge addressed the board, saying Martin “did not borrow enough” money last year and there was a deficit at year’s end.

This year, “there will be a chair for every student,” Aldridge promised. He also suggested Title I funds could be used to add teachers. 

Davis believes the loan amount should be reduced. Last year, approximately 400 teachers and staff retired saving the district $32 million in salary and benefit costs, Davis said.

Other savings were realized with a new $5 million computer system and a $12 million health insurance switch from Blue Cross to Health Alliance Plan.

Wayne State University Professor Tom Pedroni believes DPS should budget according to spending categories, so more money gets to the classroom.

Under the elected board, 55 percent of spending went to the classroom. Now, below 47.5 percent of DPS revenue goes to classroom instruction.

Pedroni said, last year, after enrollment decline, Martin cut funds to classroom instruction rather than administration.  See chart below.

A.01.PEDRONI GRAPH-DPS BUDGET

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