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Detroit Public Schools Granted Emergency Loan

Aug 20, 2014

State approves loan for Detroit Public Schools requested by emergency manager

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The state expects to lend about 200 school districts money to help them start the school year. That is normal in Michigan, which doesn't send its first school aid payments until October.
But the process has pitted the school board in the state's largest district against its emergency manager.

Detroit Public Schools Emergency Manager Jack Martin says the district needs $111 million to get through the first two months of the school year. But the Detroit school board put in an alternative plan to borrow just $81 million.

On Wednesday, the state Emergency Loan Board (ELB) sided with the emergency manager. State officials say that was the right decision.

"I don't believe the (school) board's proposal included as much background and data supporting its argument, its position," said Terry Stanton, a spokesperson for the Michigan Department of Treasury. "And the ELB determined that borrowing $81 million simply wouldn't be sufficient to address some of the significant cash flow issues the district has."

Earlier Wednesday morning, the Michigan Department of Education also approved DPS' plan to erase its deficit. That plan calls for teacher pay cuts and closing school buildings.