Nick Khouri, Michigan Treasurer, has asked lawmakers to act fast on finding solutions on the financially troubled Detroit Public Schools (DPS) before they run out of money for funding.
According to Khouri, the district is running out of money that could be meant to go to the funding of public schools.
"Sometime this spring or early summer, unless legislation passes in some form, the district will not be able to make payroll, will not be able to pay vendors. Essentially they will be out of cash," said Khouri to the Michigan Senate's Government Operations Committee, as reported by Reuters.
This month, several meetings have already taken place discussing the bills particularly supported by Republican Governor Rick Snyder. The essence of the bills is to basically create two separate entities: the Detroit Community District to run the public schools and the Detroit Public Schools to retire its debt, Yahoo News reports.
The governor has several plans under the bill including giving the new community school district $715 million in additional funding for over 10 years to offset property taxes. The property taxes will be tapped by the old district to pay off.
Additionally, a $240 million in Detroit Public School pension debt will be given to other school districts in the teachers' retirement system.
However, Khouri presented that the legislation has a better solution for Detroit Public Schools and Michigan. Khouri said that filing a bankruptcy is actually counter productive and could take a year, costing the government $100 million. Khouri's written testimony states that a DPS filing would leave the state owing $1.45 billion and will take more than 11 years to pay off.
In December 2014, the state settled a municipal bankruptcy: removing $7 billion from its $18 million debt. It is said to be the biggest ever municipal bankruptcy.
The Senate committee has suggested for the need of an elected board to control the schools.
