Monday, January 04, 2016

Bankruptcy? Detroit Public Schools could be next

Abandoned Detroit classroom
On Sunday Fox Sports' Rob Riggle did satirical year end "Those We Lost" piece during the network's NFL pregame show. One of those lost, according to the comedian, was the city of Detroit--and when he said so the screen flashed a Detroit City Limits sign and some abandoned buildings.

Some Detroiters are upset, although such jokes are hardly new to them.

Here's some news that the people of Detroit should be furious about. In four months Detroit Public Schools won't have enough money to pay its bills.

Detroit's 2013 municipal bankruptcy could be followed by a DPS bankruptcy.

From the Detroit News:
The debt payments of Detroit Public Schools — already the highest of any school district in Michigan — are set to balloon in February to an amount nearly equal to the school district's payroll and benefits as the city school system teeters on the edge of insolvency.

Detroit Public Schools has to begin making monthly $26 million payments starting in less than a month to chip away at the $121 million borrowed this school year for cash flow purposes and $139.8 million for operating debts incurred in prior years. The city school system’s total debt payments are 74 percent higher from last school year.

The debt costs continue to mount while Gov. Rick Snyder and the Legislature remain at odds over how to rescue Michigan's largest school district. A bankruptcy of the district could leave state taxpayers on the hook for at least $1.5 billion in DPS debt.

The school district's payroll and health care benefits are projected to cost $26.8 million in February — meaning the debt payments will be 97 percent of payroll. General fund operating debt payments that exceed 10 percent of payroll are "a major warning flag," municipal bond analyst Matt Fabian said.
From my post at Da Tech Guy:

I walked its streets--the tragedy of Detroit.

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