The Department of Treasury released a
document stating that Detroit Public Schools (DPS) will run out of money in
August under the House-passed plan. House Speaker Kevin Cotter (R-Mount
Pleasant), in response, questioned both the timing and the new district’s wish
list in the report.
According the Treasury, DPS would run $22.2
million deficit in August under the House plan with an $80.1 million negative
cash balance in September. Under the Senate plan, the cash balance would not
fall below $86.9 million. The major difference between the House and Senate
plan is the Senate provides $200 million in transition costs, whereas the House
allocates $33 million. Speaker Cotter said he has asked for specifics on what
the $200 million would be spent on with no proper response, so they acted on a
plan with the information given. Mr. Cotter said he and his members are
frustrated by the lack of details from Treasury.
The Treasury document did specify that
if the Legislature takes no action with the schools, the district would run out
of money in July with a negative cash flow of $22 million. A negative cash
balance of $18.7 million in July would also occur and grow to $134.9 million by
the end of June 2017. The analysis also places the total additional cost of
debt retirement and transitional items at $670 million, less than the original
$715 million because the Legislature appropriated $48.7 million in supplemental
funding.
Specifically, the document labels the
$200 million to be used as follows: $125 million for cash needed at the
inception of the new district ($58 million) and pending contingencies, payroll
costs, professional transition costs and academic support; $65 million for
deferred maintenance, upgraded school security and school closures and
planning; and $10 million for investment in key academic programs.
Speaker Cotter insists the focus has
been on paying off debt and returning to local control, both of which are
accomplished by the House plan. He looks forward to more breakdowns of the $200
million.