Public Schools In Neighboring State Saved From Bankruptcy
According to a recent article in the Chicago Tribune, the legislature in our neighbor state Michigan narrowly approved a bailout for Detroit’s broke school district. This bailout will prevent the Detroit Public School district (DPS) from filing for bankruptcy. If Michigan’s governor signs the approved legislation into law, which he is expected to do, Detroit’s school system will not only be saved financially but will also be reorganized in order to promote financial stability in the future.
Details Of The Bailout
The goal of Detroit’s bailout is to provide DPS with an alternative to bankruptcy. The Chicago Tribune reports that if Detroit’s public school system did declare bankruptcy, it would eventually cost the state of Michigan even more than the proposed bailout will. This is impressive considering that the approved bailout is for $617 million (which is in addition to the $48.7 million that Michigan’s legislature previously approved in order to keep the school district afloat for the remainder of the year). The bailout money is allocated as follows:
- Approximately $467 million will help pay down the school district’s current debt; and
- Approximately $150 million will fund the new school district.
As the point of the bailout is to make Detroit’s school system debt-free, the legislation also includes provisions that will reorganize the DPS into a new district that will hopefully emerge financially stable. However, the old school district will remain intact for a limited period of time simply so that it can pay down its debt. Essentially, Detroit’s school district will be split in two once the new district begins on July 1st 2016. To help promote the fiscal health of the new school district, the approved legislation contains several important changes to the way in which the current district operates. These changes include:
- Giving the state of Michigan increased power to close failing schools;
- Requiring that teachers be compensated based on their performance;
- Lowering the school district’s hiring requirements when it comes to hard-to-fill positions; and
- Requiring the state to appoint a commission that will watch over the new school district’s finances.
Detroit’s Bailout Can’t Come Soon Enough
While the amount of Detroit’s bailout may seem large and the restructuring extensive, desperate times call for desperate measures. According to Vox.com, Detroit’s Public School system does not currently have sufficient funds to pay its teachers their salaries through the summer. It’s no wonder that teachers in Detroit have participating in union sponsored ‘sickouts’ for months. A sickout is a form of protest in which participating teachers all call in sick on the same day. Vox reports that during one such protest 94 out of Detroit’s 97 public schools were forced to close due to a sickout protest.
How Can We Help You?
If you are an individual in Chicago facing tough financial times and are considering filing for bankruptcy, consider consulting with an experienced bankruptcy lawyer to discuss your debt relief options. The lawyers at the Bentz Holguin Law Firm, LLC are happy to help and can be reached at 312-647-2116.
