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Detroit school unions issue warning over payroll shortfall
March 9, 2016 / 9:59 PM / 2 years ago

Detroit school unions issue warning over payroll shortfall

March 9 (Reuters) - About 47,000 Detroit students will be shut out of their classrooms if the city’s cash-strapped public school district cannot fully cover worker salaries earned next month, school labor union officials said on Wednesday.

The unions were reacting to comments by the district’s state-appointed transition manager Steven Rhodes, who told a Michigan House committee that the Detroit Public Schools (DPS) would be unable to pay teachers and other staff past April 8, according to school spokeswoman Michelle Zdrodowski.

The heads of the Detroit Federation of Teachers, Detroit Association of Educational Office Employees and Detroit Federation of Paraprofessionals said in a statement that their members will not work for free.

“If Detroit Public Schools runs out of money on April 8, the stark reality is that Detroit’s students won’t have schools to attend, many students won’t receive breakfast or lunch, and educators and school staff won’t get paid,” the statement said.

Rhodes, who oversaw the city of Detroit’s historic bankruptcy as a U.S. District Court judge, testified at a House committee hearing on legislation to restructure the district. The school system, which has 97 schools and about 47,000 students, is drowning under $3.5 billion of debt, including $1.7 billion of bonds, and suffering from declining enrollment.

Despite being under state oversight since 2009, the school district has a $515 million operating deficit.

Rhodes told lawmakers that DPS can neither defer expenses nor borrow money to raise enough money for the full April payroll, Zdrodowski confirmed.

Unlike the city of Detroit’s bankruptcy, the state would be on the hook in the event of a DPS bankruptcy to cover $1.45 billion over 11 years to pay off bonds issued for the district through Michigan’s school bond loan fund.

Detroit exited the biggest-ever municipal bankruptcy in December 2014, shedding about $7 billion of its $18 billion of debt and obligations.

Bills pending in Michigan’s legislature would create two entities: the Detroit Community District to run the schools and the current DPS to retire debt. Michigan Governor Rick Snyder is seeking $72 million annually over 10 years to fund the plan, using money from Michigan’s share of a nationwide settlement with U.S. tobacco companies. He has also asked lawmakers for an immediate $50 million to enable DPS to continue to pay employees and vendors. (Reporting By Karen Pierog; Editing by Meredith Mazzilli)

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