DPS board says current district should get state funds

Shawn D. Lewis
The Detroit News

On the day before it ceases to exist, the Detroit Public Schools board unanimously approved three alternative resolutions to a state-backed loan and refinancing plan, saying the state should give the money to the existing district instead of using it to create a new, debt-free school system.

Emergency Manager Steven Rhodes is seeking authorization to issue up to $235 million in school financing stability bonds and a $150 million loan from the state to start a new debt-free district, along with asset transfers from the old district to the new entity.

The proposed financing is part of a $617 million rescue plan for DPS signed into law last week by Gov. Rick Snyder. The state’s Local Emergency Financial Assistance Loan Board will decide whether to approve Rhodes’ original request or any alternate plans.

The board members don’t have much faith their plans will amount to anything.

“I’m gravely concerned about the emergency loan board for the state of Michigan,” said Lamar Lemmons, DPS board president. “I don’t mind their kangaroo court, but we are entitled to our day in court and to at least lodge our protest for the public record.”

Jeremy Sampson, a spokesman for the state Department of Treasury, said the DPS board has seven days to submit an alternative to the loan board from the date the Detroit panel rejected Rhodes’ plan. The loan board then has up to 30 days to choose either the EM’s proposal or the alternative submitted by the school board.

“If the DPS school board presents an alternative plan that meets all requirements they will have an opportunity to present that plan to the Emergency Loan Board (ELB) when the ELB board meets to hear the emergency manager’s plan and the alternative plan put forth by the DPS board,” Sampson said.

The board’s first resolution rejects the $235 million stability bond, saying the state should assume “the total cost of the bond refinancing and forward said resources $235 million as a partial payment for monies owed to the Detroit Public School District.”

Board members and other opponents of state control of DPS have argued the state owes the district for hundreds of millions of dollars in debt accumulated under a series of emergency managers since 2009.

The second resolution says the board rejects borrowing $150 million for transition costs for a new Detroit district and wants the current district to keep those funds “for school buildings’ repair/rehabilitation.”

The third resolution opposes “defacto confiscation through legislation of the assets of the Detroit Public School District without judicial process.”

“Therefore, let it be resolved that we the duly elected members of the Detroit Board of Education do hereby reject Governor Snyder’s and the Emergency Manager’s proposal to transfer DPS assets to a newly created, undemocratic entity and demand that those assets be retained and remain with the school district of the City of Detroit, also known as Detroit Public Schools.”

Lemmons has said the state financing would carry an annual rate of up to 18 percent. The state Department of Treasury has disputed that claim. The $150 million emergency loans are based on 10-year municipal bond rates, which state officials estimate to be between 1.5 percent and 2.5 percent, according to Sampson.

Asked what will become of the board after its last day Thursday, Lemmons said, “We’ve called ourselves a board in exile for a long time, but after tomorrow, we truly will be a board in exile.”

He said he isn’t sure he will run for a seat on the school board, but he definitely is running for the position of Register of Deeds for the city of Detroit.

“I think I could assist in making sure homeowners have a say in the gentrification of the city,” he said.

He said the deadline to file to run for the board is July 22.

The DPS board will meet for a final time Thursday to adopt the minutes and to work on their injunction to stop the schools legislation from moving forward.


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