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Gov. Rick Snyder is expected to reveal a plan by the end of the week for revamping Detroit schools that will include splitting the district into an "old company" and "new company," similar to the way General Motors Corp. was divided during its bankruptcy.

The three-fold plan, which will be explained to Detroit stakeholders today, would first address Detroit Public Schools' persistent debt load, which includes $350 million of borrowing authorized under state emergency management, according to two sources in the Legislature and close to the governor. The old company — the existing DPS — would serve only to pay off the district's debt. It would do that by directing the 18 mills the district collects from a non-homestead tax to a fund that will steadily erase the debt load.

The new entity will focus solely on educating the 47,000 students who attend DPS. The structure will be similar to that in the Highland Park and Muskegon Heights school districts, which emergency managers converted to charter school districts as a way to separate the debt from the new districts.

But because charter schools can't levy millages under state law, the old school districts have to remain in place as an institution to collect taxes and transfer the revenue to debt payments.

Because of the political realities in Detroit, Snyder would most likely have to label the arrangement in Detroit something different than an all-charter district. Rather, he would likely call it a Local Education Agency, or LEA, that will maintain some form of the Detroit Public Schools name, but little of its institutional structure.

A major question is how the state will replace the revenue from the 18 mills that will be diverted to debt payments. The governor will likely ask the Legislature to shift an additional $53 million to $70 million a year from the School Aid Fund to replace the lost tax funds in Detroit, the sources said.

The second part of the plan impacts how the elected school board will operate. The board would not go away, but it would move with the old district and the debt, and remain under the authority of Emergency Manager Darnell Earley.

Snyder wants to appoint a new board to oversee the new district, at least until the debt is paid off. At that point, the old company would go away and it's possible an elected board would take over the entire school district operation.

In the meantime, the board for the new district would be jointly appointed by Snyder and Detroit Mayor Mike Duggan. The governor wants this board made up of Detroit stakeholders, the sources say.

The third piece of the plan takes into account the Detroit school landscape as a whole, which includes a large number of charter schools and the Education Achievement Authority, which was formed to fix 15 of the city's lowest-performing traditional public schools.

In addition to the new school board, the governor supports the creation of a Detroit Education Commission to oversee all schools in the city, including traditional public schools, charter schools and the EAA. The commission also would be jointly appointed by Snyder and Duggan, and would hold all schools to a set of universal performance standards.

To do this work, the commission would appoint a portfolio manager to operate a common enrollment system and determine when and where new schools could open. The portfolio manager also would be able to close schools, based on the quality standard.

The governor has no interest in limiting the number of charter authorizers in the city, and believes they are doing a good job on their own to improve quality and oversight. He is not expected to bow to pressure to crack down on charter operators, both sources said.

Snyder has already briefed legislative leaders, and will have additional meetings with key lawmakers Thursday. He is set to meet Tuesday with members of the 36-member Coalition for the Future of Detroit Schoolchildren, which came out with a detailed report a few weeks ago for reforming education in Detroit.

The governor's plan, at this point at least, includes few of the coalition's recommendations. The group wanted to return DPS to an elected school board and make the state responsible for the district's debt, with few strings attached. It also wanted more severe restrictions on charter schools. The governor is conditioning the debt relief on the adoption of safeguards to assure better operating and academic performance.

Snyder hopes to introduce bills creating the financial and legal framework for his strategy as early as Friday.

The bills almost certainly face stiff opposition, both in Detroit and Lansing. Detroiters can be expected to resist any plan that looks like a dismantling of DPS. Leaders of the Republican-controlled Legislature are already talking about "Detroit fatigue" and have said publicly that a bailout of DPS is not on their agenda.

The new Legislature that was seated in January, though still a GOP majority, is not as loyal to the governor as was the previous body.

Still, Snyder is looking to place the bills on a fast track, asking the Legislature to pass them by the end of June.

ijacques@detroitnews.com

@Ingrid_Jacques

Ingrid Jacques is deputy editorial page editor of The Detroit News.

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