The emergency loan will ensure 26-pay to teachers and startup costs for new district
Transition Manager Judge Steven Rhodes signed off on documents today to close the $150 million emergency loan approved by the state’s Emergency Loan Board and supported by the Michigan Department of Treasury.
“I’d like to thank the Emergency Loan Board Members and the Michigan Department of Treasury for promptly approving and closing the loan today. Today’s closing is another significant step in the direction of returning Detroit Public Schools Community District to local control,” said Judge Rhodes. “These funds will ensure that teachers are paid, transition costs are covered and our three startup priorities are addressed. Our three priorities to ensure a quality education include critical investments in academics, facilities and safety.”
The $150 million loan will be used to transition Detroit Public Schools to Detroit Public Schools Community District. $125 million of those funds will remain with Detroit Public Schools (DPS) and be used to pay the legacy DPS obligations (26-pay for teachers, June payroll, vendor liabilities, etc.). The remaining $25 million in state transition funds will be transferred to Detroit Public Schools Community District from Detroit Public Schools to be allocated in the following ways: $8 million in academic initiatives, $10 million for facilities, $2 million for safety, and $5 million for minimum cash balance.
The interest rate for the loan is 1.3 percent. The loan will be paid back through the 18 mil non-homestead property taxes made possible through the Michigan Legislature’s passage of the education reform bills in June 2016.
“Our team is working hard on the legal and financial tasks that are necessary when starting a new entity,” said Rhodes. “Our next steps include helping to educate the upcoming school board candidates for the November election.”