Detroit Public Schools Emergency Financial Manager Robert Bobb has asked lawmakers to approve a measure to assure lenders that they will be protected if the school district goes bankrupt.
The Detroit Free Press reports:
Robert Bobb told a joint meeting of the state House and Senate education committees that without approval of bond-security legislation within the next few weeks, debt payments on a bond issued by DPS in 2005 will nearly double to $39.3 million a year and could jeopardize the district’s ability to make payroll by March.
Though the Detroit school system has a $327 million deficit Bobb told the lawmakers that the district is not considering bankruptcy and that backing the school system’s bonds would cost the state nothing.
The Senate committee chairman, Phil Pavlov, R-St. Clair, said after the hearing that it is too soon to pass judgment on Bobb’s request, but said he was skeptical about the financial manager’s claim that it would not expose state taxpayers to any risk. Pavlov also said taking the district into bankruptcy would be troubling, but “shouldn’t be off the table.”