Bobb asks help on ‘bond security’

LANSING, Mich. — Detroit Public Schools wants state help to reassure lenders that the district is not headed for bankruptcy, a move that might help DPS secure better terms when it borrows money and pays off debt, according to The Associated Press.

Robert Bobb, the district’s emergency financial manager, asked the education committees of the House and Senate to approve “bond security” legislation, according to AP. He said the district wants to borrow $219 million in March and that failure to adopt the plan would boost its annual debt service payments from $22 million to about $39 million a year, AP reported in an article posted at Mlive.

Details on how the state would provide such assurance were not clear, according to AP. Bobb said the provision would not shift the district’s debt to the state.

AP reported that both Democrats and Republican members of the committee expressed skepticism.

“There’s got to be a lot of risk, or you wouldn’t be here asking for it,” said state Rep. Tom McMillin, R-Rochester Hills, according to AP.

DPS has a $327 million budget deficit that Bobb said would have been more than $500 million if not for cost-cutting measures he put in place as emergency manager, AP reported.

SOURCE:
The Associated Press, “Robert Bobb seeks state help for Detroit Public Schools but says new plan ‘won’t cost one dime,’” Feb. 9, 2011

FURTHER READING:
Michigan Education Report, “No Free Lunch for Failing Schools,” Dec. 3, 2010