State Loan Board approves bailout plan for Detroit schools

Michigan's Emergency Loan Board has approved plans to carry out a $617 million financial rescue and restructuring plan for Detroit public schools, despite the vocal objections of elected school board members and others who attended the meeting.

The Detroit Free Press reports that the Loan Board approved borrowing to retire or refinance debt, as well as the transfer of assets from the old Detroit Public Schools to a new Detroit Public Schools Community District.

Critics argue that the plan treats Detroit public school students as second-class citizens because they would be the only Michigan public school students who could be taught by uncertified teachers. They also say much of the debt addressed by the plan was incurred while the state was in charge of operating Detroit schools.

After the Loan Board's approval, Steven Rhodes, transition manager for the new community district, said the approvals were “an important step toward satisfying past debt obligations and moving forward."

Michigan Gov. Rick Snyder signed the plan into law on June 21. Opponents have filed a lawsuit seeking to have the law struck down.

Under the new laws, the existing district will stay intact for tax-collection purposes to retire $617 million in debt. The new community district will be responsible for educating students. A new school board will be elected in November.