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Moody's Warns of Looming DPS Disaster

May 19, 2016

Moody's Investors Service is warning state lawmakers of unprecedented financial troubles ahead if they can't agree on a rational plan to restructure Detroit Public Schools, and MEA members are urged to continue adding their own pressure on legislators negotiating a potential solution.

House Republicans passed an anti-union, anti-public education package of bills along party lines last week following a marathon overnight session. The House Republicans' plan includes just $500 million to reduce existing debt, instead of the $715 million supported by the Senate, Gov. Rick Snyder, Michigan Department of Treasury and Judge Rhodes, the new DPS emergency manager, to fully address the problem.

On Tuesday, the bond rating service issued a report detailing the expected financial woes if a fix is not found soon, noting the significant differences between the plans that have passed the House and Senate. DPS is expected to run out of money by the end of June if no action is taken before then. 

"While progress toward a workable solution to the district's fiscal situation is credit positive, the differences between the House bills and the package of Senate bills, passed in March, remain stark," the Moody's report said.

"We anticipate that lawmakers will begin to reconcile the bills soon because the district is quickly running out of resources to operate. The Legislature now has less than two months to compromise on a reform package or the district's financial position will possibly force a bankruptcy filing."

In addition, the House package would strip away unions and contracts from DPS employees; allow privatized instructional staff and uncertified teachers; and force dedicated teachers and support staff to reapply for their jobs.

House Republicans have made no secret of their desire to extend similar anti-union provisions statewide. MEA members should contact state senators, urging them to not pass the House version of the Detroit education legislation.   

Click here to locate contact information for your state senator. Let him or her know that you are an MEA member and that we are committed to a bi-partisan legislative solution that - rather than attacking school employee rights - focuses on the following:

  • Paying off the debt incurred while DPS was under state control, 
  • Ensuring employees are paid and have a voice to speak up about what's best for kids,
  • Fixing unsafe and unhealthy conditions in Detroit schools, and 

Implementing an oversight body for both traditional and charter schools that will ensure students receive a stable, quality education for years to come.