New bill would allow the state to close deficit school districts, promote consolidation

A new bill introduced by state Rep. David Rutledge, D-Superior Township, would allow the state to dissolve financially struggling school districts and shuffle their students to other neighboring schools, according to a report in the Detroit News.

Districts that cannot implement their deficit elimination plans would fall under this possible scenario and although the state would be forcing the insolvent district to close, the district would keep its taxing authority and taxpayers would continue to pay until the debt is resolved, the News article says.

Currently, if school districts cannot get out of debt on their own through deficit reduction plans, the state can elect to send in an emergency manager to fix the financial problems.

In the case of Muskegon Heights Public Schools, the emergency manager turned four of the district's buildings into charter schools to help Muskegon eliminate its $16 million deficit.

In this case, the district also is using the 18 mills of non-homestead taxes it levies on businesses and second homes, including rental homes, to help pay off its debt, according to MLive.

Rutledge's legislation, if passed, would allow the state to forgo the emergency manager step and dissolve the struggling school system itself, shifting the district's children to other schools within the county intermediate school district.

In Washtenaw County, Ypsilanti and Willow Run public schools, which have a combined deficit of about $13 million, chose to consolidate — taking action locally to fix their financial troubles and avoiding a state-appointed emergency manager. The unified Ypsilanti Community Schools district launches July 1.

Rutledge has been a champion of the Ypsilanti-Willow Run consolidation effort and has been working actively with YCS Superintendent Scott Menzel, the Michigan Department of Education and State Treasury Department to come up with a pay back schedule and time period for the $13 million debt, which the new district will assume.

Right now, the idea is Ypsilanti Community Schools would pay down its debt over a 20-year period. Rutledge told AnnArbor.com, he is working with treasury officials to see about paying off the debt in pre-established, regular intervals — similar to how a homeowner would pay off a mortgage, complete with interest, he said. The plan involves YCS paying back $1 million per year.

The treasury department has not signed off yet on a final plan, Rutledge said.

State Superintendent Mike Flanagan has been a supporter of the consolidation from the onset, dubbing the districts trailblazers, visionaries and examples for the rest of the state.

Flanagan told the Detroit News in Wednesday's article that districts making poor decisions receive the state's attention only when they don't follow their deficit elimination plans and run out of money.

"We are a local-control state. Give me the authority, and I will fix this stuff. People need to consider consolidation, and they are not doing it," he said in the article. "Ypsilanti and Willow Run … they were both sinking like a rock and we encouraged them to combine. It required a tremendous amount of work and a vote locally, but they did it."

• Read the the Detroit News story.

Danielle Arndt covers K-12 education for AnnArbor.com. Follow her on Twitter @DanielleArndt or email her at daniellearndt@annarbor.com.