Detroit Public Schools are facing a serious financial crisis – and very limited options for digging their way out of the monetary hole. The District's emergency financial planner, Robert Bobb, has three possible options in front of him to solve at least some of the district's financial woes. However, none of the choices are particularly attractive, and all would require severe sacrifices by students, parents, and staff to make them work. We'll take a look at the choices here as we examine how Detroit plans to muddle through large amounts of debt and revenue shortfalls in the midst of one of the toughest economic crises to hit the city in decades.
Steeped in Debt
According to a report at Bloomberg Business Week, Detroit Public Schools currently face $327 million in debt with no visible means of repayment at this time. While bankruptcy is a viable option for Detroit, the district's debt insurer, Assured Guaranty Ltd., wants the state legislature to add a no-bankruptcy agreement before the schools can take out any more short-term debt. Without the agreement, the insurer has threatened to accelerate long-term debt payments, raising the annual payment amount from $21 million to $45 million. The schools, which cannot afford this option, have been forced to look at other solutions to their financial crisis as a result.
"They're basically holding a gun to our heads," Robb told Bloomberg.
If the schools agree to the no-bankruptcy clause, Assured is willing to continue working
