Kathleen Gray

Detroit Free Press Lansing Bureau

LANSING — Detroit Public Schools will run out of cash in August under a package of bills passed by the House of Representatives last week, according to a memo from state Treasurer Nick Khouri.

“Without further legislation, the district will run out of cash in July. The package of bills passed by the Senate provides enough new money to transition,” Khouri’s memo stated. “The House-passed package leads to a projected cash flow deficit of $22 (million) in August, rising to $80 (million) in September.”

The memo comes as the Senate begins to contemplate the bills passed by the House last week after a marathon 15-hour session, which ended at 4:30 a.m. last Thursday.

No legislative action is expected this week in the Senate on the bills that are geared toward fixing the financially struggling Detroit Public Schools.

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The House passed bills last week, but they vary widely from legislation passed in March by the state Senate. Those bills do a better job of providing a quality education for Detroit’s kids, said Senate Majority Leader Arlan Meekhof, R-West Olive.

“This is a very complex issue. You’ve got politics involved, employee relations involved and a lot of money involved,” he said. “It’s going to take a while to find our solution.”

Part of the problem in getting a solution this week is the Tulip Time Festival in Holland, which includes a huge parade on Wednesday afternoon in which many west Michigan lawmakers participate.

The one thing both sets of bills have in common is splitting the district in two — one to pay off the debt and the other to run the day-to-day operations of the district. That’s where the similarities end.

The Senate bills provided $720 million for DPS, including $515 million to help pay off the district’s debts and $200 million in start-up costs for the new district. The House plan includes $467 million to help pay off the debt and a $33- million loan for start-up costs. The Senate includes a Detroit Education Commission that would have authority over where some public and charter schools are located in order to ensure better distribution of school buildings across the city. The House plan does not include the DEC.

The $200 million in start-up costs is “critical,” said Meekhof, and the DEC is an important tool to ensure that Detroiters buy into the fix, “so that they can be held accountable to producing the results to improve education.”

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Meekhof’s argument over the need for $200 million in start-up costs was buttressed by Khouri, who sent the memo to lawmakers that said the House plan fell well short of fixing DPS’s fiscal woes.

“Under the Senate passed proposal, DPS bridges the short-term transition cash flow needs this fall, and ends the 2017 school year with a cash surplus. Under the House-passed proposal, the district runs out of cash in August 2016,” Khouri said,

A portion of the $200 million would address deferred maintenance in the deteriorating buildings in the district including fixing roofs, heating and cooling systems, windows, lighting and security systems. Some of the rest of the money would be used for educational enhancements in art, music and gym, literacy programs and investments in science, technology, engineering and math programs.

Speaker of the House Kevin Cotter, R-Mt. Pleasant, said he was frustrated and discouraged that the House members got the information they were seeking about transition costs after they passed bills to help DPS.

"Taxpayers of the state are being asked to make an investment. I don’t think it’s unreasonable for us to see something that at least resembles a business plan to say how this money is going to be used," he said. "We were told a solution needed to be delivered, so we delivered the best solution we could with the information we had."

He questioned whether taxpayer dollars should be spent on things like building maintenance and program enhancements for DPS that are included in Khouri's transition cost memo.

"Look at all other districts in the state. Their buildings are funded with local millages," Cotter said. "My point would be to stick with paying off the debt and returning control to locals."

Since the bills have been referred to the full Senate, Meekhof said they can be substituted with alternate language closer to the Senate package, referred to a conference committee to work out a compromise with the House or even hammered out among Gov. Rick Snyder and the four leaders of the Legislature — Meekhof, Senate Minority Leader Jim Ananich, D-Flint, Cotter, and House Minority Leader Tim Greimel, D-Auburn Hills.

House Democrats were unanimous in their opposition to the House plan last week, and Democrats in the Senate said they hope that the Senate will stick by its original plan.

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“The work that we did over 15 months was dismantled in 15 hours by the Michigan House of Representatives,” said Sen. David Knezek, D-Dearborn Heights. “In an era in this country where bipartisanship seems to be a four-letter word, this chamber came together and got it done.”

Ananich said he hopes that Cotter doesn’t hijack that DPS legislation in the same way that the House ended up crafting the roads package last year.

“And now, we have a bad roads plan. We need to come up with a serious solution for DPS,” he said.

The comments came on a day when dozens of Detroit parents, pastors and community members descended on the Capitol to urge lawmakers to reject the House plan. They briefly disrupted a Senate session with chants of “no justice, no peace,” and “this is what democracy looks like,” before they were asked to follow the rules and be quiet.

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Some of their main complaints about the House bills were the provisions that impose harsher penalties on teachers who strike or who participate in sick-outs and opening the door for the use of more uncertified teachers in DPS.

The main House bills up for consideration in the Senate are HB 5383, 5384 and 5387.

Contact Kathleen Gray: 313-223-4430, kgray99@freepress.com or on Twitter @michpoligal.