Ann Zaniewski, and Matthew Dolan

Detroit Free Press

Steven Rhodes, the retired U.S. bankruptcy judge well-known for helping guide the City of Detroit out of municipal bankruptcy, is expected to play a key leadership role in the education reforms that state officials envision for the city later this year.

Gov. Rick Snyder has asked Rhodes to help guide Detroit Public Schools reform bills through the state Legislature and then implement the changes they would bring to Michigan's largest school district, sources with knowledge of the matter confirmed to the Free Press.

Rhodes would have a transitional role, steering the district until it can return to local control under an elected school board and superintendent, sources said. Details of the arrangement have yet to be finalized.

Rhodes is not expected to be named the district's new emergency manager, according to sources.

State lawmakers are debating legislation that would revamp public education across Detroit and create a new debt-free public school district. Rhodes' ramped-up role in the discussions about the bills comes at a time of sharp turmoil in the debt-ridden, 46,000-student DPS.

"I have been involved in the discussions about the future of DPS, and that’s as much as I'm prepared to say at this time," Rhodes told the Free Press late Thursday.

Dave Murray, spokesman for Snyder, said Rhodes has consulted with the administration and worked with lawmakers to help them understand the district’s troubling financial condition.

"It would be inappropriate to discuss potential candidates for the position of leading the Detroit Public Schools" through its transition period, he said.

Judge Steven Rhodes: 'A tour de force of legal acumen'

Rhodes is perhaps most well-known for guiding Detroit out of debt in the nation's largest municipal bankruptcy case, though he has had other high-profile roles. Last June, he began serving as an adviser to Puerto Rico as the U.S. territory faced debts topping $105 billion.

And he is no stranger to the problems plaguing DPS. He has met over the last few weeks with lawmakers and top Snyder aides, stressing to them bankruptcy wouldn't be a good option for the district.

Rhodes has said a strong school system is key to Detroit's long-term success. In an interview around the time of the city’s one-year anniversary after leaving bankruptcy protection, he named schools as one of the two or three remaining concerns he had about the future of Detroit after its departure from federal bankruptcy court.

“I think it’s fair to conclude that families will only move back into the city after the schools are fixed,” he told the Free Press last fall.

DPS has been run by governor-appointed emergency managers since 2009. Despite state intervention, its financial problems have gotten worse. DPS, which once had a peak of nearly 300,000 students and is widely considered the nation's worst-performing urban school district in terms of academics, is facing a total debt of $3.5 billion. Officials project that it will run out of cash this spring.

Editorial: Earley is out, but Detroit kids still need help

Current DPS emergency manager Darnell Earley, who is embroiled in controversy for his role in the Flint lead-tainted water crisis as well as for various problems in the school district, is resigning at the end of this month, four months earlier than expected.

Snyder appointed Earley to lead DPS in January 2015. Before that, Earley was the emergency manager for Flint, where he was in charge when the city switched from using Detroit water to water drawn from the Flint River while it waited to join a new water authority. Corrosion controls were not added to the water, allowing lead to leach into the water flowing into residents' homes.

Earley also has been the subject of growing criticism in Detroit for not addressing mold and rodent problems found in dilapidated schools, overcrowded classes and ballooning debt. Teachers have staged several sick-outs in recent weeks to call attention to the problems, forcing dozens of schools to close. The sick-outs have sparked a legal battle between the teachers' union and DPS. Detroit Mayor Mike Duggan has ordered city inspectors to investigate conditions at all DPS schools.

Snyder budget: Money for DPS fix could be heavy lift

State lawmakers are debating controversial legislation introduced last month that would split DPS in two, creating a new debt-free Detroit Community Schools district. The new district would educate kids, while the old district would exist only as a vehicle to pay off DPS' debt. There would also be additional financial oversight.

On Wednesday, Snyder said that he wants to tap into Michigan's tobacco settlement fund for $72 million a year over 10 years to help pay off DPS' debt. He said the move would free up about $1,100 per student for classroom spending that currently goes toward paying down the debt.

"We need to get the governor's plan, or a plan like it, in place as promptly as possible because there’s a new school year coming up soon," Rhodes said Thursday. "I certainly plan to try to work with the Legislature on resolving their various differences so that the city’s school system can move forward without this crushing debt that it has."

Rhodes, who retired from the federal bench one year ago, said in a wide-ranging interview at the time that having an emergency manager serve in Detroit meant "the people lost the ability to have the direct impact that they have when there's a mayor and a City Council in charge ... That's a taking away of democracy to that extent."​

In the February 2015 interview, Rhodes was complimentary of Snyder's approach to the city's bankruptcy.

"A lot of people maintain that it was a very courageous thing for him to do and that it was something his predecessors were not willing to do and did not do. From an economic or fiscal perspective, it doesn't seem to me it was a very hard decision," Rhodes said. "As I've said, it should have been made a long time ago. Politically, on the other hand, I'm sure it was hard for him."

But the global interest in the nation's largest municipal bankruptcy was also a change for a judge little known outside Detroit legal circles before the case.

"There were obviously times when it was extremely taxing for me personally," Rhodes said in the February interview. "It was for stretches — and sometimes long stretches — very intense."

Contact staff writer Ann Zaniewski at 313-222-6594 or azaniewski@freepress.com. Follow her on Twitter: @AnnZaniewski.