Nick Krieger (@nckrieger):
Earlier today, the Michigan House of Representatives passed two bills that would affect the Detroit Public Schools if ultimately signed into law: House Bill 5385 and House Bill 5296.
1. House Bill 5385 (passed by a vote of 66-43) would amend the Michigan Financial Review Commission Act (“MFRCA”), 2014 PA 181, by extending its reach to school districts—specifically the Detroit Public Schools. Under the MFRCA as it currently exists, a financial review commission oversees any city with a population of 600,000 or more that is subject to a plan of adjustment (in other words, the city of Detroit). The financial review commission is composed of (1) the state treasurer, (2) the director of the state department of technology, management, and budget, (3) the mayor of the city, (4) the president of the city council of the city, and (5) five individuals appointed by the governor. The financial review commission is empowered to approve or reject the city’s budget, approve or reject various city contracts, require the city to submit financial reports, implement rules concerning the city’s budgeting and cash-management practices, approve or reject the city’s request to issue debt, approve or reject collective bargaining agreements, and recommend amendments to the city’s charter and ordinances. In other words, the MFRCA provides a means by which the governor and other state officials appointed directly by the governor may exercise significant control over the finances and internal affairs of Detroit.
Under House Bill 5385, the MFRCA would be extended to the Detroit Public Schools, and the financial review commission that is already in place for the city of Detroit would assume the responsibility of overseeing and managing the finances and affairs of the Detroit schools as well. Under the legislation, the membership of the commission would be increased from 9 to 11; but a majority of the members would still be direct appointees of Governor Rick Snyder.
Interestingly, House Bill 5385 makes several references to “a community district organized under the Revised School Code.” As you’ve probably heard, the Michigan Senate (Senate Bill 710) and Michigan House of Representatives (House Bill 5384) have competing plans to reorganize the Detroit Public Schools. Although the two plans differ considerably in several respects, both plans would divide the Detroit Public Schools into a “qualifying district” (the Old DPS that would retain the taxing power and pay off the debt) and a “community district” (the New DPS that would take over the responsibility of educating pupils). By repeatedly referring to “a community district,” House Bill 5385 appears to assume that one of these two competing plans will be enacted, and that the Detroit Public Schools will have been converted into “a community district” before the financial review commission amendment takes effect.
2. The Michigan House of Representatives also passed House Bill 5296 (by a vote of 104-5), which would appropriate an emergency sum of $48.7 million in the form of “distressed public schools financial assistance,” to be released to the Detroit Public Schools by the state treasurer upon the satisfaction of certain conditions. Specifically, the state treasurer would not be authorized to release the emergency funds to DPS unless House Bill 5385 (the aforementioned financial review commission amendment) is enacted.
Both bills now head to the Michigan Senate for consideration.