April 07, 2010
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News: Detroit School District Needs Lifeline
School districts across the country have been struggling to stay afloat. It hasn't been easy for some where an already difficult budget has become more difficult as the district deals with the abusive credit card activities of school board members and/or administrators. The Detroit School District is no exception. As the Detroit School District board attempts to find new ways to pull the ailing system out of debt, the Emergency Financial Manager, Robert Bobb dug a deeper hole. Bobb acquired a $256 million loan to meet operating expenses and to pay off another short term debt. The announcement didn't mention if any of the money was to go toward the accumulation of credit card debt. However, the loan has residents concerned asking if the district is operating under the same premise of replacing old credit card debt with new card debt.
State officials confirmed the loan which will be used to satisfy payroll and another short term loan for $250 million that was taken out in August, 2009. The district's growing deficit has everyone concerned. It is expected that nearly 80 percent of the district's state aid will be used for debt reduction leaving little for classroom and academic needs. A growing concern has also brought some to ask what condition are the district's credit card balances. Bobb isn't altogether to blame for the mess the district's in. A large amount of debt existed prior to his taking over the job last year. Bobb has been kept busy looking at district credit card spending, unpaid bills, and other causes which have only served to increase the district's deficit.
Despite the fact that Bobb was not responsible for the abusive credit card spending and lack of adequate bookkeeping, he has made a few questionable decisions on his own. The most notable being his decision to lay off 1,500 employees only to rehire over 1,100 back. The city has been looking into ways to overcome the debt, but has yet to find a viable solution. Some have suggested seeking relief in the courts through bankruptcy; however, such a move could cause a significant amount of damage to the state's credit as it would for any individual or organization.