Detroit Schools Drop Deficit By More Than $43 Million

Detroit Public Schools reduced its structural deficit by more than $43 million in FY 2011.
by | November 21, 2011

Six months after Roy Roberts took over as emergency manager for the Detroit Public Schools, he reported to the state last week that the struggling school district had reduced its structural deficit by more than $43 million.

The city's school district entered the school year with a $327 million structural deficit from FY 2010, according to the district's comprehensive annual report to the Michigan Department of Education. The report shows, through a combination of increased revenues and decreased spending, the district's so-called "legacy" deficit fell to about $284 million in FY 2011.

Overall expenditures fell by 8.3 percent, from about $1.18 billion to $1.09 billion, $98 million in total. Spending for instruction dropped by $83 million, largely because enrollment fell by nearly 10,000 students. The number of classroom teachers decreased by 841, according to the district's report. Lower interest rates also allowed the district to reduce its interest payments by more than $7 million.

Meanwhile, overall revenue jumped 5 percent, almost $54 million, to $1.13 billion, largely because of an infusion of $129 million in additional federal spending. In total, revenues exceeded spending by about $39.4 million.

That surplus, combined with the sale of capital property that brought in another $4 million, amounted to the $43.4 million reduction to the district's structural deficit, about 13 percent of the original total.

The district also refinanced about $200 million of its structural debt in October by selling bonds, according to a district press release, which must be paid to holders over the next 10 years. That leaves the district with about $83 million in debt still to be addressed, according to the release.

Roberts was appointed by Gov. Rick Snyder on May 16, 2011, under the Local Government Fiscal Accountability Act. He was tasked to "rectify the financial emergency and to assure the fiscal accountability of the school district and its capacity to provide or cause to be provided necessary educational services essential to the public health, safety and welfare," according to the official order issued by Snyder.

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