By Zach Gorchow
Gongwer News Service
The Detroit Public Schools Community District filed suit against the Department of Treasury, arguing the district has the legal authority to continue collecting millage even after paying off its operational debt.
The case, Detroit Public Schools Community District v. Michigan Department of Treasury (COC Case No. 24-000202) was filed December 20 in the Court of Claims.
The litigation comes after the Legislature did not pass legislation that would have given the district explicit statutory authority to reallocate the revenues the old Detroit Public Schools is using to pay down operational debt to the new Detroit Public Schools Community District to repay borrowing for school infrastructure. The House passed HB 6255 , but the Senate did not act on it.
When the state bailed out the Detroit schools, it created the new Detroit Public Schools Community District. The 18-mill property tax on non-principal residences stayed with the old DPS to repay operating debt. That will soon be paid off, and the new district wants to retain the millage to expedite paydown of its infrastructure debt, which otherwise will not be paid off until 2040.
However, in the lawsuit, the school district says the Department of Treasury has directed DPS to stop collecting the tax once it repays its outstanding emergency loan. The revenue from the 18 mills would otherwise go to the School Aid Fund for all school districts.
A faster paydown will save $328 million in interest, according to the litigation.
It is the Detroit Public Schools Community District's view that the Revised School Code allows it to continue collecting the tax. The district asked for resolution of the case prior to February 10, 2025.
Gongwer News Service
The Detroit Public Schools Community District filed suit against the Department of Treasury, arguing the district has the legal authority to continue collecting millage even after paying off its operational debt.
The case, Detroit Public Schools Community District v. Michigan Department of Treasury (COC Case No. 24-000202) was filed December 20 in the Court of Claims.
The litigation comes after the Legislature did not pass legislation that would have given the district explicit statutory authority to reallocate the revenues the old Detroit Public Schools is using to pay down operational debt to the new Detroit Public Schools Community District to repay borrowing for school infrastructure. The House passed HB 6255 , but the Senate did not act on it.
When the state bailed out the Detroit schools, it created the new Detroit Public Schools Community District. The 18-mill property tax on non-principal residences stayed with the old DPS to repay operating debt. That will soon be paid off, and the new district wants to retain the millage to expedite paydown of its infrastructure debt, which otherwise will not be paid off until 2040.
However, in the lawsuit, the school district says the Department of Treasury has directed DPS to stop collecting the tax once it repays its outstanding emergency loan. The revenue from the 18 mills would otherwise go to the School Aid Fund for all school districts.
A faster paydown will save $328 million in interest, according to the litigation.
It is the Detroit Public Schools Community District's view that the Revised School Code allows it to continue collecting the tax. The district asked for resolution of the case prior to February 10, 2025.
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