By Alethia Kasben
Gongwer News Service
Detroit Public Schools, which exists only to pay off remaining debts after a new community school district was created in 2016, cannot use local millage dollars to repay its remaining revolving fund and bond debt, a unanimous Michigan Court of Appeals panel ruled.
In DPSCD et. al. v. Treasury et. al. (Docket No. 379565), a published decision written by Judge Michael Riordan and signed by Judge Daniel Korobkin and Judge Philip Mariani, the panel affirmed a lower court decision that said once the emergency loan still owed by the original Detroit Public Schools was paid, the entity could no longer levy a millage to pay off the other debts.
The case involves Detroit Public Schools and the Detroit Public Schools Community District. DPS is the old district that exists to pay off remaining debt. DPSCD was created to operate the public school system in the city.
Recently, DPS collected an increased amount of revenue because of rising property values in the city and the emergency loan that is an approved operating cost is expected to be paid off early. However, the district still has other debts and it asked the Department of Treasury to allow it to pay off with the continued millage dollars.
While DPS is collecting the operating millage, DPSCD receives a per-pupil payment from the Department of Treasury. Once DPS no longer collects the millage, DPSCD can ask voters to approve the operating millage for it to collect toward the actual operations of the district and Treasury will no longer be required to make a payment to the district.
The Court of Appeals agreed with the trial court that state law limits the operating tax to “school operating purposes,” which includes the repayment of emergency loans but not repayment of revolving-fund debt and bond debt.
The school districts argued the trial court decision would have a “dramatic effect” on other districts in the state. The panel disagreed.
“The issue before us is whether DPS has the authority to levy a millage under MCL 380.12b and MCL 380.1211 after it repays the emergency loan and has no remaining ‘school operating purposes,’ as the actual operation of the school district resides with the New District, not DPS,” Riordan wrote. “Our decision does not affect a typical school district’s statutory and contractual obligation to pledge revenues.”
Gongwer News Service
Detroit Public Schools, which exists only to pay off remaining debts after a new community school district was created in 2016, cannot use local millage dollars to repay its remaining revolving fund and bond debt, a unanimous Michigan Court of Appeals panel ruled.
In DPSCD et. al. v. Treasury et. al. (Docket No. 379565), a published decision written by Judge Michael Riordan and signed by Judge Daniel Korobkin and Judge Philip Mariani, the panel affirmed a lower court decision that said once the emergency loan still owed by the original Detroit Public Schools was paid, the entity could no longer levy a millage to pay off the other debts.
The case involves Detroit Public Schools and the Detroit Public Schools Community District. DPS is the old district that exists to pay off remaining debt. DPSCD was created to operate the public school system in the city.
Recently, DPS collected an increased amount of revenue because of rising property values in the city and the emergency loan that is an approved operating cost is expected to be paid off early. However, the district still has other debts and it asked the Department of Treasury to allow it to pay off with the continued millage dollars.
While DPS is collecting the operating millage, DPSCD receives a per-pupil payment from the Department of Treasury. Once DPS no longer collects the millage, DPSCD can ask voters to approve the operating millage for it to collect toward the actual operations of the district and Treasury will no longer be required to make a payment to the district.
The Court of Appeals agreed with the trial court that state law limits the operating tax to “school operating purposes,” which includes the repayment of emergency loans but not repayment of revolving-fund debt and bond debt.
The school districts argued the trial court decision would have a “dramatic effect” on other districts in the state. The panel disagreed.
“The issue before us is whether DPS has the authority to levy a millage under MCL 380.12b and MCL 380.1211 after it repays the emergency loan and has no remaining ‘school operating purposes,’ as the actual operation of the school district resides with the New District, not DPS,” Riordan wrote. “Our decision does not affect a typical school district’s statutory and contractual obligation to pledge revenues.”
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