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Bills in Michigan Would Make Bankrupt Districts Disappear

cross-posted from the District Dossier blog

by Jackie Zubrzycki

New bills that would allow the state to dissolve insolvent school districts in Michigan are making their way through the state legislature, the Detroit Free Press reports.

Buena Vista, Inkster, and Pontiac were the three districts cited as potentially being candidates for dissolution in the hearing, the Free Press reports. Buena Vista was out of school for two full weeks this year due to budget woes. Meanwhile, Pontiac is run by a state-appointed emergency manager.

But a full 55 districts in Michigan are running at a deficit, as state superintendent Mike Flanagan informed the state legislature last week.

The bills—House Bill 4813 and House Bill 4815 —passed the state House of Representatives' education committee late Wednesday.

If the bills become law, districts could be dissolved for failing to produce a viable plan to eliminate a deficit, failing to produce a deficit elimination plan at all, being unable to provide education services to students. Once a district is dissolved, according to the bill, the students would be assigned to nearby school districts and state funding would follow students to those schools. The receiving district would take on responsibility for educating those students. But the dissolved district would remain responsible for its financial debt.

The bill recommends that the size of the dissolved district and the proportion of students receiving free and reduced-price lunch be taken into consideration in assigning students to new districts. Employees from dissolved districts would become employees of receiving districts.

This would be a financial burden to the state: According to the Free Press, "a House Fiscal Agency analysis released Tuesday estimates that if the Buena Vista, Inkster, and Pontiac districts were to be dissolved, the state aid fund would need to kick in $34 million annually in per-pupil funding."

The bill is being hurried along in order to pass before the end of the legislature's session in two weeks. Proponents of the bill say that matters are urgent, as the affected districts might be unable to start school in the fall.

The bill, and the news that 55 districts were in such dire straits, prompted a conversation among legislators about how the situation has been allowed to get so bad.

But many states are struggling to determine how to deal with bankrupt districts. New Jersey, for instance, just took over the school district in Camden. A number of districts in California have also come close to bankruptcy in recent years.

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