Michigan governor names ex-bankruptcy judge to lead Detroit schools

Reuters News
Posted: Feb 29, 2016 8:21 AM

(Reuters) - Michigan Governor Rick Snyder said on Monday he has appointed former Detroit bankruptcy judge Steven Rhodes to lead the city's cash-strapped public schools system, the largest in the state.

The retired judge will become transition manager for Detroit Public Schools (DPS) as officials work on legislation to improve the system's academics and finances, Snyder said in a statement. Rhodes oversaw Detroit's 2013-2014 bankruptcy case, which was the largest municipal bankruptcy in U.S. history.

Rhodes will oversee the school district's finances and operations and is working to name an interim superintendent to oversee academic improvement, the governor said.

The school system, which has 97 schools and about 47,000 students, is drowning under $3.5 billion of debt, including $1.7 billion of bonds backed by property taxes, and is suffering from declining enrollment.

Heavy pension and debt obligations have left the district in danger of running out of cash in April.

Unlike the city of Detroit's bankruptcy, the state would be on the hook in the event of a bankruptcy filing to cover $1.45 billion over 11 years to pay off bonds issued for DPS through Michigan's school bond loan fund.

(Reporting by Suzannah Gonzales; Editing by Paul Simao)