Detroit Schools Hit Debt Limit, Risk Being Unable to Pay Bills
- District expects to run out of cash in April without relief
- Lawmakers must decide whether to include bankruptcy as option
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Detroit’s public schools have reached their borrowing limit and won’t be able to take on more debt to pay bills when money runs out in April if Michigan lawmakers don’t restructure some of its $2 billion of obligations, state officials said.
Though the district has borrowed when it ran out of money before, it has reached the statutory limit of its ability to do that, said Terry Stanton, spokesman for Michigan’s Treasury Department. This month the amount of state aid that’s siphoned off to service debt will jump to roughly what is spent on salaries and benefits, pressuring the district’s ability to pay its bills in April.