As the Detroit school district continues its legal battle with the state treasury department over millage uses, the board approved a proposal that will allow the district to have a backup plan in case the court does not rule in its favor.
Members of the Detroit Public Schools Community District school board approved a resolution Tuesday to place an 18-mill operating millage on the ballot for a special election in May. That millage would replace an existing millage operated under the former Detroit Public Schools, which is only active to pay off millions of dollars in debt racked up during decades of mostly state control.
To ensure the millage is on the ballot in time for the May election, the proposal has to be submitted to the Detroit City Clerk’s Office by 4 p.m. Feb. 11, according to the document. The language must next be reviewed by the Detroit Election Commission. The special election would cost the district $1 million, plus an additional $1 million to $2 million to inform the public about the election and its impact on the district, the proposal notes.
If the district wins the lawsuit, the special election will be withdrawn. But if the district does not prevail, and voters do not approve the millage in a May or August election, DPSCD would lose $100 million in general fund revenue for the 2025-26 school year.
The special election proposal comes after DPSCD filed a lawsuit last month against the Michigan Department of Treasury over a difference of opinion on revenue from the DPS operating millage that has been used to pay off an emergency loan since 2016. That was the year Michigan lawmakers created DPSCD to operate schools while the debt-ridden DPS collected millage revenue. Since then, the state has filled the gap left by the loss of revenue from the operating millage.
With the emergency loan expected to be paid off in February, 18 months earlier than scheduled, the district wants to use the operating revenue to accelerate the schedule by which it is paying off a remaining $1.6 billion in capital debt as well as debt to the state School Loan Revolving Fund. A separate debt millage has been paying off the debt, but district officials say that adding revenue from the operating millage would allow DPS to pay off that debt years earlier than expected, saving taxpayers in interest costs.
In the lawsuit, the district alleges that the treasury department said that the millage revenue can’t be used to pay off the capital and revolving fund debt since they are non-operating debts. It also says that once the emergency loan is paid off next month, DPS can no longer levy the operating millage, and DPSCD would have to ask voters to approve a new operating millage. The district says the state would cease providing the district with local operating revenue when the loan is paid off and DPS no longer has an operating millage.
“We, the district, is interpreting state law differently than the treasury department is, and outside council and our internal council all agree that we’re interpreting the right way, which is basically that DPSCD should not have to tax locally until all DPS debt is resolved and paid off,” Superintendent Nikolai Vitti said during the board meeting.
He added that the treasury department’s terms of how the district can use the operating revenue were not explained to DPSCD until last November.
“But even if we had received that information sooner, frankly, it wouldn’t have been on the ballot because we would have disagreed, and we would have continued to try to negotiate an agreement or went to the courts at that point.”
Meanwhile, the treasury department is seeking dismissal of the case, saying in a Jan. 10 filing that the harm claimed in the suit is hypothetical, so the lawsuit has no merit. The department also said that the district is suing the wrong party, as the treasury doesn’t have “the authority to adjust the state’s foundation allowance payments or prevent DPS from levying an operating tax.”
“Our hope and expectations is that the treasury will negotiate with the original intent and/or our court case will substantiate and support our position,” said Board member Sherry Gay-Dagnogo.
School board welcomes new members
The school board meeting also included a swearing-in ceremony for its two newest members who secured seats in the November election: Monique Bryant, a parent and nonprofit director, and Ida Simmons Short, a community college educator who previously served on the board for DPS. In addition, Gay-Dagnogo was part of the short ceremony, as she enters her second term.
Angelique Peterson-Mayberry, who served as board president last term, was replaced by member Corletta Vaughn through a nomination from Gay-Dagnogo. Other new appointments include LaTrice McClendon as vice president, Short as secretary, and Iris Taylor as treasurer.
“I would like to thank the board and this superintendent and staff for this honor to serve as your chair,” Vaughn said during Tuesday’s meeting. “But it could not be done without the chair that is now a part of the board and the chair of academics. I’ve watched her (Peterson-Mayberry) for the past four years navigate the board in very difficult times. We’ve had two amazing, brilliant women to serve; Dr. Iris Taylor and then Angelique Peterson-Mayberry.”
Micah Walker is a reporter for BridgeDetroit. You can reach her at mwalker@bridgedetroit.com.
Chalkbeat Detroit bureau chief Lori Higgins contributed to this report.
