Detroit Public Schools still ‘under water’ despite improvements, financial manager says

Bobb: Detroit Schools still ‘under water’

DETROIT — Detroit’s cash-strapped public school district “still is under water,” despite nearly a year of cost-cutting measures, the man brought in to manage its finances said Wednesday.

The 84,000-student Detroit Public Schools could face additional layoffs and about 40 more school closings, Robert Bobb told area business and media leaders while being honored by Crain’s Detroit Business as one of the print and online publication’s Newsmakers of the Year.

Bobb, whose contract as emergency financial manager was recently extended a year to May 2011, has reduced the district’s operating budget by more than $115 million, weeded out widespread fraud and theft, and repositioned the district for an academic revival. He ordered 29 schools closed this fall and whittled a budget deficit once reported at more than $300 million down to about $219 million.

“We are still under water … deep red water,” said Bobb, who received the annual award along with Mayor Dave Bing.

The mayor is cutting away at a $300 million budget deficit of his own and said that in about 75 days he will impose a 10-percent pay cut on several city unions who have not agreed to wage and other concessions. Both sides are going through fact-finding, then face a 60-day “cooling off period,” he told reporters before the start of Wednesday’s forum.

“It’s costing the city money every day that we go and follow this process,” Bing said. “And in the end it will be detrimental, not only to the city, but also to the membership of the unions because it means I’m going to have to cut more people than I normally would have had to cut.”

Many of the city’s 49 unions already have agreed to the pay cut as unpaid furlough days. But some, including the 3,500-member American Federation of State, County and Municipal Employees union, still are holding out.

Bing has laid off more than 460 city workers since taking office following a special mayoral election in May to finish out the remaining months of ex-Mayor Kwame Kilpatrick’s term. Detroit voters elected Bing in November to a full four-year term.

Still, Bing and Bobb say better days are ahead for the city and schools.

Last week, Bing met with bond rating agencies in Chicago and laid out his plans for Detroit.

Gov. Jennifer Granholm also signed legislation raising the cap for cities issuing fiscal stabilization bonds from $125 million to $250 million. It allows Detroit to sell more bonds as a way to help the city out of its budget deficit. State revenue-sharing funds would pay off the bonds within 20 years.

Bing said his “good week” was capped off Friday when General Motors Co. announced it decided against moving about 2,000 workers from its headquarters downtown to another facility outside Detroit.

“The decisions we each are confronted with will set the stage for years to come,” Bing said during the forum.

A sense of “hope” now is moving through Detroit, said Bobb, who praised 4,760 volunteers who pledged to help teach city youngsters how to read.

“While things may get more difficult before they become easier … better days are ahead and we are on a safe and secure route to reach them,” he said.