From 2002 to 2005, Detroit Public Schools collected $259 million in unauthorized property taxes from homeowners.  Because of the improperly collected taxes, the major bond rating companies put the school district's debt rating to one tick above junk status.  The district had to take on $161 million in new short term debt and refinance another $210 million in short term loans.  That new borrowing added to $1.6 billion in existing outstanding debt.  The total debt equaled 19 percent of the taxable value of all buildings, land, and business equipment in the city BEFORE THE HOUSING CRASH (although Detroit was in a mess back then anyway).  In all, the school district's total revenue for 2004 was $1.5 billion and expenditures for the School System (of over 100,000 students) was $1.6 billion.

Flash Forward to 2011...

Nearly 60,000 Detroit property tax bills were incorrectly mailed out.  The notices had the wrong interest rates, tax amounts, some people got two bills, some none at all.  The city had to extend the tax due date as a result of the confusion.  Regardless of the property tax screw ups, the Detroit Public School System has by all measures collapsed.  The size of the student body has fallen now to 84,875 students (and is projected to fall to 58,000 in a few years), but the school system is now faced with another $327 million dollar deficit - and they need $219 million by March to keep the doors open.  The creditors want a guarantee that Detroit will not file for bankruptcy if they want that money - and Detroit already pays $55 million a year on the principle and interest on the outstanding debt.  All said, even though the number of students has fallen dramatically, the expenditure for the Detroit Public School System is about $1.4 billion (only slightly less than it was in 2005) - $677 million of that goes to personnel cost.

The Proposed Emergency Remedy

Close 100 of the remaining 134 schools.  Is that really so bad?  The OFFICIAL graduation rate of the Detroit Public School System as of 2010 is 62 percent (it is probably much lower).  The Detroit School District accounted for 39 of Michigan's 92 worst performing schools.