Heavy Lifter Defines Rationale (Dollars and Sense)

Teacher loans can save DPS millions 

Bobb says no bankruptcy if they agree to deferral

By CHASTITY PRATT DAWSEY

FREE PRESS EDUCATION WRITER 

The $10,000 that each member of the Detroit Federation of Teachers is being asked to defer until departure from the school district would save Detroit Public Schools $25.4 million, school officials said Monday.

Robert Bobb, the DPS emergency financial manager, stopped short of guaranteeing that the money will be repaid if the district declared bankruptcy, but in sisted that he would not declare bankruptcy if the teachers approve the deal. “From all the legal advice we’ve been given, the money is protected if bankruptcy occurs,” he said.

David Martell, executive director of the Michigan School Business Officials, and officials of the Michigan Education Association said there’s no way to guarantee the money would be protected ina bankruptcy. But, Martell said, bankruptcy is unlikely.

“It’s extremely far-fetched for a school district to declare bankruptcy because the impact would be far-reaching.”

DPS ended the past school year with a $219-million deficit and is looking to cut jobs this school year in response to state budget cuts and rehires of counsel ors and other support staff.

Thousands of teachers at a meeting at Cobo Hall on Sunday booed the wage deferment proposal that is part of a 3 year tentative contract agreement. Teachers are to vote over the next two weeks on the contract.

If approved, the funds would be deducted from paychecks over two years and be placed in a Termination Incentive Plan account. The school district would be able to use the money to help pay bills and would repay the employees upon retirement, layoff, firing or resignation — with no interest.

Officials at the MEA, the largest teachers union in the state, and the parent union, the American Federation of Teachers, said they knew of no other unions locally or nationwide that adopt ed such a proposal. “This particular plan is something they came up with at the table — unique to Detroit,” said George Jackson, an AFT spokesman.

DFT members could choose to be repaid in a $10,000 payment — which is subject to taxes — in an annuity or could choose to use the funds to buy a year or so of time toward retirement.