Detroit’s public school district has taken a major step forward after years of debt and emergency management.
Superintendent Nikolai Vitti on Tuesday announced that the operating debt held by Detroit Public Schools for the last decade has been paid off. At the same time, the school board approved transferring a millage levy to the Detroit Public Schools Community District.
DPS, the legacy entity left over after the state split the district into two separate entities to tackle debt, took out a State Emergency Loan in 2016 and repaid it about a year and a half ahead of schedule, thanks to the 18-mill tax on non-homestead properties. Now that voters approved the 18-mill operating millage transfer in August, the Detroit Board of Education has authorized a summer tax levy beginning next July for businesses and people who own rental properties. The tax can be levied next summer and every year through 2045 and collected by the new entity, DPSCD.
However, DPS still has capital debt. As of July, the total is $1.5 billion. DPS made interest payments of $24.3 million in October, according to district documents, and the district is scheduled to make a $139.2 million interest and principal payment in May. The debt is expected to be fully repaid in 2040, according to documents from Detroit City Council’s Legislative Policy Division.
For most taxpayers in Michigan, summer taxes become a lien on July 1 each year and are due by September 14, while winter taxes become a lien on December 1 and are due on February 14.
“By collecting the funds in July, the district will receive collections in the summer to support school operations until state funding is received in October,” board president LaTrice McClendon said.
The operating millage was last renewed in 2024. A court decision earlier this year said DPS must cease collecting that tax with that operating debt nearing repayment. Now, DPSCD will have the authority to continue collecting the full operating funding available under Michigan’s school funding formula.
Vitti said the old district made its final principal payment of $4.5 million and final interest payment of $27,000 in September. According to district documents, DPS’ remaining millage fund balance of $190.8 million will be transferred to DPSCD.
The school board held a special meeting Tuesday evening to discuss the tax levy and then approved the resolution during its regular board meeting later that night. As a new taxing entity, DPSCD had to adopt a resolution to allow it to begin collecting the millage funds.
The $112 million the millage will collect in 2026 is a fraction of the district’s overall $1.1 billion budget. But the revenue is critical to the school system. Vitti previously said that the estimated revenue generated by the tax levy would constitute $2,400 of the $10,300 per pupil the district receives from the state.
DPSCD was created in 2016 as part of a legislative initiative to address mounting debt in DPS. The new district had a debt-free start to handle day-to-day school administration, while DPS stayed intact to collect taxes to pay off operating and capital debts of $3.2 billion.
Since DPSCD would not receive local property tax revenue, the state then filled the gap with money from the 1998 Tobacco Settlement Fund.
“DPSCD, like every other district in Michigan, has its own local funding revenue and is no longer relying on tobacco settlement money for its local taxation starting the next fiscal year,” Vitti said Tuesday.
Chalkbeat Detroit Bureau Chief Lori Higgins and reporter Hannah Dellinger contributed to this report.