School operating tax; Revised School Code; MCL 380.12b; MCL 380.1211; Qualifying school district; Community school district; Operating obligations; Emergency loan; Bond debt; Revolving-fund debt; “School operating purposes”; Statutory interpretation; School Bond Qualification, Approval, & Loan Act (SBQALA); Detroit Public Schools (DPS); Detroit Public Schools Community District (the New District)

The court held that plaintiff-DPS may not continue levying an operating tax under MCL 380.12b and MCL 380.1211 after it repays its emergency loan in order to accelerate repayment of bond debt and revolving-fund debt. After a 2016 restructuring that established plaintiff-New District, DPS remained as a limited taxing entity to collect taxes and repay debt, while the New District operated Detroit’s public schools. The court first agreed with plaintiffs that “debt” under MCL 380.12b is broad enough to include the emergency loan, revolving-fund debt, and bond debt. But it held that MCL 380.12b(3)(b) did not expand DPS’s authority to levy an operating tax beyond MCL 380.1211’s terms and that statute limits the tax to “school operating purposes.” The court reasoned that “school operating purposes” generally refers to day-to-day school operations and maintenance, not “any school-related expenditure,” because otherwise the statute’s listed examples would be unnecessary. The court next held that repayment of the emergency loan qualified as an operating purpose because MCL 380.1211(10)(j) expressly includes “repayment of an emergency loan,” but that bond debt and revolving-fund debt did not qualify because they were not “deficiencies in operating expenses for the preceding year or preceding years.” The court emphasized that the SBQALA separately authorizes a millage for bond and revolving-fund debt, suggesting the operating tax “is not available for this purpose.” Finally, the court rejected plaintiffs’ argument that the ruling would disrupt ordinary school financing, explaining that the issue was limited to whether DPS, as a dissolving qualifying district with no remaining operating functions after the emergency loan is repaid, may continue levying the operating tax. Affirmed.