Not long ago, it was rare, almost unthinkable, for cities and school districts to declare bankruptcy. Even when they did it wasn’t a panacea. Sure debt was restructured, creditors were put at bay for a while. But towns didn’t get to wipe the ledger clean and start afresh just by declaring bankruptcy.
Then came Detroit. After the city declared bankruptcy in 2013, the court eliminated $7 billion Detroit’s debt in one fell swoop. The city was authorized to borrow a fresh $1.4 billion to invest in city services. Pensioners made out pretty well. And there are now credible reasons to think the city is recovering, at least a little.
Sure would be dreamy if the School District of Philadelphia could do the same, right? Whoosh, $1.45 billion in debt payments over the next five years wiped away just like that. There’d be an extra $276 million this year alone. As Larry Platt at the Philadelphia Citizen writes, that’s enough to “hire roughly 1,000 more teachers and provide each student with an iPad.” Read more »