Moody’s Investors Service said that the deteriorating finances of Detroit’s public schools may result in a bankruptcy filing if Michigan lawmakers don’t agree on a rescue package within the next two months, Bloomberg News reported yesterday. The state’s House of Representatives last week approved a plan to restructure the cash-strapped district that has “stark” differences with the package approved by the Senate in March, Moody’s said in a report yesterday. The school system, which is rated Caa1, seven steps below investment grade, will soon run out of money. The $50 million of emergency funding that the state appropriated in April is supposed to last only through June. “The legislature now has less than two months to compromise on a reform package or the district’s financial position will possibly force a bankruptcy filing,” Moody’s said in the report. “Failure to implement a solution increases risks to all of the district’s bondholders.”
