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Michigan board formally OKs loan for Detroit school district

Loan is to be repaid over 10 years at fixed rate of 1.31 %

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LANSING, Mich. – A state board has approved a $150 million emergency loan as part of Michigan's bailout of the debt-ridden Detroit school district.

The three-member Local Emergency Financial Assistance Loan Board formally OK'd the loan Tuesday a day after endorsing it and other facets of a $617 million rescue plan enacted into law in June.

The loan is to be repaid over 10 years at a fixed rate of 1.31 percent.

The money will cover "transitional operating costs" as the district is split in two this summer; $25 million will be used on deferred facilities maintenance.

The old district will exist to retire operating debt. The new district will educate 46,000 students.