The recent news that Detroit would be filing for bankruptcy made headlines not only in Michigan but around the country. Gov. Rick Snyder approved a request from emergency manager Kevyn Orr to file for Chapter 9 bankruptcy. The city filed on July 18.
Kudos go out to Dr. Eric Scorsone, Michigan State University Extension specialist, for his diligence in working with the media to explain the Detroit bankruptcy issue. Within 24 hours of the bankruptcy being announced, Dr. Scorsone spoke to about 20 media outlets on four continents.
In the “It’s Just Politics” segment on Michigan Radio July 19, producer and co-host Zoe Clark called Dr. Scorsone the Mick Jagger of “muni” (municipal) finance. You can listen here.
Many national news agencies such as NBC sought Dr. Scorsone’s reaction to the bankruptcy. We’re grateful to Dr. Scorsone for his expertise and his willingness to step out and communicate to the public about these complicated financial issues. And he’s probably going to be doing this for a while, given the complexity of such a large municipal bankruptcy filing.
In this unsteady economy, the chances of a city undergoing bankruptcy increases. Never reaching that point would seem to be the ideal goal for any municipality. However, cities and other districts may need to resort to bankruptcy when other methods fail to lift them out of debt.
To better understand Chapter 9 municipal bankruptcy, Michigan State University Extension conducted a simulation exercise based on historical data from a U.S. city and recently put out a staff paper presenting the lessons learned from that exercise.
Find “Chapter 9 Bankruptcy: Simulation Exercise Staff Paper” and its companion white paper on the MSU Extension website at http://msue.anr.msu.edu/resources/municipal_bankrupty.
MSU Extension specialist and MSU Department of Agricultural, Food, and Resource Economics (AFRE) faculty member Dr. Eric Scorsone, MSU Extension specialist Nicolette Bateson, and MSU College of Law graduate student and graduate assistant in AFRE Amanda Wright wrote the staff paper. Amanda also authored the white paper.
Read more about the paper and municipal bankruptcy here.