DETROIT (Reuters) - Detroit Public Schools’ emergency manager Darnell Earley is stepping down later this month, Michigan Governor Rick Snyder said on Tuesday. Earley, who has drawn criticism from the teachers union and black state lawmakers for the crumbling state of the city’s schools, will leave the school district on Feb. 29, the governor said in a statement.  Earley, who had formerly presided over the city of Flint and its now lead-contaminated water system, has served as manager of the Detroit schools since January 2015. The school system is drowning under $3.5 billion of debt, including $1.7 billion of bonds backed by property taxes. Detroit Public Schools is suffering from declining enrollment. Heavy pension and debt obligations have left the district in danger of running out of cash in April. The governor said if the state Senate passes legislation  reorganizing the school and tackling the debt soon, the school system could revert to some form of local control. If the debt is not addressed, the system will be “virtually insolvent” by April, Snyder said. A November report by Earley said a bankruptcy by Detroit’s school system could shift liabilities for pensions and bonds to the state and local governments. The governor, whose approval is needed for the system to file for bankruptcy, is unlikely to support such a move. Snyder said on Tuesday that Earley has done a “very good job under some very difficult circumstances,” restructuring the school system, cutting costs and working to stabilize student enrollment.    The governor said he will appoint a transition leader before the end of the month to set in place his plan to restructure the system to address the district’s academics and finances.     The Michigan black legislative caucus last week asked Snyder to fire Earley. Also last week, the union for Detroit public school teachers sued the district, demanding Earley’s immediate removal and a return of local control with a plan to repair the district’s crumbling buildings. Ivy Bailey, interim president of the Detroit Federation of Teachers, called Earley’s departure a “step in the right direction.” Under Earley’s leadership as emergency manager of Flint, the city switched its water supply from Detroit to the Flint River in April 2014. It switched back last October after tests found high lead levels in blood samples from Flint children. Lead is a neurotoxin that can damage the brain and cause other health problems. Earley has said he is not to blame for the problem since the decision was made before his tenure. 