The Peril of NOT “Fixing” Detroit Public Schools

Dec 17, 2015 by

Jack Lessenberry –

LANSING – As the clock ticked down the last days of this year’s legislative session, majority Republicans mounted a full-court press to give their party more partisan advantage in coming elections. They voted to eliminate straight-ticket voting, and spent the dwindling hours on a bill to allow for close connections between individual campaigns and the “SuperPAC” committees that channel millions to (mainly) Republican candidates.

But the legislature couldn’t find time for another issue that could potentially save, or destroy, Detroit’s attempt to restore itself as a fully functional, vibrant city capable of attracting middle class residents:

Detroit’s rapidly dying public schools.

Governor Rick Snyder realizes something has to be done. Fast. The school system is crippled by debt, and has watched its revenues plummet, as students desert the schools for charters or the suburbs. Despite slashing spending and overhead and closing more than three-fifths of its buildings since 2005, the savings were too little, too late. Emergency manager after emergency manager has vowed to get the school system’s finances under control. They’ve all failed.

Detroit Public Schools are now on course to run out of cash long before the school year ends in 2015. If that happens, bankruptcy seems likely. Bankruptcy saved General Motors, and more than likely “saved” the city of Detroit … at least temporarily.

For Detroit, it’s like a patient that has survived major surgery, and is still in intensive care. The city is solvent for now, but an economic downturn or a shift in state finances could swiftly change that. All agree that the city needs jobs and revenue, and a way to reverse the decades-long population decline. But those things will be hard or impossible to do without a decent school system. The population has been voting with its feet. As recently as the year 2000, there were still about 170,000 students in Detroit Public Schools. Today, that number is a mere 47,000.

Since the mainstay of school funding is the state’s $7,391 per pupil annual “foundation grant,” that decline has been a crippling blow.

Darnell Earley, the schools’ latest emergency manager, says that thanks to reforms, the schools would have run to a $13 million surplus this year. But the schools are paying $53 million a year to service their $515 million debt, accumulated over decades. That was more than enough to tip the balance into the red. It is hard to see how, if present conditions continue, the district can reverse that before it becomes insolvent.

But if bankruptcy was a way out for GM and the city itself, it would be a different story for the public schools. Bankruptcy would, the emergency manager told the Michigan House Subcommittee on School Aid in October, “predominantly shift liabilities onto other municipalities.” That’s no small matter. Those liabilities include more than a billion dollars in pensions and nearly $1.5 billion in capital bonds, plus the operating debt. Not only that, something would have to be done with the students.

Governor Snyder understands what that would mean. Last April, he presented a complex plan to financially save Detroit schools. He would create a new Detroit Community School District, an umbrella structure including charter schools and the Education Achievement Authority, or EAA, the scandal-plagued entity he created to try and fix Detroit’s 15 worst schools.

Essentially, he’d fix the economic mess by splitting the schools into two parts, something reminiscent of the General Motors bankruptcy. There, an “old GM” was saddled with liquidating debts and obsolete factories while the “new GM” went forward. Under the governor’s plan for the schools, an “old DPS” would use what millage revenue remained to gradually liquidate the debt. Meanwhile, the new district would concentrate on the students. However, the sticking point was a simple one: Money.

The governor wants to pay for saving the schools by taking extra money from the Michigan School Aid Fund – $70 million a year for a decade, after which presumably the old debt would be paid off, and the new district could capture the millage money again. “I think it’s actually a system for long-term success,” the governor said in October, when he began making a renewed push to get the legislature to adopt his proposal.

But that was evidently not seen as anything like a formula for political success by his fellow Republicans in the legislature. None are from Detroit. They don’t get any votes from Detroit. Two years ago, they were persuaded (with grave difficulty) to contribute $195 million to save the Detroit Institute of Arts. Persuading them to agree to commit far more to save the Detroit Public Schools is proving a much harder sell. The lawmakers had not planned to even begin hearings on the governor’s plan before they adjourn for the year. Passing something next year—an election year for every seat in the lower house—may prove much tougher.

But dealing with the fallout of a Detroit Public Schools bankruptcy might be even more difficult. It’s hard to blame lawmakers for being skeptical of yet another attempt to save Detroit’s public schools. This proposal, however, adds layers of state oversight that weren’t there before – something the governor has failed to stress. He also needs to do a better job persuading legislators that the extra money for Detroit kids won’t be taken from their districts.

Nobody in Michigan will benefit if the state’s largest school district goes bankrupt. Fixing it will be hard to begin with, and may take political courage on many lawmakers’ parts.

What is certain, however, is that for everybody, from Detroit children to a state budget potentially saddled with new liabilities, the consequences of a Detroit Public Schools collapse could prove far worse.

Source: The Peril of NOT “Fixing” Detroit Public Schools

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