For the second time in 6 months, Governor Snyder outlined his plan to restructure the Detroit Public School system a week ago. The purpose is to help improve academic performance and to start paying down the more than half billion dollars in operating debt. The bailout deal for the city of Detroit made sense and has been very successful so far. But what about the public school system? Should the state start paying off the debt and further subsidize the operations of the Detroit public school system? Isn’t there an emergency manager system already in place to deal with public school problems? What about the other public school systems in Michigan that are also experiencing severe financial problems or may in the future? Is this proposal setting up a precedent for more state intervention across the state? Is this proposal showing a favoritism for one system at the expense of other public schools in the state? What is the “Right Thing to do?” Let’s look at some issues:
1. Detroit Public Schools lost close to 100,000 students over the past 10 years. The final enrollments for this year have not been released yet, but last year the district had about 47,000 students.
2. The plan proposes breaking the system into 2 pieces, the existing district that would deal exclusively with paying down the existing $515 million debt and a new Detroit Community School District that would be charged with everything else, from teaching the students to negotiating teacher contracts. The new legislation, expected to be introduced within a couple weeks would take effect July 1st.
3. The existing Detroit Public Schools would be phased out completely once the debt is paid off. The City’s Financial Review Commission would oversee the old district while the debt is being repaid.
4. Under the plan, the state would provide $70 million a year from the School Aid Fund for 10 years to pay off the debt, for a total cost of about $715 million. An additional $200 million would go to the new Detroit Community School District for startup funding and to cover expected operating losses due to potential declining enrollments. The new district would also be responsible for about $1.5 billion in pension obligations.
5. The new funding would come from the state school aid fund. It is equivalent to a $50 per student increase, although the Governor has said other school districts per-pupil funding amounts would not be cut. There are concerns that the increase could shift dollars from other state districts.
6. A new Detroit Education Commission would be created to govern the Detroit Community School District. Its members initially would be appointed by the Governor and Detroit Mayor Mike Duggan, with elections phased in beginning in 2017. The board would be majority elected by 2019 and fully elected by 2021.
7. A new Detroit Education Commission would be created, with oversight of the new Detroit school system, the Education Achievement Authority and charter public schools.
8. The Governor would not say whether or not the alternative to this plan is to take DPS into bankruptcy. Should the district default on its debt and enter bankruptcy, the cost to the state may be much higher than $715 million, because the total debt also includes the $1.5 billion in pension obligations.
9. DPS has been under the control of an emergency manager for years with the objective of getting the financial condition of the school district improved and under control.
10. Reaction by the legislature has been mixed. It is likely to be a challenge to get legislators outside Detroit to agree to the plan.
Is this new plan an admission that the emergency manager system is ineffective? Is there sufficient money in the School Aid Fund to support the increased funding for Detroit without impacting other state districts? Will this set a precedent to also bail out school systems currently under emergency managers, such as Benton Harbor, Flint, Saginaw and others? Is a DPS bankruptcy possible? What is the “Right Thing to do?” I appreciate that the Governor continues to support the revival of Detroit and education is a key foundation for that effort. However, without a system to provide support for other state school systems that may face the same financial obstacles after being under control of emergency managers, this plan is incomplete. The School Aid Fund has been financially challenged for years and may not have extra funding available to support the plan without impacting other districts. Education is critical for the entire state and to favor Detroit alone is not the answer to those issues we face.