Before delving into Gov. Snyder’s debt plan for the Detroit Public Schools (DPS), let’s look at the current state of DPS. As of this year, Detroit is the nation’s lowest-performing urban school area. Only 6% of high school students are considered proficient in math, 4% proficient in science and two-thirds are not proficient in reading. Furthermore, enrollment has dropped nearly 100,000 in the past decade. Financially, DPS has accrued more than $483 million in accumulated debt that is growing each day. There also exists a combined capital and bond debt of $1.54 billion. In short, the entire educational landscape in Detroit is falling short of the needs of the students, parents and teachers. According to Gov. Snyder, “the kids in Detroit cannot succeed when their schools are struggling with failing academics and crushing debt. In order to have a strong Detroit, strong thriving schools are essential. They go hand in hand”.
Gov. Snyder’s plan for DPS’ debt is one that mirrors the “Old GM New GM” approach. Under the plan, the existing Detroit Public Schools would continue under the direction of the emergency manager (Robert Bobb) and the elected Board of Education. It would exist solely for the purpose of paying off the district’s debt. The state plans to contribute $53 million to $72 million annually to support this. A new district – the City of Detroit Education District – would operate the schools under the management of a seven-member school board. This board would contain Detroit residents initially appointed by the mayor and governor. Over a six year period, said appointees are to be replaced by elected members. A separate financial review board would have financial oversight of both the current and new districts to help ensure coordination, continuity and fiscal stability.
A new Detroit Education Commission, consisting of a five-member board jointly appointed by the mayor and governor, would serve as an umbrella organization that hires an education manager. Said education manager would oversee all traditional and charter public schools in the City, review performance and determine timeliness for poorly performing schools to show improvement or be closed. This individual would also administer a new enrollment application called KIDS (Kids In Detroit Schools). Parents can use this new system to select their top three choices for the child’s school. If a school ends up with too many students, seats are awarded using a random lottery system. If a parent is not awarded their first choice, they will receive their second preference. This process continues until all seats are assigned equitably.
In terms of debt relief, the plan calls for a mechanism meant to relieve the district’s debt while ensuring financial stability. The existing debt requires more than $1,100 per student be spent on paying down what is owed. Said mechanism is the existing local millage – about $72 million per year – to pay off debt. The state would then need to provide funding for the new district to offset this relocation of the millage until the district’s debt is repaid. Despite its appearance, Gov. Snyder refuses to consider his plan a bailout for DPS. Instead, he considers it a way to address the Schools’ debt, while making systemic changes to ensure the academic and financial failures of the past are not repeated
Initially, Detroit Mayor Mike Duggan expressed explicit disagreement with Snyder’s plan; and despite his pivotal role in appointing new board members, wished not to participate. During Mayor Duggan’s opening speech at the Mackinac Policy Conference, however, he offered a compromise. Said compromise calls for an elected school board whose financial decisions could be vetoed by a state-appointed financial review commission – the same structure He and City Council reside under in post-bankruptcy Detroit.
Recently, attention has been focused on DPS’ $1.2 billion in unfunded pension liabilities, and whether Snyder’s proposed new entities would actually solve the problem. Instead of addressing the pension liabilities, Snyder’s plan focuses almost entirely on reducing nearly half a billion in operating debt. It is not clear, however, that isolating the bad debt in a new entity changes the fact that Detroit schools need more money one way or another. According to Michigan State University professor and expert on municipal restructuring, Eric Scorsone, “it’s a game about what we are giving money to, and what looks better?” In other words, the proposal may be able to gain more support if it doesn’t require money for the failing DPS, but a fresh, new entity – City of Detroit Education District.