Emergency Managers Burden Detroit Public Schools with Staggering Deficit

What is happening most notably in Detroit but also in Philadelphia and Chicago would not be possible in your public schools if you live in a prosperous community or a middle income suburb, or a small city or town with a mix of rich and middle income and poor families.  The plight of the public schools and their teachers and their students in these big cities and others scattered across the states is the result of structural poverty and powerlessness and the unwillingness of local and state officials to find a way fairly to serve the children.  As is happening right now in Detroit and Chicago, everybody is blaming the teachers’ pension funds and by extension blaming the teachers.

Here is what has actually been happening.  In Chicago the school district pays into the state teachers’ pension when required to do so, but then the school district borrows the money right back out.  In Detroit, the school district has pretty often over the years failed to pay in what is required.  It has not only withheld its own contributions, but according to a recent report from the Citizens Research Council of Michigan, it has sometimes missed contributing each teacher’s own share—the part withheld from each teacher’s paycheck. The financial morass is so convoluted and arcane that nobody can really understand the details.  The fact is that these school districts—and in Detroit the state emergency managers who were supposedly appointed to deal with the district’s financial crisis—have put the school districts so far in debt that nobody knows how to dig them out.

This week Detroit’s teachers have been staging a sick-out to bring attention to the problems in the schools where they work.  The Associated Press reports that on Tuesday the mayor of Detroit (whose city, by Michigan law, is a separate jurisdiction from the school district) visited some of the schools across the city.  He found a dead mouse in one school; in others he found children shivering in their coats all morning as the poorly heated buildings warmed up after a cold night.  Neither his visit nor the protests of the city’s teachers have speeded up any kind of solution coming from Lansing.  Reporting for The Guardian, Ryan Felton explains: “Teachers say students are already devastated by conditions in the district, which is facing financial calamity with liabilities of $3 billion.”

The district currently serves 47,000 students, and Republican Governor Rick Snyder has proposed splitting the district, turning more schools into charters, and using property taxes to pay off the debt instead of for educating the children.  Felton explains that nearly half the state’s per-pupil funding currently pays for debt servicing instead of educating the children.  One of teachers’ primary complaints is that class sizes are astronomical, a not-surprising situation in a district neglecting to hire more teachers it says it cannot afford.  Last April, John Eligon of the NY Times explained how Governor Snyder proposes to revamp the system and its finances: “The current district, with the emergency manager and current school board, will take on the operating debt and make sure it is paid off through a tax levy that collects about $72 million a year.  Meanwhile, under the plan, a new district called the City of Detroit Education District would be created and would rely on additional funding from the state of up to $72 million a year to operate.  The bond debt would go to the new district, to be paid down by a tax that is currently collected.”  It’s not hard to see why the president of the Detroit Federation of Teachers, Steve Conn, commented: “It’s just layer after layer of bureaucracy and playing funny with the money.”

The merits of Snyder’s proposal and its deficiencies are meaningless to date because Snyder, a Republican, has been unable to get his all-Republican legislature to weigh in on the plan.  Detroit’s problems are complicated by a declining population and an over-built, mostly for-profit, and largely unregulated charter sector.  As charter schools have rapidly expanded, they have sucked students and state funding out of the public schools.  Even Robin Lake, of the pro-charter, pro-choice Center on Reinventing Public Education at the University of Washington, questioned her previous assumptions about the expansion of school choice after she observed the problems in Detroit: “Whose job is it to fix the problems facing parents in Detroit?  Our interviews with leaders in the city suggest that no one knows the answer.  It is not the state, which defers oversight to local education agencies and charter authorizers.  It is not DPS (Detroit Public Schools), which views charters as a threat to its survival.  It is not charter school authorizers, who are only responsible for ensuring that the schools they sponsor comply with the state’s charter-school law.  It is not the mayor, who thus far sees education as beyond his purview.  And it is not the schools themselves, which only want to fill their seats and serve the children they enroll.  No one in Detroit is responsible for ensuring that all neighborhoods and students have high-quality options or that parents have the information and resources they need to choose a school.  ‘It’s a free-for-all,’ one observer said. ‘We have all these crummy schools around, and nobody can figure out how to get quality back under control….’”

Here is the conclusion of the new report from the Citizens Research Council of Michigan: “Detroit Public Schools has $3.5 billion in outstanding debt.  Nearly half of this amount, $1.67 billion, is capital liabilities payable with a dedicated millage… The balance of DPS’s liabilities are related to legacy costs and repaying short-term borrowings converted to long-term debt by state-appointed emergency managers.  This includes $1.3 billion that represents DPS’s estimated share of the unfunded actuarial accrued liabilities for retiree pension and health care costs…. A plan that solves the district’s money problems without addressing what is taking place in the classroom will not set the district up for future success.  Similarly, any financial plan that only deals with the district’s near-term fiscal woes (cash flow for example) will not prove lasting and will not support student learning over the long haul if current financial problems are shifted to future students.”

In Michigan’s poorest urban areas it has been pretty clear that Governor Snyder’s appointed emergency managers—people whose power is not constrained by checks and balances as they can override locally elected city councils and school boards and are given the power to abrogate union contracts—have been neglecting the needs of children. The lead poisoning of Flint’s public water supply, under Darnell Earley, Snyder’s appointed emergency manager of that city, has been widely reported. Now we learn that Governor Snyder has appointed Darnell Earley as the emergency manager of the Detroit Public Schools. While the schools’ financial crisis predates Earley, Snyder’s appointment of Earley to lead Detroit’s public schools ironically highlights how absolutely Michigan is failing to protect the basic rights of the state’s poorest children.

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10 thoughts on “Emergency Managers Burden Detroit Public Schools with Staggering Deficit

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