Detroit Schools’ Pending Fiscal Collapse Endangers Over 45,000 Children

The public schools in Detroit, Michigan—a school district that serves over 45,000 students—may run out of money in April.  The mess is so complicated that it is hard to know even how to describe it.  How to address it would require strong leadership that appears to be lacking in Michigan these days.

The state is a one-party, all Republican state.  Its governor and legislature are unified in their commitment to lowering taxes through austerity budgeting.  In education they have also proven to be pro-privatization at least in the biggest and poorest cities.

One thing is certain. The kind of thing that is happening in Detroit is unlikely to affect your children personally unless you live in one of the 10 most distressed large U.S. cities profiled in the NY Times last week—Cleveland; Detroit;  Newark; Toledo; San Bernardino, Calif; Stockton, Calif.; Milwaukee; Buffalo; Memphis; and Cincinnati or a similar smaller city like Camden or Gary or Youngstown or Hartford or Flint. What is alarming is that Detroit’s public school crisis has not created any kind of urgent public sense that it must be remedied immediately.

The situation in Detroit’s schools has been a long time in the making.  A lot of deplorable choices have been made by politicians over the years.  Here are some of the major problems.

First, the school district has a staggering $3.5 billion long-term deficit.

Second, fifteen of Detroit’s schools were, several years ago, turned into a state Education Achievement Authority that has never encompassed more than this small group of the city’s schools.  Earlier this month, Eastern Michigan University’s Board of Regents voted to pull out of the EAA coalition, which will effectively eliminate this experiment that everybody agrees has failed to serve its students, but according to state law, phasing out the EAA will take 18 months.  The EAA’s current budget for 2015-1016 (all state dollars) is over $84 million that could be, one assumes, invested in the city’s schools.

Third, Michigan has, in Detroit, been committed to private management of schools through a rapidly expanded charter sector that has sucked children and money away from the city’s traditional public schools.  In June of 2014, a Detroit Free Press expose described the underwriters of a powerful pro-charter lobby in Lansing, investors like pro-charter, pro-voucher Dick and Betsy DeVos; Jim and John Walton, and J.C. Huizenga, founder of the for-profit National Heritage Academies.  The legislature has never created oversight of charter school authorizers to require them to shut down schools that perform poorly.  Seventy-nine percent of Michigan’s charter schools are managed for-profit, with nearly a third of the state’s charter schools located in Detroit.  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….’”

Julie Bosman in yesterday’s NY Times summarizes the depth of Detroit Public Schools’ fiscal woes: “(T)he district’s financial problems are crippling, officials said, The enrollment loss has resulted in a steep decline in revenue for the district, which depends partly on per-pupil funding from the state.  That has made it more difficult to reduce debt, maintain buildings and pay for fixed costs.”

Governor Rick Snyder and the Michigan Senate back a plan now being considered by the legislature to address the financial crisis in the Detroit schools, a plan that would, according to Michigan’s EclectaBlog, form, “two districts, one which has all the debt and another which would receive all the per-pupil state and federal funding and would educate kids…  A transfer of $250 million from the state’s general fund would be made to create a new DPS district.  A source of funding to pay off the district’s (immediate) $515-million debt has not been identified…  Detroit-area lawmakers are not happy with it, as you might imagine.”

EclectaBlog continues: “But that’s the ‘good’ plan.  Another plan being rolled out in the House of Representatives is such a blatant attempt to use Shock Doctrine politics to destroy public education that it is gobsmacking in its audacity.  Their plan restructures power to the democratically-elected Board of Education but not for eight years.  It also strips the right of teachers to collectively bargain for anything but wages and benefits.  Working conditions? Nope.  Work schedules? Nope…  The House’s approach would allow the new district to hire teachers with ‘alternate’ certification meaning that they wouldn’t have to be as qualified as teachers in any other school district.  It would also tie teachers’ pay and benefits to student academic progress despite the fact that most of what determines a child’s success in school is tied to his or her level of poverty.”

Darnell Earley, the emergency manager of Detroit’s schools who ended his tenure yesterday at the end of February—the very same emergency fiscal manager appointed by Governor Snyder to impose austerity budgeting on Flint and the man who presided over the lead poisoning of the city’s water supply, is described by the NY Times’ Julie Bosman defining what he expected of himself as the emergency fiscal manager of Detroit’s school district.  He was hired to impose austerity, and he seems satisfied with what he accomplished: “He said some of the mess had slowly been cleaned up.  Enrollment, which had dropped to 45,000 this year from 150,000 in 2000, had begun to stabilize.  He eliminated almost 90 administrative positions and whittled down the number of departments in the district’s central office.  ‘We’ve eliminated a lot of the bureaucracy.  I would like to think that we did what we needed to do. And we’ve set the Detroit Public Schools on a course of long-term financial solvency and long-term sustainability.'”  Despite that he claims to have established solvency and sustainability, Earley also confesses hopelessness unless, he says, the legislature enacts the Governor’s and Senate’s plan: “Without that, all bets are off.  The whole thing will just kind of bottom out.”

The editorial board of the Detroit Free Press is much clearer about the urgency of the problem than Mr. Earley seems to be: “Are the Republican leaders of the state House of Representatives so craven, so insensible to the fact that their work affects children, that they’d risk the futures of the 47,000 souls enrolled in DPS with a slate of ideologically driven ‘reforms’ sure to divide any vote along party lines?  Sadly we know the answer to that.”

What Does the So-Called Corporate Takeover of Government Mean?

Democracy has failed in Michigan.  In November, 2012, voters repealed a state law permitting the governor to impose state appointed austerity fiscal managers on local jurisdictions, but the legislature came back by the end of the year with a new, un-repealable, emergency manager law.  For years the state emergency managers running Flint’s water system have insulted citizens who complained about water quality at the same time the same officials knew about the rising level of lead and other toxic substances in the water but kept poisoning Flint’s children anyway.  And state emergency managers in Detroit’s public schools have run up a cumulative deficit of $3.5 billion at the same time they have neglected the decaying conditions in which children are expected to learn and teachers to work.  Citizens in Michigan’s poorest communities have been rendered powerless by the loss of checks and balances.

Through weeks’ of rolling sick-outs, Detroit’s teachers have tried to bring attention to the roof leaks and buckling gym floors and rodents (alive and dead) littering the buildings where they work.  Although photographs in newspapers have been distressing,  Michigan’s laws, as they have been adjusted in recent years, don’t really provide a path for citizens to regain control.  So last Thursday, according to Corey Mitchell writing for Education Week,  “The Detroit Federation of Teachers, along with the American Federation of Teachers… filed a lawsuit against Detroit public schools and Emergency Manager Darnell Earley, alleging that the district has failed to ‘provide a minimally adequate education and to properly maintain the schools.’  Parents and students are also named as plaintiffs in the lawsuit, the latest volley in a frenzied legal struggle between teachers and the leadership of the troubled state-run school district… Recent inspections of schools by city workers have uncovered numerous code violations including issues with mold, rodents, broken glass, and leaking roofs.  The lawsuit said district officials, including Earley, have allowed the condition of the schools to ‘deteriorate to the point of crisis’….” Mitchell adds that Darnell Earley, Detroit Public Schools’ current emergency fiscal manager—and previously the state emergency manager involved with Flint’s water poisoning—has turned (unsuccessfully) to the courts to try to prevent protests by teachers.  Now the teachers’ union is turning to the courts to demand that the state eliminate conditions that violate established building codes. We will have to watch to see if the courts can correct the overreach of the executive and legislative branches of Michigan’s government.

Jared Bernstein—formerly an economic adviser to Vice President Joe Biden and before that on staff at the Economic Policy Institute, and currently on staff at the Washington, D.C. Center on Budget and Policy Priorities—tries to help us put Michigan’s governance crisis in perspective: “I’m a hard-boiled policy wonk who’s been around the block enough times that I see little that surprises or shocks me.  But the recently publicized water crisis in Flint, Mich., did both.  The depth of government failure, the neglect and mistreatment of an already deeply vulnerable population, the potentially permanent damage to children’s brains, and the series of events that led to this tragic debacle, must be carefully examined for at least two reasons.  First, the fact that the richest economy on the globe failed to provide an essential public good is a symptom of government failure with which we must reckon.  Second such failure is not a benign accident.  It’s not a passive failure of lazy oversight.  It is a strategy to first break and then discredit the public sector, to undermine trust and inculcate disgust.  The beneficiaries of this strategy are the wealthy who will then push for smaller government and tax cuts.  Those who pay the price will be the people much like those in Flint.  And there are many more of the latter than the former.”

Bernstein describes the strategy of the so-called “corporate” reformers: “(W)e must recognize that government failure is not an accident.  It is a strategy of those who benefit from less government.”  “Fiscal cliffs, threats to default on the national debt, government shutdowns, the collapse of the budget process, unwillingness to compromise, ignoring facts and science that challenge ideology, and of course, as in Flint, the failure to provide basic public goods—all of these can make people say one of two things: 1) ‘the government is a corrupt mess with which I want nothing to do,’ or 2) ‘we cannot have a fair economy or decent society without a well functioning government.  So let’s get to work to make that happen.’  The problem with #1, of course, is that it denies the uncontroversial recognition that quality public goods are a hallmark of an advanced economy…. The problem with #2 is it is not clear how to ‘make that happen.'”

How does this all derive from our growing plutocracy?  Bernstein explains: “It is particularly hard to defend a functioning public sector when the concentration of wealth interacts with our uniquely money-fueled politics and policy.  Forty percent of the wealth in this country is held by the top 1 percent of households, and political science has clearly shown that politics favors their preferences and protects their wealth… Meanwhile, 42 percent of Flint residents are poor, compared to 17 percent for the state of Michigan… Racism is also in play: 57 percent of Flint residents are black, compared to 14 percent statewide… There are a lot more people who need a functioning government than exist in the top 1 percent.”

Michigan’s governor Rick Snyder has tried to diffuse responsibility by doing just what Bernstein describes: discrediting government at all levels—federal, state, and local.  In The Flint Disaster is Rick Snyder’s Fault, the Washington Post‘s Dana Milbank explains why we should not accept Governor Snyder’s attempt to convince us that, in Bernstein’s words, “government at all levels is a corrupt mess with which I want nothing to do.”  Milbank pins the blame on Snyder himself and on his philosophy of governing:

“(T)he Flint disaster, three years in the making, is not a failure of government generally.  It’s the failure of a specific governing philosophy: (Governor) Snyder’s belief that government works better if run more like a business… The governor, former head of Gateway computers, was first elected as part of the tea party wave of 2010 with a plan to use his tech industry skills to run Michigan. He spoke of ‘outcomes’ and ‘deliverables,’ called residents ‘customers’ and sought to ‘reinvent’ the state to make it business-friendly.  A centerpiece of Snyder’s agenda, and one of his first actions, was a new law that gave the state dramatic powers to take over failing municipalities and school districts by appointing emergency managers with unchecked authority.  Michigan voters killed that law in a November 2012 referendum, but a month later Snyder got the legislature, in a lame-duck session, to enact a law very similar to the one voters had rejected. This time legislators attached it to a spending bill so it couldn’t be undone by referendum.  The unelected viceroys had mandates to improve municipal finances but little incentive to weigh other considerations… Snyder undertook an arrogant public policy experiment, underpinned by the ideological assumption that the ‘experience set’ of corporate-style managers was superior to the checks and balances of democracy.  This is why Flint happened.”

A huge question as we move into February will be whether the stories of Flint’s water and Detroit’s public schools will just slip to the back pages of the paper and then out of the news altogether.  Or will we continue to pay attention to their meaning? Flint’s water-poisoning catastrophe and the deplorable deterioration of the Detroit Public Schools are evidence that our politics have dangerously veered away from the principles we learned in basic civics.

If you haven’t read Nobel Prize winning economist Paul Krugman’s important piece on Michigan from last week, check out Michigan’s Great Stink.  (This blog explored Krugman’s important piece here, and recently covered the problem of the loss of democratic governance in Michigan here, here and here.)

Will Flint’s Lead Poisoning Wake Us Up to Disaster of State Takeovers and Austerity Budgets?

State takeovers of various sorts have been a favorite policy response of governors and state legislatures who seek an efficient solution to the problems of America’s poorest cities and school districts.  The question today is whether the lead poisoning of Flint, Michigan’s water supply and the attempt for months to hide the seriousness of this situation, all under Emergency Manager Darnell Earley—now serving as Emergency Manager of the Detroit Public Schools—will sufficiently awaken the public to the widespread neglect by state governments of so many of our poorest cities and school districts.

Last August, the Alliance to Reclaim Our Schools released a major report, Out of Control: The Systematic Disenfranchisement of African American and Latino Communities Through School Takeovers, that traces the state takeovers of school districts and the abrogation of democracy as appointed state overseers commence to manage operations without the usual checks and balances imposed by elected boards of education.  That report describes the long-running New Jersey takeovers of Jersey City (since 1989), Paterson (since 1991), and Newark (since 1995); the Louisiana Recovery District that has fully charterized the New Orleans schools since Hurricane Katrina in 2005; the Tennessee Achievement School District that operates schools in Memphis and now in Nashville; the Michigan Education Achievement Authority by which Governor Rick Snyder has taken over 15 schools in Detroit since 2013; and two new state takeovers in 2015—the takeover of Milwaukee Schools that was logrolled last summer into the Wisconsin state budget, and Arkansas’ takeover of the schools in Little Rock.  The 2015 legislation to enable Ohio to take over Youngstown’s schools was too recent to have been covered in the report, and Nathan Deal’s proposal for a Georgia “Opportunity School District” has passed the legislature but must be affirmed by voters in a referendum in November, 2016.

Additionally, Michigan Governor Rick Snyder has the power to appoint emergency fiscal managers for municipalities and school districts deemed to be in financial emergency.  Emergency fiscal managers were first authorized by state law in Michigan in 1988.  In a referendum in November of 2012, the voters overturned the right of the governor to take over local municipal and school district juristictions deemed to be in financial emergency, but the all-Republican legislature came back with a tougher law that was passed before the end of that year. The 2012 law supposedly limits the tenure of austerity-budget emergency managers, but Governor Snyder has found a way to extend emergency management long-term.  Curt Guyette, an investigative reporter for the ACLU of Michigan explains: “(T)he managers were given extreme unchecked authority… (T)hey were given the ability to come in, clean up the problems and get out.  And so there was an 18-month time limit put on their terms.  Except that this governor is exploiting what amounts to a loophole in that law… (T)hese emergency managers serve for 17 months and 29 days, and the day before their term expires, they resign.  A new emergency manager is put in place, and the clock starts ticking all over again.  And they just shuffle them from one place to another.”

We now know that a couple of years ago, Michigan’s appointed emergency fiscal manager, Darnell Earley, approved a plan for Flint to save money by creating its own water system instead of buying already treated water from Detroit.  Chemicals to prevent release of lead from old, corroded pipes were not added to the water when Flint began taking water from the Flint River; the pipes corroded all over town; and the children of Flint began to experience epidemic lead poisoning.

Earley left Flint and was appointed Emergency Manager of the Detroit City Schools a year ago, not enough time for him to be blamed for all of the school district’s fiscal problems.  The state’s previous appointed emergency managers had already failed to correct a long-running financial crisis for Detroit’s schools, a crisis that has now culminated in the failure to pay required contributions into the state teachers’ pension fund and a practice of restructuring short term debt instead of making the needed payments.  Detroit City Schools currently have an accrued deficit of $3.5 billion.

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.”  Neither has the state legislature invested in public education, nor has the state devised a workable plan for equitable distribution of funding to help the school districts with the least capacity to generate local revenue. A new report from the Center on Budget and Policy Priorities documents that Michigan’s general state funding per student remains 7.5 percent lower than it was prior to the 2008 recession.

It is not only the emergency fiscal managers whose performance is in question in Michigan, but critics have also been raising very troubling questions about the other form of state takeover in that state, the Education Achievement Authority, that manages 15 of Detroit’s struggling schools. Michigan’s Education Achievement Authority was intended to have been expanded beyond Detroit, but low achievement and other problems have prevented its growth. Here is some troubling data released in mid-December: “Just one fourth-grader in schools run by the Education Achievement Authority—a state district created to turn around the worst performing schools in the state—passed the math portion of the exam…. Overall, only 1.2% of the students in the district passed in math and 5.6% passed in English language arts.  In some grades and subjects, not one student passed.”  Last spring, even Governor Snyder admitted to the failure of the Education Achievement Authority, when he issued an executive order to transfer the Education Achievement Authority from the Department of Education to the Department of Technology, Management and Budget, a department directly under Snyder’s control.  In his executive order, he declared, “Despite not achieving satisfactory outcomes, the current structure has neither implemented the rigorous supports and processes needed to create positive academic outcomes….”  In these words last March, Snyder condemns the results of the state takeover initiative he had himself created, though the test scores just released show no improvement under the new management plan he instituted last spring.

And there is more, this time about the implications of the state-imposed emergency fiscal manager on the Detroit Public Schools—news about cutting back on building maintenance under current Emergency Fiscal Manager Darnell Earley.  Here is Michigan’s Eclectablog: “Darnell Earley has been the Emergency Manager for DPS for a year now.  While the obscene state of many DPS schools is not solely on his shoulders, it’s clear that that he’s done nothing to solve the problems.  Once again, he has used the Emergency Managers’ toolkit of cutting, reductions, and other austerity measures to solve a problem that can only be resolved through investment and renewal… For months, labor unions and residents have been sounding the alarm that a plan by DPS to cut the number of certified, licensed boiler operators and switch to an untested, unmanned system of monitoring commercial boilers in schools is too dangerous.  Boilers are more likely to explode when not maintained and watched by licensed, certified operators… DPS is decreasing the number of operators from one per school to a one per every five schools… Getting to a school in time to avert an equipment failure that can cause an explosion will become almost impossible.”

Here is the analysis of Curt Guyette,  speaking in an interview with Democracy Now: “(O)ne of the things about the emergency manager law is that these managers were given extreme unchecked authority.  And the thinking was… they were given the ability to come in, clean up the problems and get out…  And the other thing is… the imposition of austerity.  This is what austerity looks like… So you have all the problems in these schools that you just reported on, because they’re treating it like a managerial problem rather than a structural problem.”  Guyette is asked to comment on the type of communities and school districts on which Michigan has imposed emergency fiscal managers: “With the exception of one, they are all majority African American.  And they’re also all very poor cities.  So this is a racial issue, and it’s a class issue.”

This blog recently covered the fiscal problems of Detroit Public Schools here.