In Michigan, Out-of-Control Charter Sector Diminishes Equitable Access to Quality Education

Buried in news about the hurricanes, several in-depth articles have explored the emergence, growth and impact of school privatization. There has also been fine reporting on the retreat from school integration and multicultural studies in public schools.  This blog’s four posts this week will highlight important reports that trace how public policy in education has been playing out over time in Detroit and Highland Park, Michigan; in St. Louis, Missouri; in metropolitan Birmingham, Alabama; and in Tucson, Arizona.

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Watching her Congressional confirmation hearing, one could sense that Michigan’s Betsy DeVos is unsuitable for the position she now holds as Secretary of Education, but for those willing to learn how absolutely unfit she is to lead the federal department that administers federal policy for the nation’s public schools, Mark Binelli’s NY Times Magazine profile of school privatization in Michigan will provide the details.

In Michigan Gambled on Charter Schools. Its Children Lost, Binelli traces the history of Michigan’s venture into school privatization—the primary players and the intellectual foundation for the movement as it was articulated by the Mackinac Center: “Over the last 30 years, the Mackinac Center, which was founded in 1987 by, among others, John Engler, a Republican state senator, has become a model for state-level conservative policy shops around the country. When Engler was elected governor in 1990, the intellectual foundation of his signature policy issue—education reform—came via a Mackinac Center white paper that pushed school choice as a means of breaking up the ‘bureaucratic monopoly’ of a public-education system smothering risk-taking and entrepreneurial moxie.  The author of the study, Lawrence W. Reed—then the center’s president—argued that it was time ‘to put our faith in the virtues that made America great in all areas where they have been tried: competition, private initiative, and, of course, consumer choice.’  He cited private-school vouchers as a possible model and also gave a nod to an experiment taking place in Minnesota, where they were testing ‘independently run public schools, known as ‘chartered schools.’… Betsy DeVos, a wealthy, deeply religious conservative willing to spend millions of dollars lobbying for a radical redefinition of public education, and her husband, Dick, the heir to the Amway fortune, provided significant financial backing to the Mackinac Center, as well as to pro-charter lobbying groups like Teach Michigan and their own Great Lakes Education Project.”

As governor, John Engler passed a 1994 ballot initiative that was sold as a way to equalize school funding. It would make all districts depend equally on a state per-pupil distribution of sales taxes, though legislators from Detroit’s wealthy suburbs, of course, ensured that school districts could still add local contributions to supplement the state allotment.  When Michigan’s economy sagged and wealthy districts continued to supplement their own budgets with local taxes, the chasm between wealthy and poor districts deepened. Privatization was sold as the remedy.

Binelli covers a maelstrom of problems spinning together— inequality, racial segregation, the economic collapse of Michigan’s poorest cities, deregulation, and the ideological attack on government itself: “Charters continue to be sold in Michigan as a means of unwinding the inequality of a public-school system in which districts across the state, overwhelmingly African-American—Detroit, Highland Park, Benton Harbor, Muskegon Heights, Flint—grapple with steep population declines, towering financial obligations, de-industrialization and the legacy of segregation.  By allowing experimentation, proponents argue, and by breaking the power of teachers’ unions, districts will somehow be able to innovate their way past the crushing underfunding that afflicts majority-minority school districts all around the country.” “Today, all but seven states have some version of a charter law, though few have adopted a model as extreme as Michigan’s. Twenty-one states have a charter cap, 31 require charters to submit annual reports and 33 have statewide authorizing bodies. Michigan, abiding by none of those rules, has allowed 80 percent of its own charters to be operated by for-profit EMOs (Education Management Organizations).  Only 16 percent of charters nationwide are run by for-profit companies.”

Throughout his analysis, Binelli threads the story of Carver Academy, a charter school in Highland Park, a Detroit-area school district turned over by its state-appointed emergency manager in 2012 to the Leona Group, a for-profit EMO: “The state’s solution that year was to ‘charterize’ the entire district: void the teacher’s union contract, fire all employees, and turn control of the schools to a private, for-profit charter operator. But enrollment at Highland Park High (School) continued to decline, so the state closed the school in 2015. Highland Park now has no high school, either public or charter.” (Filling in an important detail, Wikipedia reports that Carver Academy, the school Binelli profiles, left the Leona Group in 2016 and found another authorizer, Bay Mills Community College.)

One of the enormous problems Binelli profiles is Michigan’s problem with myriad, unaccountable charter school authorizers: “Perhaps the most startling feature of Michigan’s system is its lack of centralized oversight. In most of the country, state governments play some role in determining who can open charter schools and monitor their progress. But Engler ceded nearly all control to dozens of groups throughout Michigan—universities and community colleges, as well as existing public school districts.” Highland Park’s George Washington Carver Academy, a PreK-8 charter school that Binelli profiles in depth, is authorized by the Bay Mills Community College (B.M.C.C.), “owned and operated by the Bay Mills Indian Community, an Ojibwa tribe with over 2,000 members and 5.5 square miles of reservation land” along Lake Superior in Michigan’s Upper Peninsula. “In 2003, the tribe started its own K-8 charter, which would offer classes devoted to Ojibwa language and culture. In addition to serving as authorizer for the tribal school, Bay Mills Community College began authorizing other schools around the state. Today, with 42 schools in locations as far-flung as Flint, Benton Harbor and Detroit, B.M.C.C. is the third-largest charter authorizer in Michigan.”

Binelli takes us to the meeting of the review panel where a committee at Bay Mills Community College evaluates several charter schools under its sponsorship—their financial and academic performance—to determine their future.  Bay Mills Community College’s president, Mickey Parish chairs the meeting. Later Parish explains privately to Binelli that there is little incentive for B.M.C.C. ever to close a school: “After the meeting, when I spoke with Parish alone, he acknowledged that the 3 percent fee (paid to authorizers by the state), beyond covering charter-office expenses, ‘does provide a little bit of extra money to help our college activities.'”

Carver Academy is, however, being more carefully investigated, by Oak Ridge Financial, a business that makes its profits by working with Michigan’s financially fragile charters. When Sylvia Brown recently became became Carver’s school principal, not only did she take over the responsibility for improving the academic achievement of Carver’s students, but she also faced the need to keep the school going despite its heavy debt load, which she sought to refinance: “When Brown took over at Carver Academy, one of the many problems she inherited was enormous real estate debt. The problem is not uncommon: Michigan does not mandate that its charter schools buy or lease property at fair-market prices, resulting—predictably—in wildly inflated real estate spending. In Carver’s case, the situation was especially frustrating because the debt was a legacy from yet another for-profit entity… It contracted (in 2000) with a for-profit EMO called Mosaica Education. After only a year of operation, Carver, still run by Mosaica, signed a mortgage agreement to buy and upgrade the school property for $7.1 million—the loan Brown found herself facing 17 years later.” The refinancing partnership with Oak Ridge Financial eventually falls apart, and Brown faces the need to shop around for another financial partner. Binelli describes the financial analysis of Carver Academy’s problems by Scott VanderWerp, who runs Oak Ridge Financial: “Carver’s debt made no sense to VanderWerp: $6.5 million of debt on a building that’s surrounded by public-housing complexes, in a place where 49 percent of people live under the poverty rate. ‘The crime rates are high, there are vacant buildings everywhere… I think you’d readily agree that the building and land isn’t worth $5 or $6 million. Quite candidly, it’s probably worth $500,000 or $600,000.’  He said charters often entered bad deals because authorizers and school boards, which must approve loans, lacked a basic understanding of bond finance.” Binelli adds, describing another serious charter school real estate problem, in many cases charter school management companies themselves acquire buildings, remodel them cheaply as school facilities, and then charge outrageous rents to the very schools they themselves manage, a clear conflict of interest.

Please read Mark Binelli’s fine report: Michigan Gambled on Charter Schools. Its Children Lost. It is impossible adequately to summarize Binelli’s nuanced analysis of the public crisis that has derived from Michigan’s ideologically driven experiment with privatization. Due to the school district’s size and the sheer number of charter schools, Detroit has become the epicenter of Michigan’s charter school problem. Binelli explains: “Last year, State Senator Geoff Hansen, a Republican from the tiny city of Hart, tried to rein things in. Setting his sights on Detroit, Hansen sponsored a bipartisan bill that would have increased oversight of charters in the city, creating a seven-member Detroit Education Commission with mayoral appointees and a mandate to determine where new charter schools could open and whether existing schools would expand or be closed. The bill passed the Senate with the support of Gov. Rick Snyder, a Republican, and Detroit’s Democratic mayor, Mike Duggan, but it was derailed in the 11th hour by Republicans in the… (House)—thanks in large part, to the lobbying efforts of the DeVos family, which, The Detroit Free Press reports, showered the state Republican Party with ‘near-unprecedented amounts of money’ during the campaign cycle.”

Even from Its Deathbed, Michigan State-Takeover EAA Continues to Rob Detroit District

Michigan’s governor, Rick Snyder, has done everything he could to privatize and take over and bankrupt the state’s poorest school districts.

Since 2012, Muskegon Heights and Highland Park were turned over to Mosaica and the Leona Group, private, for-profit charter management organizations. Both went broke and abandoned these projects. The state has also intervened in other poor districts like Inkster and Buena Vista and Pontiac with closures and takeovers and privatization the only result. Then there have been the governor-appointed austerity emergency managers, put in place to cut costs.  In Detroit a succession of these so-called fiscal managers burdened the Detroit Public Schools with a staggering long-term debt of $3.5 billion. Then there has been the out-of-control charter school sector that has sucked students and money out of Detroit’s public schools, but even as the legislature passed a plan in June to restructure and ameliorate the district’s debt, lawmakers left out the proposed Detroit Education Commission, which had been designed to provide some oversight of school choice district-wide.

On top of all this, there has been Michigan’s Education Achievement Authority (EAA), a state takeover district created by the Snyder administration back in 2012 in collaboration with Eastern Michigan University and modeled on Louisiana’s Recovery School District.  Its supporters said state takeover would improve Michigan’s lowest-achieving schools through the imposition of state management.  The Education Achievement Authority never did well enough to expand beyond the 15 Detroit schools it originally seized. John Covington who was brought in as EAA’s chancellor, purchased from a private contractor the expensive, ineffective electronic BUZZ curriculum that, it turned out, was still in the development stage and not fully functional. Covington was forced out after a scandal about his personal expenses. EAA was always unpopular with Eastern Michigan University’s board of regents, who finally voted last February to pull out, effectively setting an 18 month sunset for EAA.  It’s final demise is guaranteed by the new legislative rescue plan for Detroit’s schools.

But the damage wrought by the Education Achievement Authority continues to surface even as its demise is guaranteed. Early this week it emerged that the EAA owes Detroit Public Schools millions of dollars. Here is reporter, Shawn Lewis in the Detroit News: “The Education Achievement Authority owes Detroit Public Schools $14.8 million in unpaid rent for the use of former DPS classroom buildings, plus information technology and safety services for fiscal years 2015 and 2016….”  Lewis adds that last February, the EAA’s current state-appointed chancellor, Veronica Conforme, asked then-Emergency Manager Darnell Earley (of Flint water notoriety) for relief from the debt.

All this emerged as internal e-mails were made public this week, including one that was sent by Thomas Saxton, of the State Treasury Department, to officials in the governor’s office: “In February, the EAA (Veronica) approached Darnell at DPS with a request for relief from the aforementioned debt through an amendment to the lease agreement which would forgive all of the EAA rent debt… I advised Darnell not to sign it.  I have spoken to Veronica once about this and it has come up in conversation(s) with Steven Rhodes (the emergency manager who replaced Darnell Earley).  Darnell did not sign the amendment before he left and now Veronica has requested Judge Rhodes to sign it…. While we understand forgiving this debt would clear up the EAA’s books, it would be detrimental to DPS.”

Lewis writes that the debt being discussed in this e-mail conversation included $6.5 million for rent in 2016, $1.5 million for IT (information technology) services and $400,000 for safety services.  Lewis adds that on Monday of this week, Ms. Conforme announced that the EAA will pay the full amount for safety and police services, while EAA continues to negotiate with the Detroit Public Schools about the rent owed by EAA.

In a follow-up, Detroit Free Press reporter, Ann Zaniewski adds that EAA’s Chancellor Conforme believes the Detroit rescue legislation, adopted by the Michigan legislature in June, erased EAA’s debt to the Detroit school district for rent: “EAA officials told the Free Press that Conforme told state officials in the spring that the EAA was building its budget around the lease debt being eliminated… At an EAA board meeting in June, an EAA official said the annual fees the district is supposed to pay for using DPS buildings dropped from $6 million to $1 million because of recent education reform legislation.”

It’s not yet clear whether Detroit Public Schools, struggling to crawl out from under massive debt, will be able to recoup back rent from the state that is supposed to be involved in the negotiated financial rescue of the Detroit Public Schools.  What is clear is that the Education Achievement Authority, a state takeover imposed by the Snyder administration that was supposed to be another way the state would help some of Michigan’s poorest children by improving their schools, has just been one more drain on the budget of the Detroit Public Schools along with being an educational failure.

Here is the analysis of Thomas Pedroni, a professor of education at Wayne State University: “The revelation of the $14.8 million debt, which exists at Snyder’s pleasure, comes at a time when DPS children have faced a siphoning off of classroom dollars that might have been used to alleviate ballooning class sizes, repair dilapidated and dangerous buildings, and attract and retain high quality certified teachers in the district… Snyder’s control of the EAA, much like his control of Flint, has always been about enriching business opportunities whatever the cost to the health and wellbeing and future lives of Black children.”

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.