Detroit Public Schools Face Insolvency, Legislators Search for Solution

Published May 23, 2016

Children enrolled in the Detroit Public Schools (DPS) face an uncertain future, as the system still lacks a viable fiscal plan for the coming year and sustainable, long-term funding.

Earlier in 2016, the Michigan Legislature approved allocating $48.7 million to the Detroit Public School to avoid insolvency and a shutdown. The action funded DPS through the end of the school year, but a longer-term fix for the district’s financial woes is still up in the air.

Years of Mismanagement

The financial troubles of the DPS system have been a long time in the making, says Ben DeGrow, director of education policy at the Mackinac Center for Public Policy.

“Detroit Public Schools have experienced financial mismanagement for years, … and state-appointed managers have done nothing to reverse that trend,” DeGrow said. “This [trend] goes back years and years and years.”

DeGrow says much of the financial mismanagement and corruption in the city’s schools results from pension agreements and union contract obligations. He says money spent on new schools has often gone unaccounted for and wasted.

While costs of pensions and day-to-day operations have been rising, revenues have dried up over time as residents have left the city, DeGrow says.

“[DPS] has lost more than half of their student population in the last 10 years,” DeGrow said.

House, Senate Divided on Plans

The state Senate passed legislation in March 2016 that would, if passed, split the district in two, with one district existing solely to collect taxes and pay down the debt. The Senate’s plan would also grant a newly formed Detroit Education Commission (DEC) powerful oversight over DPS schools. DEC has a price tag of $720 million. 

The Senate’s legislation faces an uphill battle in the House, which has introduced its own plan to revamp the DPS system. The House plan doesn’t involve creating a new commission.

Peter Lund, Michigan state director for Americans for Prosperity, says the contentious element in the current debate over DPS funding isn’t the creation of a new school district.

“The biggest controversy right now is [about] who actually gets control of [DEC],” Lund said. “Whether it goes directly to the voters, whether the mayor is involved, will the state be involved? What type of oversight? Would there be financial [oversight] … or beyond that?”

Shortage of Charters

Another problem facing the city’s students and their families is a government-mandated shortage of charter schools, which has helped fill Detroit’s growing education achievement gap.

Lund says the Senate’s plan will block charter schools from being set up, “unless it’s by an existing charter provider that’s got a high rating.”

“I don’t think it’s right that we eliminate the opportunity for other good charter school providers to be able to go in and give more options to the parents and children of Detroit,” Lund said.

Lund says Detroit provides an ideal opportunity for charter schools, which operate essentially as education entrepreneurs filling needs in places where traditional public schools have failed.

“Literally, the Detroit Public Schools have at times had trouble getting toilet paper out to the students in the bathrooms,” Lund said. “I have yet to hear of a charter school where toilet paper was not being provided [and] the basics were not being provided. If that’s the case, let’s let the charters educate the kids, and more importantly, let’s let the parents decide where their kids will be educated.

“If [the system] isn’t working, if bureaucrat after bureaucrat after bureaucrat tries and fails to get that system to work, we need to look for other alternatives,” Lund said.

Andrea Dillon ([email protected]) writes from Holly Springs, North Carolina.