News Story

Blame Engler, Granholm and Snyder for Detroit Public Schools Financial Woes?

Don’t leave out parents choosing better, safer schools for their children

The Democratic-controlled State Board of Education recently released a statement that appears to blame Michigan’s state government for the Detroit school district’s crippling debt. The board wrote, “Detroit Public Schools has been under state control for nearly 15 years, and currently is experiencing its fourth Emergency Manager.”

Except, DPS hasn’t been under state control for a 15-year stretch, as the board states. Actually, it has been under state control two separate times. The first was for six years, and had the primary goal of correcting unsustainable district practices. The second state receivership began in 2009, after a 3 1/2-year period under local control. This second takeover came in the face of a disastrous decline in the number of students attending district schools and continues to this day.

The 3 1/2 years during which a local school board controlled the district began in late 2005. The district had no operational debt the first two years the local school board was in control. By 2009, though, the district had borrowed $218.9 million to cover day-to-day operations. That’s when Gov. Jennifer Granholm appointed an emergency manager to once again take over the district’s finances.

In an email, John Austin, president of the state school board, said it would be accurate to say DPS has been managed by governor-controlled bodies for nearly 11 of the past 15 years.

“The important thing now, per our resolution is that 1) all public schools serving Detroit school children — charters, EAA and DPS — need to managed for quality and access by one coordinating body — to end the chaos; and 2) that that body, and any new governance for DPS be run by people (mayor or board members) who are elected by the people of Detroit,” Austin wrote.

Among other things, this would give whatever local entity controls the Detroit public schools the power to shut down charter schools in the city.

One group that wants to bring back an elected Detroit school board also points to the state as the main culprit for the school district’s financial woes.

Earlier this year, the Coalition for the Future of Detroit Schoolchildren said as much in a report that advocated a bailout of the district that would mean $153 million a year in pension and debt payments.

The group's report read: “The state is liable for the debt, much of it accumulated while the state was in charge of the district.”

But Gary Naeyaert, the executive director of the Great Lakes Education Project, called the state-shaming agenda a “fantasy.”

The state of Michigan didn’t cause DPS’ problems, Naeyaert said, but was brought in because of its problems.

“Somehow the state was responsible for creating this debt because it was under their watch and somehow they have to pay it,” Naeyaert said. “That’s a fantasy argument.”

Naeyaert said Gov. Rick Snyder has bought into that fantasy by pitching a $715 million bailout of DPS.

John Rakolta, co-chair of the Coalition for the Future of Detroit Schoolchildren, responded to Naeyaert's "fantasy" claim.

"Of course its fantasy to think that the state is responsible, except for the fact that the state is the one that’s making all the decisions, not paying itself the annual $80 million MPSERS cost and borrowing an additional $50 million to fund cash flow shortage by using the numerous levers of government and credit of the state," Rakolta said in an email. "The fantasy is thinking that someone else will bail the state out. In the end the state owns the debt and will ultimately be the payer of last resort."

The problem was that Detroit Public Schools was failing to provide a good education and parents were leaving the district, Naeyaert said. And the more that parents left and took their foundation allowance with them (to other districts and charter schools), the further into debt DPS fell.

The first state receivership of the Detroit district was authorized by legislation signed by Gov. John Engler in March 1999. It created a school reform board that oversaw the district for five years. In November 2005, voters elected a new Detroit Public Schools Board of Education, which took back control of the district.

That local school board operated without a deficit for two years. But in 2007-08, Detroit Public Schools had accumulated a $139.7 million deficit. The next year that deficit grew to $218.9 million. On March 2, 2009, Granholm appointed an emergency manager to take control of the school district. Three more emergency managers would be appointed by Snyder in 2011, 2013 and 2015.

None of the emergency managers could downsize and cut costs quickly enough to keep up with an ongoing exodus of students from the school district. DPS enrollment has fallen from 168,213 in 1999-2000 to 47,160 in 2015-16.

Editor's note: This story was altered to add the comments of John Rakolta.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.