NOTE: This letter ran in the Commentary Section of the Detroit Free Press on April 22, 2015, following Governor Snyder’s announced plan for public education in the City of Detroit.
In late March, the Coalition for the Future of Detroit’s Schoolchildren issued its long-awaited report concerning public education in the city. The report focuses on all public schools in the city; not just Detroit Public Schools (DPS) but also charter schools and schools operated by the Educational Achievement Authority. While the report catalogs many of the academic challenges facing schoolchildren attending all types of public schools in Detroit, it directs considerable attention to the financial realities and struggles confronting Detroit Public Schools. Its key financial recommendation is for the State of Michigan to assume the responsibility for $124 annually of DPS’s financial obligations, including $53 million in annual debt service payments on borrowing to support current operations.
Current state laws dealing with financially troubled school districts do not provide these districts with access to additional resources or debt relief, either from state or local sources. The underlying assumption is that current resources are sufficient and better financial management will cure each school district’s money troubles.
Since 2012, state officials have taken steps to provide school districts in four Michigan communities with debt relief to erase their operating deficits. The state effectively assumed the operating debts of the Muskegon Heights School District, Highland Park City Schools, Inkster Public Schools, and the Buena Vista School District. Through the plans crafted for eliminating each district’s debts, state policymakers have acknowledged that some problems plaguing districts cannot be adequately addressed within the current funding allotted to them and that additional financial resources, and time, may be necessary.
Given these recent experiences, the Coalition’s recommendation for the state to assume DPS’s debts is not unprecedented. However, the authority for the state to assume the debts of struggling districts is not found in state policy, but in ad-hoc actions taken by state officials.
In many respects, the experiences of the Buena Vista, Inkster, Highland Park, and Muskegon Heights school districts served as the proverbial “canary in a coal mine.” While DPS is the most recent financially and academically struggling district to request direct state assistance with its debts, there are 55 other school districts across the state that began the current fiscal year in a deficit situation. A request from any of one of these districts, some of which are under the control of state-appointed emergency managers, may not be too far off.
If nothing else, the experiences to date yield two unavoidable conclusions: 1) policymakers have accepted the premise that some financial challenges facing school districts cannot be solved within existing resources and additional funds and/or debt relief may be needed specifically to address some legacy costs; and 2) the State of Michigan lacks a clear and consistent policy related to the provision of financial assistance and/or the assumption of school debts.
In anticipation of future requests for state assistance, policymakers should first give consideration to the lack of a long-term policy on the matter. Before entertaining the Coalition’s financial recommendations, or as part of the state’s response to the educational challenges in the City of Detroit, policymakers need to articulate a policy for when and how the state is going to provide additional financial assistance to struggling districts. Formulating such a policy should be a top priority of state policymakers.