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Howes: Bankruptcy unlikely prescription for DPS trouble

Daniel Howes
The Detroit News

With Detroit Public Schools on track to run out of cash by spring, threats of another Chapter 9 spectacle are coming again from leading Republicans in Lansing.

They’re idle threats.

A financial restructuring of the district in federal court would not implement academic reforms or address chronic governance issues. Nor would bankruptcy relieve the district’s debt because it is backed by the taxpayers of Michigan, a sharp difference from the Chapter 9 case the city completed in roughly 15 months.

“Without these serious reforms, the option of bankruptcy must remain on the table,” House Speaker Kevin Cotter, R-Mount Pleasant, said in a statement. “Cutting a check without reforms does nothing but buy time for us to fall further behind.”

He may be exactly right about the cutting-a-check-without-reforms part. But officially bankrupting the state’s largest district risks imposing a remedy just as bad as the disease it is allegedly intended to cure — and leaving Detroit’s kids essentially to fend for themselves.

“I see no way that they would ever file for bankruptcy,” says John Rakolta, the chairman of Detroit-based Walbridge Co. who closely studied DPS’s finances as a co-chair of the Coalition for the Future of Detroit Schoolchildren. “There are no easy solutions here. There has to be structural reform of the district, how they teach, where they teach.”

Chapter 9 would expose the state to at least $1.5 billion in liabilities accumulated by DPS and backed by the state, more than double the $715 million price-tag (payable in 10 annual installments of nearly $72 million) attached to Gov. Rick Snyder’s DPS restructuring proposal.

Bankruptcy also would not directly answer some of the most contentious issues swirling around DPS: first, oversight of competing charter schools in the city and, second, how quickly an elected school board could be seated and empowered to govern the troubled district.

Time is slipping away for DPS. It soon will run out of cash, potentially pushing the district into some kind of federal court action. Its emergency manager, Darnell Earley, is quitting at the end of the month, capping a seven-year run of state control under four EMs with nothing to show but decline, anger, blame and managerial free-fall.

State lawmakers, increasingly desperate for a solution that could reach the governor’s desk, are abandoning the Education Achievement Authority that the governor pushed for the city’s most troubled schools, gutting an effort that drew philanthropic support and fierce political opposition at the same time.

Like an aging auto plant building too few models, the lumbering district is carrying capacity for 85,000 students in a district populated by roughly 43,000, an unsustainable disparity. Its bloated central administration remains basically unchanged, even as its teaching staff and student headcount have declined steadily the past 15 years.

Civic and business leaders who’ve studied the district’s financial, academic and social challenges struggle to coalesce around a single prescription. Documented cases of public corruption (see Kenyetta Wilbourn Snapp) suggest the practice is more widespread.

Teachers are in revolt, egged on by a radical union leader whose only “crime” is pointing out the deplorable conditions found in so many city schools. Parents, DPS supporters and members of the Legislature’s Detroit Delegation are frustrated with the slow pace of legislative remedies and fearful of how draconian those fixes may be.

They should be concerned. A district saddled with so much debt, too many buildings, too few students, chronic absenteeism and awful management is a district that cannot be fixed solely by Lansing wiping the financial slate clean. Like the city before it, whoever leads DPS in the post-EM era will need to reckon with politically charged reality as it is; otherwise the district will be back in the same spot just a few years from now.

Into this morass step competing proposals from the state Senate and the state House, the latter’s including barely veiled whacks at Detroit’s teachers unions, their defined-benefit pensions and other items of collective bargaining. The GOP temptation to use the current crisis to extract concessions from the battered union risks something else, however:

A broader battle between the GOP leadership and teachers unions statewide. House legislation to impose 401(k)-style accounts on teachers and winnow collective bargaining rights in Detroit likely will be seen as a proverbial camel’s nose under the tent. Once the precedent is set, others will try to follow.

That might be a battle or two too many for a GOP majority. Emergency managers inside DPS, enabled by Republican lawmakers, have a demonstrated record of failure — and using a crisis to score an ideological win won’t change that sorry fact.

(313) 222-2106

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.