Howes: Payback trumps trust, reality in DPS bailout

Daniel Howes
The Detroit News

Evidently the players in the Detroit Public Schools end-game learned little from the epic bankruptcies of the city and its two hometown automakers.

Instead of offering a package that could entice adversaries toward what could be a consensual settlement, House Republicans are pushing a bare-bones bailout that proposes to retire the district’s debt of roughly $500 million. But give it enough capital to stay out of debt, as the state Senate proposes, and to help rebuild the district?

Naw, not when the majority can condition its rescue on accompanying anti-union legislation that would limit collective bargaining and stiffen penalties for illegal strikes, payback for the Detroit Federation of Teachers’ attitude in general and the union’s sickouts to protest the real prospect of payless paydays in particular.

Instead of quietly warning interim DFT President Ivy Bailey that the district could have trouble making payroll after June 30, the retired federal bankruptcy judge-turned-emergency manager, Steven Rhodes, drops the news in a letter that is promptly leaked to the media and union members, ensuring the sickouts (or lockouts, in Bailey’s telling) that followed.

If this is Gov. Rick Snyder’s way of using his EM to create a crisis and pressure the GOP majority into moving on legislation it clearly detests, the move failed. House Republicans are pushing paper produced in a marathon all-nighter that no one — not the Senate or the governor, not House Democrats or the teachers union, not the Coalition for the Future of Detroit Schoolchildren or Business Leaders for Michigan — seems to like.

Worse, Rhodes damaged his otherwise-sterling credibility with union leaders he, and his successors, will need to make any bailout work. Restructuring an educational eco-system as sensitive as a public school system in a situation as fraught as Detroit’s needs teamwork to succeed, and teamwork depends on something rare inside DPS: trust.

Instead of learning from the mistake, Rhodes late last week issued an “Open Letter to the Detroit Community” that presumed to lecture the district’s teachers: DPS “is fragile in it finances, in its ability to compete and in its relationships, especially with those to whom it is accountable.”

Who knew? Publicly laying this sermon on teachers (and parents and anyone else who cares about fixing public education in Detroit) is neither helpful nor smart. This town has accumulated a lot of unwritten rules in its labor-management ethos. One of them is that management offers harsh criticism and condescending advice in private, or it pays the price publicly.

Not good, maybe, but it’s reality some people still need to learn the hard way. Look, most of what Rhodes wrote is true: the sickouts did puzzle, anger and alienate legislators “considering lifesaving legislation” for DPS; they did keep kids out of classrooms for two days, depriving many of hot meals; they did undermine DPS’ ability to retain students and attract teachers.

“It diminished, on the threshold of collective bargaining, our productive and mutually beneficial relationship with DFT leadership,” Rhodes wrote. Arguably so did using the specter of payless paydays to spark a chain reaction that would a) rouse teachers to action to b) pressure resentful Republicans into cutting a deal that would cost the state far less than the district’s outstanding liabilities of at least $3 billion.

“The district is quickly running out of resources to operate,” Moody’s Investors Service wrote in a note Monday. “The legislature now has less than two months to compromise on a reform package or the district’s financial position will force a bankruptcy filing.”

In a statement, Business Leaders for Michigan CEO Doug Rothwell warned that “Michigan’s fiscal stability will be adversely impacted by delaying actions because of potential liabilities of up to $4.8 billion under a bankruptcy proceeding, substantially higher than the cost of a reform package, which the governor and Senate believe to be $715 million.”

Several things are undeniable here: first, state control of DPS for much of the past 16 years, and state backing of district debt that the state allowed DPS to issue, means the state will be underwriting the workout. Second, the timing of the DPS corruption roll-up that netted a dozen principals and a Franklin businessman in a kickback scheme is a positive, not a negative, because it means the feds are watching — and acting.

And, third, the teachers union is a fact of life in Detroit public education. Any restructuring of DPS requires the support of the DFT, just like the restructuring of Detroit’s automakers required the support of the United Auto Workers. The ingredient that made it work is trust grounded in the reality of their predicament.

All sides in the DPS stand-off aren’t there yet, even as the dollars disappear and the prospect of an uncontrolled collapse increases. The teachers understandably want a forensic audit to understand where the money went; the Republican Legislature says no, an expensive process also likely to implicate the state in mismanagement of the district.

Litigating grievances of the past may be satisfying, but it won’t build trust or solve a worsening problem that, like it or not, cannot be denied.

(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.