Detroit's public schools expect to soon emerge from oversight

Christine Ferretti
The Detroit News

Detroit — The city's public school district expects to emerge next year from strict state oversight put in place as part of its historic financial bailout. 

Detroit Public Schools Community District Superintendent Nikolai Vitti said Tuesday that the district has posted three balanced budgets, has reserves and a $100 million fund balance. That, combined with increasing enrollment and student achievement, positions the district to have local control restored in January, he said.

Detroit Public Schools Community District Superintendent Nikolai Vitti said Tuesday that the district has posted balanced budgets, has a surplus and expects to be released from state oversight in January.

"We're optimistic that come January we should be released from that oversight," Vitti said after a Tuesday presentation before Detroit's City Council. "It's really continuing to empower Detroiters to make decisions for their own school district and not having outside entities review or influence those decisions."

Vitti said the exit, pending a January audit, would mean the school board would have more autonomy over the budget and authority over how tax dollars are spent, without strict oversight from Detroit's Financial Review Commission.

Detroit's old school district — which was run by state-installed emergency managers from 2009-16 — struggled with declining student enrollment, budget deficits, school closures, low state assessment scores and teacher shortages.

In 2016, Gov. Rick Snyder approved a $617 million bailout for the district to help pay off $467 million in operating debt and provide $150 million in start-up funding for Detroit Public Schools Community District, the new, debt-free district.

The review commission was first created in November 2014 to provide oversight of the city as it exited municipal bankruptcy Dec. 10, 2014. The commission reviews and approves budgets and establishes fiscal management requirements.

In June 2016, the review commission began its oversight of the schools, following the creation of the new Community District. 

Vitti said under Snyder, outgoing treasurer Nick Khoury outlined the conditions the district had to meet to be released from oversight and "we believe we've met those conditions."

The city met its milestones and emerged from state oversight in May 2018, a historic milestone that marked the first time in four decades that the city had full control of government operations.

Vitti on Tuesday also noted the most challenging issues for the district: teacher pay and funding for facility repairs. 

The Detroit News in April detailed the building conditions in the city's public schools, repairs with a price tag anticipated near $543 million and a district unable to collect taxes to address it.

Vitti on Tuesday stressed to the city council the need to lobby in Lansing against the financial inequities among school districts, including Detroit, as well as for a yet-to-be-identified statewide initiative to fund facility repairs. Lansing, he said, "does not provide one cent for facility funding to any district."

Vitti reiterated he's had conversations with the state, the city and its business leaders on possible solutions. 

The old public school district has no bonding capability and only functions to manage the district's legacy debt, which is $1.5 billion that's expected to be paid off in 2050 and another $450 million in operating debt that's estimated to be taken care of by 2025. 

Gov. Gretchen Whitmer's proposed budget called for the state to switch to a "weighted-funding formula" that included additional funding per student for those with more costly education needs. That provision, Vitti said, was not adopted by the Legislature, which did opt to boost a per-pupil funding plan. 

Later this month, Vitti said, the district will begin a series of "community conversations" at the district's high school buildings to discuss the condition of district buildings and needed investments as well as changes that already have taken place and others that are expected.

"Our children deserve the best," he told reporters after the meeting. "Obviously, that means quality facilities."