Cotter: Private cash would help Detroit school deal

Chad Livengood
Detroit News Lansing Bureau

Lansing — House Speaker Kevin Cotter said Thursday that an infusion of private cash into a rescue of Detroit Public Schools would make a $715 million plan to fix the district’s balance sheets “more palatable” to wary lawmakers.

“If there were support from the philanthropic community, that would make this a little easier,” Cotter told The Detroit News. “It’s very hard to justify taking money out of the School Aid Fund when it’s going to have an impact of $50 per kid every year for 10 years.”

Cotter weighed in Thursday on the vexing funding issue at the center of Gov. Rick Snyder’s push for the Legislature to assume $515 million of the Detroit school district’s unpaid bills and operating debt, and fork over another $200 million to create a new debt-free school district.

In doing so, the Mount Pleasant Republican scolded a coalition of Detroit civic, business and education leaders for “playing the blame game” in their effort to pressure lawmakers to assume DPS debt at a cost of $50 for each of Michigan’s 1.5 million school children during the next decade.

Coalition for the Future of Detroit Schoolchildren Co-Chair Tonya Allen, who also heads the Skillman Foundation, said Wednesday that lawmakers should not expect the philanthropic community to contribute to the debt-relief effort.

Foundations project to pour $350 million over the next decade into Detroit’s public education system through a variety of academic initiatives, Allen said.

“At some point or another, private philanthropy will make big investments in this, but we will not make investments to pay bad debt that was mismanaged ... while (DPS) was under the state’s watch,” Allen said at a meeting with reporters in Lansing. “That just isn’t good uses of our dollars.”

Cotter is suggesting foundations commit financially to rescuing Detroit’s schools in much the same way they did in Detroit’s bankruptcy “grand bargain” to shield the city’s art collection from being sold and soften the blow of cuts to pensions.

Regional and national foundations contributed $366 million toward a fund to aid retirees worth $816 million over 20 years. The Legislature contributed a $195 million lump sum payment to help settle Detroit’s bankruptcy in 2014 and spare the Detroit Institute of Arts collection from a fire sale to satisfy creditors.

Allen said Wednesday that philanthropic foundations are already spending $20 million annually on initiatives to improve learning in the city’s classrooms of DPS, charter schools and the state-created Education Achievement Authority.

Snyder’s office is not actively soliciting private or corporate contributions for fixing the Detroit school system, spokesman Dave Murray said Thursday.

“Certainly if someone wants to step forward and help with the effort, that’s appreciated,” Murray said. “Everyone has the common goal of improving academics for Detroit children.”

Cotter said the coalition’s bipartisan leaders have been focused on “bigger handouts and more power for the adults” since releasing a report on the state of Detroit’s fractured education system in March.

Republicans who control the Michigan House, the speaker said, “are going to want to see Detroit helping Detroit.”

Senate leaders have said they’re looking past the School Aid Fund to pay for a long-term revival plan for Detroit schools.

In a blistering statement, Cotter was even more direct in his criticism of the coalition’s leaders, who include GOP donor John Rakolta Jr., CEO of the Walbridge construction company.

“Blaming the state for the financial failures of DPS is like blaming a relief pitcher who enters the game in the ninth inning already down 20 runs,” Cotter said. “It is both an absurd claim and a ridiculous discussion that offers nothing productive to the conversation.”

“If the coalition is so hell-bent on preventing a deal to reform Detroit’s schools, they should do the right thing for the kids and stand aside so the rest of us can work together to try to fix.”

Rakolta has been one of the harshest critics of the state’s management of DPS over the past six years under four emergency managers. Earlier this year, Rakolta and other business leaders spent weeks pouring over the finances of the Detroit district and have warned of a looming financial disaster if the state doesn’t relieve the district of debt payments that amount to $1,100 per student.

“The state of Michigan is both the lender and the borrower in this whole mess,” he said Wednesday.

Rakolta said debate among lawmakers over the future governance of Detroit schools remains the “undercard” issue.

“The main event’s the money,” he said. “The main event’s going to be far, far harder to solve. It’s a very large amount of money, and the state doesn’t just have that laying around.”

Rakolta and Snyder have portrayed the $715 million rescue plan as an out-of-court alternative to bankruptcy, where the state could be exposed to another $2.8 billion in debts for DPS pensions and school improvements.

“We have a choice between allowing a system to totally collapse or having a workout,” he said.

Rep. Tim Kelly, chairman of the House’s School Aid appropriations subcommittee, has been a critic of Snyder’s request for a rescue of DPS and was dismissive of the existing foundation spending in Detroit schools.

“(The Skillman Foundation) is an organization that claims it has joined other foundations in contributing $20 million a year to promote academic achievement in Detroit Schools, yet the district’s test scores are among the worst in the country,” the Saginaw Township Republican said in a Thursday statement. “Does it not share responsibility for the lack of achievement being done in the classrooms?”