Tobacco tax dollars eyed for DPS rescue plan

Jonathan Oosting
Detroit News Lansing Bureau

Lansing –— There were signs of legislative progress and continued challenges Thursday in shaping a rescue plan to prevent the Detroit Public Schools from potential insolvency.

State lawmakers confirmed they are eyeing tobacco tax revenue to help fund Gov. Rick Snyder’s $715 million rescue plan for Detroit Public Schools. Finding an acceptable source of state aid for a bailout has been a contentious issue.

But Mayor Mike Duggan insisted Thursday that Detroiters need to control the city’s public schools if the state wants to see them turn around. In spirited testimony before a Senate panel, Duggan questioned the performance of state-appointed emergency managers who have run the Detroit Public Schools and the Education Achievement Authority, which took over 15 of the district’s worst-performing schools in 2011.

“The problem is that state control of local schools doesn’t work,” he said.

State Sen. Hoon-Yung Hopgood, D-Taylor, said Thursday the tobacco tax revenue is one of several sources that could be used to make up losses to the School Aid Fund if the Detroit district is split in two.

Hopgood is discussing draft legislation with Republican leaders as part of a larger discussion on Detroit schools and the potential for bipartisan compromise.

“What we’re trying to do is be comfortable with the package in a broader sense before we push that one forward, but we’re interested in being a constructive part of the solution,” Hopgood told The Detroit News.

Linking tobacco tax revenue to the Detroit schools plan is a real possibility, said Senate Majority Leader Arlan Meekhof, R-West Olive.

Bills introduced last month by Sen. Goeff Hansen, R-Hart, would split Detroit Public Schools into two entities. One would use an existing millage to pay down debt, while a new debt-free district would receive full state funding to focus on education.

The plan, backed by Snyder, would cost the School Aid Fund an estimated $71 million a year over the next decade, limiting potential funding available for other districts and making it a tough sell for legislators outside of Detroit. Tobacco taxes could be used to help backfill the School Aid Fund and hold other districts harmless.

“We’ve been talking to (Republicans), and they’re aware of the concept, and I think that this is something that helps the package,” said Hopgood. “It’s not relying on having all the kids in the entire state support this. Having other sources of state revenue support this, I think, makes sense.”

Michigan imposes a $2 tax on each pack of cigarettes. The state collected $940 million in tobacco taxes in fiscal year 2014, according to a January Treasury Department report. While most of the money was earmarked for specific purposes, $192.8 million ended up in the general fund for discretionary spending.

Meekhof said his office is exploring how much tobacco tax revenue could be freed up to backfill the School Aid Fund.

But control over public schools operating in Detroit could prove more contentious in the Republican-controlled Legislature. Duggan asked legislators to restore authority to an elected school board, calling for an August election.

“It’s been seven straight years of enrollment decline, deficits and school closings. It’s time that Detroiters retake responsibility for the schools in our community,” the Democratic mayor told reporters after testimony before the Senate Government Operations Committee.

Duggan also urged lawmakers to reconsider Snyder’s call for a Detroit Education Commission that could open or close traditional or charter schools in the city.

The charter school lobby has fought aggressively against the proposed commission, which was not included in the Detroit schools bills introduced last month.

Hansen told Duggan he wants to continue working with him but stopped short of saying the commission idea could become part of the package.

After the hearing, Hansen said the “challenge has always been trying to make sure that we have enough support to get things done,” suggesting Senate Republicans would be unlikely to vote for a plan with charter oversight.

The lack of standardized oversight has led to haphazard decisions and inconsistent academics in Detroit, Duggan said. More than 160 schools have opened or closed in Detroit in the past seven years, he told legislators, and while district academics are the worst in the state, 24 charters schools have performed even worse.

Dan Quisenberry, president of the Michigan Association of Public School Academies, said Duggan’s plan would create a “huge city-wide central school district” that wouldn’t work.

“The reality is the schools that are working have some power at more of a local level than he’s talking about,” Quisenberry said. “There are charter boards of Detroiters running their own neighborhood schools. What we need to do, that I think there is agreement on, is a statewide accountability system.”