House Speaker Cotter: Detroit schools face risk of bankruptcy without ‘serious reforms’
Lansing — House Speaker Kevin Cotter said Thursday a bankruptcy reorganization of Detroit Public Schools “must remain on the table” if lawmakers are unwilling to impose “serious academic and financial reforms” on the troubled school district.
A Senate plan that would codify Gov. Rick Snyder’s $715 million request to help DPS escape crippling debt and funnel more money into classrooms doesn’t do enough to address systemic issues in the district, Cotter told reporters on the House floor.
“I am interested, and my caucus is interested, in being problem solvers,” said Cotter, R-Mount Pleasant. “But we’re not going to be problem enablers. Just simply cutting a check for $715 million and returning control, I believe, is only enabling the problem.”
House Republicans this week introduced a new Detroit schools plan that would implement various academic reforms in the district, including an A-F grading system for individual schools and a third-grade reading initiative that would require the district to hold back struggling students.
The plan, which was immediately ridiculed by Detroit Democrats and unions, would also limit collective bargaining rights for district employees, penalize teachers who participate in “sickouts” and put new teachers into a 401(k)-style retirement plan.
While the Senate plan calls for school board elections in November, and Detroit Mayor Mike Duggan has called for an even faster transition, the House version would not restore a fully elected school board for at least eight years.
Sen. Morris Hood, D-Detroit, called the House GOP plan “insane” and argued that various provisions would “poke at the teachers who are trying to do an exceptional job under the conditions they’re up under.”
Senate Majority Leader Arlan Meekhof, R-West Olive, said Thursday the House package is unlikely to help ongoing negotiations in the upper chamber, where majority Republicans are trying to win over reluctant Democrats, especially members from Detroit.
Sen. Goeff Hansen, R-Hart, is sponsoring bills to create a new debt-free Detroit school district and said Thursday he is focused on getting bills passed that fix the school district’s finances before tackling academic reforms.
“The academic reforms are something we have to work on. Are there some things that could be in this package? Maybe, but I didn’t want to make it so broad that it creates a lot of problems,” Hansen told The Detroit News.
But Cotter threw cold water on the Senate plan Thursday, saying he would not put the initial bills up for a vote without consideration of some of the additional reforms proposed by the House.
“I wouldn’t vote for them myself,” Cotter said.
The Speaker noted that Democrats in both chambers spoke out against the Senate bills last month upon introduction.
“That tells me there probably isn’t a sweet spot in this one for a bipartisan plan,” Cotter said. “I haven’t closed the door to it, but for Republican support, there are going to have to be some pretty serious reforms.”
Retired U.S. Bankruptcy Judge Steven Rhodes, who oversaw the city of Detroit’s 2013-14 bankruptcy and is advising the Snyder administration on Detroit Public Schools, has warned lawmakers against allowing the district to go through a Chapter 9 reorganization.
The state Treasury Department has estimated a Detroit school district bankruptcy could leave the state on the hook for at least $1.5 billion of debt the district owes creditors, including the state’s own school employee pension fund.
John Rakolta Jr., co-chair of a Detroit coalition of civic and business leaders pushing for overhaul of the school system, said Cotter is trying to leverage changes to DPS that go beyond debt relief.
“Bankruptcy is the nuclear option, and I don’t think he really means that,” said Rakolta, CEO of the Walbridge construction company in Detroit. “But he has no other leverage, and he wants to get … meaningful reform.”
Cotter acknowledged that a district bankruptcy case could end up costing the state more money than a bailout, but he said he is not willing to put $715 million of additional taxpayer money into a “failed system.”
“To the extent that people want to hold out just for money and the return of control, I am perfectly comfortable keeping the option of bankruptcy on the table,” he said.
The House Appropriations Committee is expected to begin holding hearings on the new Detroit schools plan next week, even as the Senate continues to consider its own bills.
Sen. Coleman Young II, D-Detroit, denounced the House GOP plan Thursday during a floor speech.
“It puts cash above kids, it puts profit above people, and it’s wrong,” said Young, who also argued against imposing an A-F grading system on one school district without imposing it statewide.
“That’s just not fair,” Young said.
But House Republicans appear resolved to push for more changes to how Detroit’s low-performing public schools operate after earlier proposals to eliminate the district altogether failed to gain any political traction.
“This is the time to either make changes to DPS that can put it back on the path to sustainability and success or start from scratch,” Cotter said.