Michigan Senate approves $715M DPS package

Jonathan Oosting and Chad Livengood
The Detroit News

Lansing — The Michigan Senate on Tuesday approved a $715 million plan to rescue Detroit Public Schools from insolvency and accumulated debt, but the bipartisan bills may face a bigger challenge in the more conservative state House.

The package was backed by Gov. Rick Snyder and Detroit Mayor Duggan, but divided majority Republicans. The state Senate approved the main bill in a 21-16 vote despite opposition from half of the GOP caucus.

The bills received backing from Metro Detroit Democrats, including Bert Johnson of Highland Park, Virgil Smith of Detroit and David Knezek of Dearborn Heights.

“The time for blame is well past. Now is the time for solutions,” sponsoring Sen. Goeff Hansen, R-Hart, told his colleagues before the vote.

The plan would allow Detroit schools to “hit the reset button and begin anew,” he said. “This will put $1,100 per student back into the classroom instead of paying down debt.”

Lawmakers are moving quickly on a financial bailout because the district is projected to run out of cash by April 8. But the two Republican-controlled chambers have different approaches to rescuing the state’s largest school district.

House Speaker Kevin Cotter, R-Mount Pleasant, wants the Senate to approve a $48.7 million emergency aid bill for DPS along with an accompanying bill placing the Detroit school district under the supervision of the city’s Financial Review Commission.

Cotter wants to put off working on the long-term overhaul of the Detroit district until after the Legislature’s two-week spring break, which begins Friday.

“I don’t see what the legitimate argument is against subjecting DPS to the Financial Review Commission,” the speaker told reporters.

The Senate included the commission in its package of bills, but the House can’t vote on the Senate bills this week because the state Constitution requires a five-day period for bills to pass between the chambers.

Cotter said he wouldn’t delay the break to vote on the Senate bills next week.

“The Senate could act within the two days we have remaining,” he said.

If the Senate doesn’t act on the two House bills, Cotter said, “I think we could expect that come April 8 or shortly thereafter that the schools would be closed.”

Some House Republicans remain skeptical that the Detroit school district is running as financially efficiently as possible, despite the work of four cost-cutting emergency managers over the past seven years.

“It doesn’t seem to teeter on the money,” said Rep. Peter Pettalia, R-Presque Isle. “It teeters on the efficiency.”

House Republicans have proposed a transition to a 401(k)-style retirement plan for DPS employees and limitations on collective bargaining rights on Detroit teachers to allow for more privatization of district operations.

House Detroit Democrats have opposed the GOP plans as well as letting the state maintain control of the school district’s management.

The Senate plans a Thursday vote on the House package.

The legislation approved Tuesday does not include direct appropriations for the Detroit school district, beyond making available up to $300 million in loans to cover transition costs. But the package would facilitate Snyder’s plan to split the district in two, leaving the old district to pay off debt.

The governor has proposed spending roughly $72 million a year in tobacco settlement revenue to cover associated costs over a decade.

Why Duggan backed plan

Duggan endorsed the plan earlier Tuesday after Senate Republican leaders agreed to include creation of a Detroit Education Commission that would have the authority to regulate the opening of new traditional or independent charter schools.

The package would also create an A-F letter grade system to rate all schools in the city and could lead to closure of traditional or charter schools that receive failing grades for three consecutive years.

Johnson voted for the legislation but said the district still has work on academic reforms, which he hopes will occur at the local level. He criticized state oversight of the district, which has been under control of emergency managers off and on for several years, and urged his colleagues to lobby members of the House for support.

“There’s a lot there that we need, and we need now,” Johnson said of the Senate package. “We need not play any politics, in particular if you look at what the House may be looking to lob over here.”

The Senate legislation calls for school board elections in November. The financial oversight board set up to monitor the city after its Chapter 11 bankruptcy case would also oversee the school system.

Sen. Patrick Colbeck, R-Canton, criticized the bills, saying the rescue package was “eerily similar” to funding the Legislature approved in 2014 to facilitate Detroit’s exit from bankruptcy.

“That’s $72 million that will not be distributed to communities in my district,” he said.

But Knezek praised the package because it would not draw funding from the Michigan School Aid Fund. He said it would allow the state to pay down DPS debts, but “not on the backs of other children.”

Senate Republicans were split on the package, with 13 members voting for the main bill and 13 voting against it.

“We have other people that are thinking about their political future and don’t want to take that vote,” Majority Leader Arlan Meekhof, R-West Olive, said when asked about the divide in his caucus. “Some people think a different solution was the better way, but we didn’t really have the votes together for a different solution.”

The commission is designed to steer traditional public or charter schools toward underserved areas of the city and avoid unnecessary duplication. Charter school advocates see the commission as a way to undermine charter school progress in Detroit.

A traditional school that received a failing grade for three consecutive years could face closure or another intervention model imposed by the state School Reform Office. In the case of a charter, authorizers would be required to amend the academy’s contract to prevent it from operating a school that serves the same age or grade levels at that site.

The school board and charter operators could bypass commission review and open a new school that “replicates” one that has received A and B grade for three consecutive years.

But a high-performing school could only be replicated in a single instance.

Charter groups fight panel

Charter school groups have fought the proposed Detroit Education Commission as an overly broad regulation that could be used to limit parental choice, and it was not included in the initial plan Hansen introduced last month.

The commission would initially operate for five years but could be extended another five years by the state School Reform Office overseen by Snyder.

The legislation would “essentially” create up to a 10-year ban on new charter operators opening their first school in Detroit, said Gary Naeyaert of the Great Lakes Education Commission, a pro-charter group.

“I think what the authorizers might do, if they’re smart, they might become extremely familiar with the city limits — and locate at least a few inches outside the city where it’s still about freedom,” Naeyaert said.

Hansen disputed the characterization as “a lot of fear-mongering, fear of what could happen. We’re hopeful that as reality plays out, it’s not going to be that way.”

Charter schools would have representation on the commission. Detroit’s mayor would appoint all seven members and be required to include at least five city residents, one charter school parent and two charter school administrators.

Duggan said the package achieves his goals of establishing the commission, ending state emergency management, returning Education Achievement Authority schools to the public district and getting debt aid from the state.