DPS rescue stalls from fight on aid to fix schools

Jonathan Oosting
Detroit News Lansing Bureau
Detroit Public Schools teachers file past the Capitol on a bright, spring morning.

Lansing— Mold mushrooms on a wall at Vernor Elementary School. Ceiling tiles sag at Osborn High. Trash cans catch water leaks at Palmer Park Elementary.

This is what happens when a huge part of a district’s budget is diverted to debt payments, Mayor Mike Duggan told state senators in February, showing them photos of Detroit Public Schools’ buildings as they began debating how to bail out the struggling school district.

“The results are inevitable: DPS is the worst-performing school (district)in Michigan,” Duggan said.

Using state aid to repair the Detroit district’s crumbling infrastructure is one of at least three sticking points in the debate over DPS rescue plans. The issue gained new urgency last week when a Treasury Department analysis showed the district would run out of cash by August under a House plan, a finding questioned by House Speaker Kevin Cotter.

DPS Emergency Manager Steven Rhodes says Detroit students “will suffer” without the building upgrade subsidy. But Cotter argues taxpayers across the state should not foot the maintenance bill in a single district, and other critics are wary of the district’s past misspending and corruption.

“Buildings are funded with local millages,” said Cotter, R-Mount Pleasant. “That would be my thought at this point, stick to paying off the debt — and that is a huge step, we’re talking about half a billion dollars — and also returning control.”

The bipartisan Senate plan approved last month would pay $470 million in district debt and provide another $200 million in startup costs, including $53.3 million for “deferred maintenance” and $10 million for upgraded school security equipment, according to a Treasury Department analysis. Another $2 million would help the district close and reorganize some schools.

The $500 million House Republican package approved May 5 includes $33 million in startup funding.

Rhodes said the district’s request for $65.3 million to repair buildings and enhance security is vital to retaining students in a school district that has lost more than 100,000 students since 2004.

“If we don’t get that money from the Legislature, then we have to take it out of the classroom,” he said Friday on WKAR-TV’s “Off the Record” public affairs show. “And if we take it out of the classroom, our kids will suffer.”

Rhodes said the deteriorating building conditions reflect the “structural deficiencies” that plague the $725 million operating budget of Michigan’s largest school district.

In addition to operating debt that cuts into classroom spending, Rhodes said, Detroit schools incur additional expenses for a high proportion of special needs children that other school districts in Michigan do not have. About 19 percent of the school district’s 46,000 children require costly special educational services, he said.

“The simple reality is that there are aspects of our mission that are different from the missions of other school districts around the state,” Rhodes said.

In a city fraught with crime, safety is a top concern for parents, Rhodes said.

His plan targets $10 million in transition funds for upgrading security equipment and hiring more school safety officers.

“I’ve heard from parents — this is among their very biggest concerns,” Rhodes said. “We have to not only protect our students, but give them the feeling that they are secure.”

Cotter and other House Republicans have complained the district has not given enough details about how the $200 million in startup costs would be spent.

State Rep. Pete Lucido, R-Shelby Township, said he’d like Rhodes to provide a building-by-building breakdown of the proposed maintenance projects with cost estimates from multiple contractors before he could even consider the appropriation.

“I want to make sure the numbers make sense from the beginning; otherwise, we’re doomed for failure again,” Lucido said.

How bond debts grew

Detroit voters in 2009 authorized up to $500.5 million in borrowing to build eight schools and modernize 10 others. The bonds, pushed by then-Emergency Manager Robert Bobb, were issued in 2009 and 2010 and were required to be used within three years under federal rules.

Fifteen years earlier, voters in 1994 authorized up to $1.5 billion in school improvement bonds. The district had a remaining fund balance of $3.1 million at the end of the 2015 school year, according to financial statements.

The capital improvement bonds, combined with additional borrowing for operations and other purposes, helped the district accrue $1.5 billion in general obligation debt as of August 2015, according to the Citizens Research Council.

The district’s operating deficit was expected to reach $515 million by the end of June. Both legislative plans would help the district pay off $470 million of that debt, in addition to the $48.7 million in stopgap funding legislators approved in March.

Besides startup costs, lawmakers remain at odds over the need for a commission to regulate traditional and charter school openings, which was included in the Senate plan. The competing plans differ on the timing of school board elections, with the Senate proposing elections this fall but the House targeting August 2017.

Sen. Goeff Hansen, lead sponsor on the bipartisan Senate package favored by Detroit’s Democratic mayor and Republican Gov. Rick Snyder, said he views building upgrades as a key part of any turnaround plan for Detroit schools, where state-appointed emergency managers have primarily focused on the bottom line.

“We have to get them in a ready position to be successful,” said Hansen, R-Hart. “In some of these schools, with the boilers and different things, you see kids with sweaters or jackets on during class. That’s unacceptable.”

School buildings toured

Local Reps. Sherry Gay-Dagnogo and Harvey Santana have each taken lawmakers from both sides of the aisle on tours of Detroit school buildings, showing them both the best and worst the district offers.

“If you’re looking at really restoring the district, you can’t just look at the debt,” said Gay-Dagnogo, D-Detroit. “There has been a much greater loss than just the (deficits) that were increased under state control.”

Gay-Dagnogo used her tours primarily to show colleagues that Detroit students can succeed in the right environment, bringing them to high-performing schools like Cass Technical High, Gompers Elementary and the Foreign Language Immersion and Cultural Studies K-8 school.

Lucido, a 1978 graduate of Detroit’s private De La Salle High, visited several city schools with Santana. He acknowledged the need for maintenance but voiced frustration over past corruption and misuse of taxpayer money that could have been spent on buildings.

“We need to have a solution not only for the past debt but the present and going forward,” he said. “But the blueprint has to be followed perfectly, or we’re going to have all these challenges again.”


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Requested building aid

The Detroit school district is requesting $65.3 million in state aid for building and security improvements in a bid to retain students:

■$19 million for heating, ventilation and air conditioning

■$16 million for roof repairs

■$15 million for windows

■$10 million for upgrading school security equipment

■$3 million for lighting

■$2 million for school building closing and reorganizing

■$250,000 for fencing and paving

Source: Michigan Treasury Department