Detroit shifts debt, launches new district with local control

ÄúOld‚Äù district will pay down debt; new, debt-free system gets $150M
By: | August 11, 2016

When public school students in Detroit return to classrooms this fall, they’ll be attending a new district, created by the state’s legislature this past summer.

In early June, lawmakers approved a $617 million bailout for Detroit Public Schools to restructure nearly $4 billion in crippling debt. The plan will divide the schools into an “old” district—a legal entity which will pay down debt over time—and a new debt-free district known as the Detroit Public Schools Community District, which will be given a $150 million startup loan from the state.

The new district will be responsible for 97 schools, serving nearly 47,000 students. That’s down from 162,000 students, as many have moved to charter schools over the past 16 years.

Former bankruptcy judge Steven Rhodes, the district’s emergency manager, warned last April that the school system would run out of money by the summer, and has been pushing the restructuring plan in the state legislature.

The teachers union, meanwhile, staged a sickout last May, temporarily closing 94 schools to pressure the state legislature into funding salaries through the summer period.

The division of the district sets in motion the Nov. 8 election of a new school board, returning a degree of local control to a district that’s been run by emergency managers for the past seven years. The current board has been rendered mostly defunct by Rhodes.

Some parents are breathing a sigh of relief because they believe an emergency manager shouldn’t run a district alone. “Even if you’re qualified from a business perspective to tackle budget problems, running a school district shouldn’t be just about cutting costs” says Ruthann Jaquette, president of the Michigan PTA.

Still, while the new board will direct day-to-day operations, the Community District’s financial decisions will be overseen by a nine-member Financial Review Commission, appointed by the governor.

Creating a controversy

And some cost-saving measures are already generating controversy. For instance, the commission refused to fund PD travel for teachers. And it created a provision that will allow uncertified teachers into Detroit classrooms.

Uncertified teachers would have to be approved by local school leaders. Proponents argue this will allow experts in areas such as engineering and music to work in schools when local principals deem it appropriate. Opponents say allowing uncertified teachers into classrooms turns Detroit students into second-class citizens.

“No other school district would allow that” says state Rep. Brian Banks, a vocal critic of the plan. “I’m concerned quality teachers could leave the district, and there still will not be adequate resources for teachers to do their jobs.”

On top of that, Banks and other critics worry that the new start-up loan from the state will continue to saddle the district with debt—even if it’s at a lower interest rate. Banks points out that much of the worrisome debt was accumulated during the period of emergency manager control. “How do you provide a loan for debt that you ran up?” Banks says.

Meanwhile, more than 70 candidates have signed up to run in the November election for the new board.

Rhodes says he is eager to return some district control to elected representatives. “[The] responsibility to educate students in the new Detroit Public Schools Community District falls upon the residents of the city of Detroit” he wrote in a public statement in early July. “Democracy is not a spectator sport.”

Avi Asher-Schapiro is a freelance writer.