Detroit Public Schools Consider Bankrupcy


(Guest Post by Matthew Ladner)

An enormous experiment in school choice is going on in Michigan, and it doesn’t receive a fraction of the attention it deserves. The Detroit Public Schools- perhaps the most dysfunctional of the nation’s large urban districts- has been bleeding students and is now actually considering seeking bankruptcy protection.

The Wall Street Journal lays it out:

DPS’s enrollment — which largely determines its allotment of state funding — is about half what it was in 2001, as suburban districts and charter schools have siphoned off tens of thousands of students. By this fall, DPS will have 172 schools open and more than 100 vacant. Meanwhile, the high-school-graduation rate is 58%; coupled with the enrollment losses, only about one-quarter of students who start high school in the district graduate from it in four years, according to outside estimates.

But DPS’s problems go beyond the type that sank GM and Chrysler. Wide-scale corruption has depleted district coffers, which held a $103.6 million surplus as recently as 2002. In June, Mr. Bobb’s new team of forensic accountants found DPS paychecks going to 257 “ghost” employees who have yet to be accounted for. A separate Federal Bureau of Investigation probe in May led to the indictment of a former payroll manager and another former employee on charges of bilking the district out of about $400,000 over four years.

Given the longterm academic results of DPS, shrinking it in half in 8 years should be considered a humanitarian triumph. Don’t cry for the people working for DPS- all that money has shifted to schools where parents would rather have their children. Instead- celebrate for the students.

In the late 1990s, state lawmakers abolished the Detroit school board and appointed a CEO. I recall that person studied the situation for a few months and concluded that not a single business function of the district worked as it should. Contractors were being paid for work they didn’t do. The reported high school dropout rate was around 75%.

The inescapable conclusion: DPS was a money trough for adults that might occasionally educate a student here and there, but only by accident.

Further- bankruptcy could be very much in the best interest of the students in the district. It would allow administrators to modify union contracts and perhaps, gasp, make it feasible to let teachers go for academic failure or professional misconduct. Perhaps even reward teachers for outstanding work.

An interesting set of dynamics led to this point. In 1999, I coauthored a study for the Mackinac Center exploring the dynamics of public school choice. I interviewed a number of inner-ring suburban superintendents, some of whom were quite candid with me.

The basic story is that initially, the suburbs were not interested in participating in open enrollment competition for students. One superintendent, when I asked him why his district didn’t participate, replied “I think the feeling around here is that we’ve got a pretty good thing going, and we want to keep the unwashed masses out.”

As the charter schools got into the act, however, it compelled some of the school districts to defect and begin accepting open enrollment transfers. This had a snowball effect- now districts were losing students to both charter schools and school districts. This motivated them to accept transfers themselves.

As more districts opened their doors to transfers, and more charter schools continued to open, the biggest opportunitity gains were realized by students in Detroit.

6 Responses to Detroit Public Schools Consider Bankrupcy

  1. Patrick says:

    “Given the longterm academic results of DPS, shrinking it in half in 8 years should be considered a humanitarian triumph.”

    Nominated for Best One-Liner this week.

  2. Greg Forster says:

    Another nominee for your consideration.

  3. allen says:

    On the basis of academics alone the death sentence of the DPS should’ve been signed a couple of decades ago but when you add the grotesque fiscal mismanagement of the system it makes it tough to avoid the conclusion that the government that governs least governs best.

  4. […] venerable Dr. Jay Greene was right when he noted, “Given the longterm academic results of DPS, shrinking it in half in 8 years should be conside… Well, even though Bobb has backed off somewhat from earlier talks about the school district filing […]

  5. […] 2, 2009 by meech16 “In the wake of declining enrollment, possible bankruptcy, and the worst drop out rates in the nation, Detroit Public Schools, along with rest of the […]

  6. bankruptcy in michigan…

    Detroit Public Schools Consider Bankrupcy « Jay P. Greene's Blog…

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