House Dems to Detroit Parents: No New Charter Schools For You
Unanimous vote in House committee
In the debate about a state bailout for the Detroit school district, the greatest divide may be the future of charter schools in the city. Democratic lawmakers have often shown a bias against charter schools, and did so again this week.
Rep. Sarah Roberts, D-St. Clair Shores, proposed an amendment to a bailout bill (House Bill 5384) that may effectively ban new or expanded charter schools in the city of Detroit. A charter authorizer would be required to overcome a new layer of red tape.
Specifically, authorizers would have to get a determination by the state Superintendent of Public Instruction that a population of “underserved” schoolchildren lives within a 5-mile radius of a proposed charter school. The term is not defined in the bill, but if it is read to mean “within five miles of an existing public school” then few and perhaps no parts of the city would be open to new charters.
There are currently 65 charters operating in Detroit and 97 district schools.
The Roberts amendment was defeated in a party line 18-11 vote in the House Appropriations Committee. All 11 Democrats voting for the proposal and all 18 Republicans opposed it.
The House version of the bailout bill does not include a Detroit Education Commission, another device the Detroit political establishment could use to ration or ban new Detroit charter schools, which is contained in a Senate-passed bailout bill. For this reason, the current House bill is unlikely to get any Democratic votes.
The actual bailout provisions may be the least controversial part of the measures working their way through the House and Senate. There is a bipartisan consensus that the schools will be kept open, which means state debt relief will happen.
The committee vote is a clue, though, that Democrats will oppose any bill that does not hinder the charter school sector. What is unknown is how many Republicans will join them. If House Republican leaders are to pass a relief package without Democrats, only eight of the 63-member Republican majority can vote "no." In the committee vote to advance the Detroit school bailout package to the full House, three Republicans — Reps. Phil Potvin, Michael McCready and John Bizon — opposed the main bill of the package in committee.
Charters schools are currently the most accessible alternative for Detroit parents who do not want their children to attend a school run by Detroit Public Schools, which is deemed the worst urban school district in the country by the federal agency that produces biannual school report cards.
“More than half the parents in Detroit have made the choice to send their child to a charter school, and polls say that 75 percent of Detroiters say we need more charter schools in the city, not less,” said Michigan Association of Public School Academies President Dan Quisenberry. “Above all, charters are outperforming other public schools in Detroit by a significant margin. So any proposal to eliminate charter schools in the city is ludicrous, and it would obviously hurt students.”
The Roberts amendment’s unanimous Democratic support in the House committee further erodes the credibility of Democrats like Detroit Mayor Mike Duggan, who has said he wants a level playing field for all schools within his city. However, in 2014, Duggan approved a ban on selling city-owned property to charter schools located to close to a Detroit district school.
During a five-month period in 2014, Democrats in the Michigan Legislature introduced 10 bills and two budget amendments that would have imposed additional layers of oversight, new reporting requirements, regulations, restrictions, and in one case an outright ban on public charter schools.
The Roberts amendment again raises concerns about the fate of charter schools if Democratic politicians and others aligned with teachers unions and status quo DPS interests are given the power to halt new charters in the city and gradually squeeze out existing ones.
Charter schools in Michigan have outperformed traditional public school peers, according to Stanford University’s Center for Research on Education Outcomes (CREDO). In its 2015 report, CREDO found that students at charters in Detroit received the equivalent of a few weeks to as much as several months of additional learning in reading and math compared to their peers at conventional public schools. CREDO also said the city of Detroit should serve as a model for the rest of the country for how to operate charter schools.
Roberts didn’t respond to an email seeking comment.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
Detroit Public Schools Debt Largely Not Supported By Additional Taxpayer Dollars
The state isn't on the hook for most of what DPS owes
As Michigan legislators discuss a bailout of the Detroit Public Schools, some have argued that this makes obvious fiscal sense for the state since state taxpayers are ultimately responsible for DPS debt. Yet a look at the composition of the district’s debt shows very little taxpayer exposure.
According to the Department of Treasury’s report, the district carries $3.4 billion in debt, most of which contains some state involvement. Yet this involvement rarely comes in the form of a direct obligation to cover the district’s debt.
Consider what is listed as $1.3 billion in DPS’s share of the pension system’s unfunded liabilities. Since the school retirement system is a multiple-employer, cost-sharing plan, these liabilities are the direct responsibility of the other school districts in the state. This means that policymakers could remove this debt obligation from DPS altogether and spread its costs over the rest of the school districts in the state. Indeed, because contribution rates are assessed as a percentage of payroll and because DPS is smaller than it used to be, DPS has already offloaded much of its retirement liabilities onto other districts.
In other words, DPS’s share of the unfunded pension liabilities is not really debt that DPS owes the state; it’s debt that the state owes future pensioners. Bailing out or not bailing out DPS will change none of this. In fact, one thing policymakers might consider is allowing DPS to completely exit the state-run pension system and shed the enormous burden it levies on the district. State policymakers have full control over the pension system and how these payments are made.
The district also secures some of its bonds and notes with revenue from the state. Yet these state contributions do not require that the state make additional payments to bondholders if the district does not make its payments. Instead, it gives bondholders the right to take money directly from the state’s general aid to the district. This would give the district less money to operate, but it would not necessarily require additional state dollars.
There is one debt that may be the state’s responsibility — the money DPS borrowed through the state’s School Loan Revolving Fund. DPS has borrowed $196 million from the state through this fund, but the district is not likely to pay back the full amount. The state’s School Revolving Loan Fund has debtors of its own and any deficit it holds to those creditors due to DPS nonpayment may be an obligation of the state taxpayer.
If DPS creditors tap state payments to cover what DPS owes them, the district may not have enough money to operate. This is a serious concern, because it will limit the educational opportunities the district can offer current and future students. This may be something that lawmakers want to influence, but this is different from making the case to bailout DPS because the state is ultimately on the hook for the debt anyway.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
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