Here's What the NY Times Got Wrong On Detroit Public Schools
Grab a cup of coffee, this will take a while
This week, The New York Times published a lengthy article on the public education landscape in Detroit. The article went to some length to portray the city's charter schools in the worst possible light and implied that they were the primary cause of Detroit Public Schools' collapse.
The Times article, titled “More School Choice for Detroit’s Children, Not Better Schools,” also contained a number of factual errors and problematic claims. Michigan Capitol Confidential lists these below, adding corrections or missing context as needed.
The New York Times wrote: “For all the abandoned buildings and burned-down houses in her neighborhood in the southwest part of this city, national charter school companies had seen a market and were setting up shop within blocks of each other, making it easier to find a charter school than to buy a carton of milk.”
Left Out: There are 65 charter schools in the city of Detroit, which are all independent of the Detroit school district. By comparison, DPS operated 100 schools attended by 46,912 students this year, compared to 162,000 students attending many more schools in 2000.
The New York Times wrote: “To throw the competition wide open, Michigan allowed an unusually large number of institutions, more than any other state, to create charters: public school districts, community colleges and universities. It gave those institutions a financial incentive: a 3 percent share of the dollars that go to the charter schools. And only they — not the governor, not the state commissioner or board of education — could shut down failing schools.”
Correction: The State Reform Office has the authority to close any public school in the state, whether a district school or a charter. A separate statute gives the state schools superintendent the authority to close a charter school for poor performance, and suspend an authorizer. Since they were first authorized in 1996, two charter schools have been ordered shut by the state superintendent.
The Great Lakes Education Project claims that no district school has ever been shut down by the state for academic failure, a claim the state has not refuted.
The New York Times wrote: “But hers became the story of public education in a city grasping for its comeback: lots of choice, with no good choice.”
Correction: There were 34 charter schools (elementary and high school) within the city of Detroit that were given a grade of A or B by the Mackinac Center for Public Policy in its most recent elementary and high school report card. The Mackinac Center incorporates the socio-economic backgrounds of students into each school’s grade, which measures how much value (student learning) it adds in comparison to its peers.
The New York Times wrote: “While the idea was to foster academic competition, the unchecked growth of charters has created a glut of schools competing for some of the nation’s poorest students, enticing them to enroll with cash bonuses, laptops, raffle tickets for iPads and bicycles. Leaders of charter and traditional schools alike say they are being cannibalized, fighting so hard over students and the limited public dollars that follow them that no one thrives.”
Left Out: Define “unchecked.” In the two years after an artificial cap of 150 university-chartered schools was lifted by the Legislature and Gov. Rick Snyder in 2011, 21 charter schools opened in Detroit. Four more opened in 2014 and none opened in 2015. One charter school is projected to open in Detroit in fall 2016 and another in 2017.
On the other side, four Detroit charters are closing this year, and two more are merging into one.
The New York Times wrote: “The charter school where Ana Rivera sent her two sons, Cesar Chavez Academy, added a second elementary school, even though its existing one fell below 98 percent of schools on the most recent state rankings, in 2014.”
Left Out: The New York Times is guilty of violating a practice it has advocated for years: When writing articles about education, use metrics that are adjusted for students’ socio-economic status, because that’s what matters when measuring a school’s real performance. Most recently, an April 2016 New York Times article titled “Money, Race and Success: How Your School District Compares” contained the following statement: “A new analysis of reading and math test score data from across the country confirms just how much socioeconomic conditions matter.”
This week’s article, however, ignored all that and used the unadjusted rankings compiled by the Michigan Department of Education to condemn Cesar Chavez Academy. Had the state factored in socio-economic backgrounds as The New York Times and the Mackinac Center for Public Policy have advocated (and the latter has done), then Cesar Chavez Academy would have earned an A.
The New York Times wrote: “Stanford University’s Center for Research on Education Outcomes, considered the gold standard of measurement by charter school supporters across the country, found that students in the company’s schools grew less academically than students in the neighboring traditional public schools.”
Left Out: The level of selective data-cherry picking needed to twist what Stanford University’s CREDO reported into what the Times wrote is noteworthy. The 2015 CREDO report found that on average, charter school students in Detroit gain the equivalent of a few weeks to as much as several months of additional progress in reading and math compared to peers at Detroit district schools. It also reported that Detroit’s charter schools should be seen as a model for other communities.
The New York Times wrote: “Just as universities were allowed to charter more schools, Gov. Rick Snyder created a state-run district, with new charters, to try to turn around the city’s worst schools. Detroit was soon awash in choice, but not quality.”
Clarification: The Education Achievement Authority of Michigan was created by the governor's office, Eastern Michigan and Detroit Public Schools in 2011, and placed the worst-performing schools in the state under a new governing system. Those 15 schools were all district schools formerly run by DPS. Three of them were converted into charters. No additional schools were created.
The New York Times wrote: “This winter, as Detroit Public Schools ran out of money, Mayor Mike Duggan, a pro-charter Democrat now in his third year, argued that the problems of the traditional schools demanded a solution to address the problems posed, and faced, by charter schools.”
Left Out: Duggan is described as a pro-charter Democrat. But in 2014, he signed off on a resolution prohibiting selling any of the school property the city owned to a charter school located within one mile of an existing school.
The New York Times wrote: “That transience can prevent schools that want to be good from getting there. When there is always another option, families are inclined to take it.”
Left Out: Detroit Public Schools has been trying to "be good" for decades, under several governance overhauls. Had any of those overhauls been successful, the district’s enrollment almost certainly would not have seen a catastrophic plunge: DPS went from enrolling 102,494 students in the 2007-08 school year to 70,326 in 2011, the year the charter cap was lifted, meaning 32,000 students had already departed in the four years before the charter influx.
The Times also fails to note that when an alternative became available Detroit parents had another good reason to take it: According to the National Assessment of Educational Progress (NAEP) – the nation’s report card — DPS has been the nation’s worst-performing urban school district for student learning in 2009, 2011, 2013 and 2015.
If that weren’t enough, just this year those parents saw some of the Detroit school district’s highest administrators plead guilty, even before a trial, to federal charges of taking kickbacks and working for years with vendors in bribe-taking schemes. Most will still remember that a DPS board president pleaded no contest to a charge of misconduct in office when he allegedly fondled himself during a 2010 meeting with the superintendent.
A number of national news stories this year highlighted decrepit conditions in some DPS buildings. These stories did not mention the $500.5 million property tax increase approved by city voters in 2009, with the proceeds of bond sales going to refurbish, remodel and improve schools.
While all that was happening, for nine straight years DPS continued to spend more than it took in for day-to-day operations, creating a growing burden of debt that by this year finally ended in a state of insolvency. The debt accumulation began with a locally elected school board and continued under state receivership.
Under those circumstances, The New York Times was accurate when it wrote: “When there is always another option, families are inclined to take it.”
Correction: The Education Achievement Authority was created by the governor's office, Eastern Michigan University and Detroit Public Schools.
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.
How Bad Investment Rate Projections Cause Pension Underfunding
Municipal discount rate assumptions prove to be costly
Michigan’s 100 largest cities and townships have over $5.4 billion in unfunded pension liabilities. The liabilities are the difference between what municipalities have promised to public workers as retiree benefits and what they have put aside to pay for them.
A main driver behind this future debt seems to be the “discount rate” – the investment rate cities assume when projecting costs far off in the future. Some cities assume extremely generous market returns, which mean they pay less in the short term but much more later when their assumptions turn out to be too high. But cities that use lower investment return assumptions tend to do a better job setting aside the money need to pay for pensions.
In Flint, the city’s defined benefit pension system is only 47 percent funded and has $285 million in unfunded liabilities, while the Grand Rapids defined benefit pension system is 97 percent funded and has only $29 million in unfunded liabilities (despite the city being nearly twice the population).
One difference between the cities is the assumed investment rate. Since at least 2006, the Grand Rapids government has estimated a discount rate between 7 and 7.5 percent. On the other hand, Flint’s government has estimated a discount rate of at least 8 percent since 2007.
At first glance, this appears to be a small one percentage point difference. But it is actually nearly 15 percent – which can add up to large differences in liabilities. For example, in the 2015 audit report for Grand Rapids, the city estimated a 7.5 percent discount rate in its general retirement system. If the 7.5 percent discount rate is achieved, then city will have $31 million in unfunded liabilities next year. However, if a discount rate of only 6.5 percent is achieved, then the city will face $84 million in unfunded liabilities.
By estimating a lower discount rate, Grand Rapids prepared for the uncertainty of investments by requiring more contributions from employers and employees, while Flint assumed optimal investment conditions for a decade straight. And they didn’t hit it. Flint’s five year return on investment amounted to 5.6 percent compared to Grand Rapids 7.2 percent.
Even though an 8 percent return on investment is very ambitious, policymakers still have an incentive to estimate high discount rates because it makes unfunded liabilities appear smaller in the short run. Over time, however, the unfunded liabilities can grow exponentially if investment returns are below expectations, and employers and employees are not paying enough to make up for the lower investment yields.
Michigan Capitol Confidential looked at the audits of all of Michigan’s largest cities and found a direct correlation between a city’s funded ratio and its discount rate. A funded ratio is a city’s assets divided by its liabilities. Municipalities that were at least 80 percent funded were assuming an average investment rate of just over 7.1 percent, while cities funded less than 80 percent were assuming an average discount rate of nearly 8 percent.
In 14 cities, taxpayers were on the hook for no pension debt because the employees instead participated in a defined contribution retirement system, which includes IRA’s and 401(k)’s. In the defined contribution system, retirees only get what they and their employers pay into it during their tenure, so there is no possibility for underfunding.
Defined benefit pension systems, on the other hand, have the possibility of unfunded liabilities because benefits are calculated based on years of service and salary at the time of retirement. Pension systems rely on politicians to accurately predict future returns and fully fund the system – which is almost never done.
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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