Sunday, May 01, 2016

Detroit Schools Insolvency

Just some questions to stimulate thought about DPS and public schools in general:

1. Does anyone believe that Michigan taxpayers are not going to be on the hook for the financial mess that is DPS, just like we were for the City of Detroit?  

2. With all the other school districts reported to be in distress in the state, does anyone think that DPS is the end of this problem? Or only the beginning?

3. Does this looming crisis cause you to think that the way school districts are financed and run needs to change?  Or even more radically, should the way we organize and deliver education change?

1 comment:

Eaton Rapids Joe said...

A magician performs magic by distracting the audience so they are NOT looking where the action really is.

The "real" action is in the underfunded teacher's pensions. Detroit owes about $150 million dollars to the pension. $150M sounds like a lot of money but it is dwarfed by the aggregate under-funding.

In round numbers, the teacher's pension, overseen by the Michigan State Department of Budget and Management is underfunded by roughly $9 billion which is four times larger than DPS's debt.

I suspect that one thing that is keeping legislatures awake at night is the thought that DPS default will further impair the pension and might trigger a day-of-reckoning. The house of cards is fragile and nobody wants to be the guy who sneezed.