Public Policy Forum Blog

So you think MPS has troubles?

Those who think there couldn't possibly be another major urban school district under greater fiscal stress than Milwaukee Public Schools (MPS) need look no further than across Lake Michigan. Articles in Saturday's and today's Detroit News report how Detroit Public Schools (DPS) was required either to accept a consent decree issued by a state review team examining its fiscal situation, or have a state-appointed manager take control of its finances. The school board opted to accept the decree, which requires it to submit a deficit elimination plan within four weeks and abide by a host of stringent reporting requirements.

How did the Detroit school district get into this predicament? To start, there is the district's perennial budget deficit (at least $10 million per year since 2000), which at one point earlier this year was estimated at $400 million in a $1.1 billion annual budget. Then there was the district's inability to meet payroll obligations during two separate months last summer, necessitating a $103 million advance in state aid payments, and its continued heavy reliance on borrowing to address cash flow needs.

DPS also faces steep declining enrollment, with a reduction of 67,000 students since 2000 to the current estimate of 98,000 students. In a recent article in Education Week, an official with the Council of the Great City Schools attributed this decline both to the flight of Detroit residents with school-age children out of the city and to competition from charter schools.

These problems led Michigan Governor Jennifer Granholm to appoint an outside review team early last month to examine DPS' books. It is this review team that developed the consent decree.

Is this the direction in which MPS may be headed? Some of the parallels are strong - huge budget difficulties, declining enrollment, a governor- and mayor-directed audit, talk of dissolution or a city takeover. However, it appears that DPS' fiscal issues are even more longstanding and severe than those facing MPS, and that they are not as closely tied to the state's school funding formula.

Also, DPS already has been subject to a state takeover. That one occurred in 1999, when state legislation created a new school board consisting of the state superintendent of public instruction and six appointees by the Detroit mayor. That experiment lasted until 2005, when voters returned control of Detroit's schools to an elected 11-member board.

While MPS may not yet be in the same straits as DPS, an important lesson here is that local elected officials cannot act with impunity when it comes to managing - or failing to manage - government finances. There can come a time when a local school district or government's failure to address its fiscal problems will lead to loss of local control.

The threshhold for such action is impossible to define, and may come down to whether the new controlling authority perceives it to be in its best interest to take over or significantly intervene in the school district or local government that is experiencing the fiscal crisis. Another factor - both here and elsewhere - is whether state government is the correct entity to be "rescuing" a local school district or government. As one Detroit parent put it, "I don't think the state can take care of its own mess."

Author: 
Rob Henken