Michigan’s Smaller School Districts Get Screwed, as DPS is Poised for a Bailout

Updated 6-26-16

“Three years ago, the state of Michigan made the decision to dissolve Inkster Public Schools against the will of the people,… it is past time for the state to step up and remove the burden of debt from the residents of Inkster. There has been enough suffering as a result of decisions made by the state. It’s time to allow Inkster to move forward without being forced to pay for a school district that no longer exists.” — Sen. David Knezek 


Sen. David Knezek, Photo: SenateDems

The rest of Michigan looks on with skepticism as Detroit Public Schools are headed toward an inevitable legislative bailout, while other school districts toil under the Snyder administration’s starvation-level budgets. Year after year, the gap between richer and poorer, (the latter often being smaller communities), widens into an unbridgeable chasm.

Detroit Schools will be at the top of the agenda at this week’s Detroit Regional Policy Conference on Mackinac Island where lawmakers and business leaders are typically all about the business of exchanging money for policy. But this year, House Leader Kevin Cotter is keeping his kids in class down in Lansing during their regular legislative session — preventing them from schmoozing and boozing on the island. Between trays of drinks and canapés, Detroit business leaders had hoped to put the squeeze on reluctant House members to approve a more generous DPS bailout package.

One way or another though, Detroit will get some form of support, albeit insufficient and negligently late. But, what of those other struggling districts — those not too large to fail?

Inkster and Buena Vista come to mind.

Public Acts 96 and 97 of 2013 were the two hastily enacted laws that provided means for the state to dissolve small school districts that are fiscally distressed, yet not big enough to support the cost of the emergency manager apparatus or to warrant a bailout. The first strips a district of local control, and the second sorts through the details and financials. The laws provide an appropriation of $2.2 million, over four years, for the purpose of grants to the receiving school districts for transition and enrollment costs as they take on students from the dissolved schools. Additionally, the receiving districts earn a 10 percent bonus over the per pupil foundation grant of transferred students for four fiscal years.

To date, only two school districts have been forcibly dissolved — Buena Vista and Inkster. In truth, the above laws were maliciously written and enacted specifically with them in mind. It was a nadir for the previous legislature — a time when the chair of the House Education Committee, Rep. Lisa Posthumus Lyons, referred to public school teachers as swine in her argument supporting the dissolution of Inkster and Buena Vista.

After a careful evaluation of the fiscal fallout from the dissolution policy, the Citizens Research Council of Michigan published a detailed analysis titled School District Dissolutions: Another Approach to Address Local School District Fiscal DistressIn the report, the CRC outlined several concerns about the wisdom of the law, mostly stemming from slight-of-hand tax policies that simply shift burdens and ignore underlying systemic problems. They concluded that the law is not good public policy and should be revisited, referring to its hasty enactment as an “ad hoc reaction” which “illustrates that state government lacks a uniform model that will apply when school districts fail”.

The policy not only transferred students against their will to surrounding districts, it also conveyed the defunct district’s assets to the receiving districts — creating a costly burden for the receiving schools in the form of the maintenance of crumbling buildings. The 10 percent per student bonus offset some of those expenses, which in the case of Buena Vista totalled an additional $2,019,000, and Inkster students were worth an extra $8,138,000 over the course of four years. Yet, the legislature was forced to shell-out additional millions to the receiving districts just to keep them solvent.

The state also became responsible for the dissolved district’s portion of pension funding through the Michigan Public School Employee Retirement System. The two defunct districts’ portions have since reverted to the state, which the House Fiscal Agency estimated to be $4.1 million in additional costs.

The bulk of the debt load of the dissolved districts remained where it was — with the taxpayers of that school-less community.

All Prop A taxes collected in the defunct districts are allocated to paying-down the residual debt, and thus, do not contribute to the School Aid Fund. Any additional millage monies are rerouted to the receiving district, via their local Intermediate School District, to be used at their discretion.

In an effort to ease the local tax burden, two lawmakers serving the Inkster area, Sen. David Knezek (D-5) and Rep. Julie Plawecki (D-11), have introduced legislation which would allocate state funds to payoff the Inkster Public School debt of $37 million. Plawecki explained:

“The four school districts surrounding Inkster have welcomed their students with open arms, but the dissolved Inkster Public Schools still has a substantial debt, which places an onerous burden on the city and its residents. This is similar to the situation that Detroit Public Schools are facing, as they are dealing with a debt due to several decisions, many of which were made by the state. And just as the state is helping DPS with its debt obligations, we believe the same should happen with the community of Inkster.”

(Update: Rep. Plawecki passed away suddenly while vacationing over the legislative break with her family. She will be missed by all.)

House Bill 5708 and Senate Bill 1006 have both been referred to their respective Appropriations Committees. It is doubtful they will emerge to see the light of day.

Perhaps, a pricey tray of champaign and canapés, served with a generous promise of campaign dollars, would do the trick.

DSCN0444Amy Kerr Hardin



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One Response to Michigan’s Smaller School Districts Get Screwed, as DPS is Poised for a Bailout

  1. Stephanie Bradshaw says:

    Hello Everyone
    I am a citizen of Inkster where my children were affected by the closing of
    Inkster public schools. The districts my children were given to did not fit my
    criteria as a school so I had to make the choice of putting my children in
    charter schools outside the districts chosen for them. The charter schools I
    choose are good schools but lack the arts and music which my children were
    flourishing in at Inkster Public Schools. I would like to know why is it that
    our children can not get free education beyond graduation here in Michigan.
    We know that education is a priority for our children . I am a parent that no
    matter what, my children will strive under any condition. Let us wake up to
    the reality that all children whether rich or poor deserve to be educated or
    skilled in a field of their choice especially today . My daughters friend
    told us her counselor at her school told her because she did not score high
    enough on her sat test she will not get any monies for college.
    How dare Michigan to let a child who’s parents have worked hard to pay taxes
    allow her not to get some help to continue her education . You all can not test
    people for greatness and purpose . Even though my daughter did pretty well
    my concern is for other children who may not have done well but are destined
    for greatness.

    Let us as Americans do better by our children whether rich or poor
    no one is better than the other. We all have one God who have purposed
    and destined all of us for greatness.

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