Six years later

Takeover of Detroit Schools shows few intended results

On Nov. 8, voters elected a new Detroit Public Schools board of education which will take control of the district in January. One of the top vote-getters was Rev. David Murray, who had been elected to the school board in 1998, just months before the state took over the district.

Six years have passed since Detroit’s last elected school board was replaced by a mayorally-appointed one. Over that time, the test score gap between Detroit and the rest of the state has diminished, but remains large, and sought-after improvements in financial management have failed to materialize.

On March 26, 1999, then-Gov. John Engler signed Public Act 10 of 1999, paving the way for the Detroit school board takeover.

To gain perspective on what has and has not changed in the district, it is helpful to recall the hotly debated issues that concerned legislators about Detroit Public Schools.

According to its sponsors, the legislation was motivated by desperation over the district’s poor academic performance, falling enrollment and dire graduation rate – then estimated at just 30 percent. The legislative debate over the measure that took place in 1999 was contentious.

Then-Sen. Bill Schuette, R-Midland, argued that Detroit Public Schools students were "being short changed by a system that is failing," and that as a result "we need some fundamental change." His sentiments were echoed by Sen. Mike Goschka, R-Brandt, who told his colleagues, "I … cannot stand by knowing that these kids who need so much … are receiving so very little." Observing that the city’s population had fallen from 2 million to 1 million, Sen. Leon Stille, R-Muskegon, suggested that "much of that decision (to leave Detroit) was based upon the school system that (residents) had to send their kids to."

Sen. Burton Leland, a Detroit Democrat, questioned the legality of removing the publicly elected school board. "We have a million people who live in Detroit," Leland said. "What gives this chamber and the governor the right to remove an elected body? The present school board was elected by the million people in Detroit and you’re going to throw them out?"

Others broke ranks. Sen. Virgil Smith, also a Detroit Democrat and co-sponsor of Senate Bill 297, which became P.A. 10 of 1999, said, "This is not an easy decision for me. Rarely do I step away from my Detroit colleagues, but on this issue I have because it’s more important than any other issue that I’ve seen in this body."

But the specific mechanism by which an appointed board would solve the district’s problems was not fully articulated, and even many of the bill’s backers admitted that it was a speculative endeavor.

"I’d be the first to admit that this is an experiment," Smith added.

Among the few specifics offered during the Senate’s debate were the comments of Sen. Dan DeGrow, R-Port Huron, who argued that the appointed board would bring greater professionalism and managerial expertise.

"I think immediately, you will see improvements in the operational aspects and improvements in the board, knowing the role of the board," he said

While Leland defended Detroit schools saying a budget deficit had been turned into a surplus and graduation rates were up, DeGrow disagreed.

"It has been said by someone else that Detroit is not the worst school district in the state, and I won’t dispute that," DeGrow said. "But when you have a district with 180,000 students, and you look at the class of 1998 and see 71 percent missing in action, one has to wonder what happened."

Given the enormity of the apparent problems and the drama of the intervention, one would expect striking improvements. As Detroit is set to revert to an elected school board in January, a review of the policy’s impact reveals missing information and mixed results.

Though the district’s low graduation rate was a chief motivation for the takeover bill, no third-party study of graduation trends was commissioned. As a result, only the district’s self-reported numbers are available and these have proven erratic and unreliable, according to media reports and scholars.

Prior to the takeover, DPS reported that only 30 percent of its high school students graduated on time. The following year, the district announced a figure of 88 percent. The Detroit Free Press reported that this jump in the statistic was due to irregularities in the district’s figures, having to do with the number of students being held back a grade. Students who are required to repeat a grade are omitted from the graduation rate calculation, thus raising the rate.

At one high school, Cooley, the district asserted that 711 freshmen had been held back, but its own records show the school as only enrolling 612 freshmen. In other words, the district claimed that it was failing more students than it was teaching.

State Department of Education spokesman Brad Wurfel acknowledged that the district had reported 1,163 graduates who "could not exist," but evinced no concern over the discrepancy.

"They have to submit the numbers," Wurfel told the Free Press. "The numbers don’t have to be right."

Though two separate national studies have been performed to determine reliable graduation rate estimates for the states and the largest districts (by the Manhattan and Urban Institutes), neither was able to compute the rate for Detroit due to missing or flawed data. As a result, it has been impossible to assess the takeover’s impact on this issue with any certainty.

Its effect on enrollment has been easier to determine: the pre-existing decline has continued unabated. Detroit public school enrollment has fallen steadily since the 1996-97 school year, when it totaled 183,447. In the spring of 1999, when the takeover bill was passed, it stood at 179,103. It fell to roughly 140,000 by early 2005, and is expected to plummet to 130,000 during the current school year.

The district’s results on the Michigan Education Assessment Program have proven less bleak. Though scores worsened considerably in mathematics, they improved even more dramatically in reading, held relatively steady in science, and improved in writing. In 1999, 48.5 percent of high school seniors scored at the lowest level ("below basic") in math. By 2005, the number of low performers had increased to 59.1 percent. But the percentage of students reading proficiently (those scoring at level 1 or 2) rose from 36.3 to 57.4 over the same period.

The gap between Detroit students and the state average also shrank substantially in most subjects — by 6 percentage points in science, and by 10 in reading. Mathematics was again the exception, with the city/state performance gap remaining largely unchanged.

But while the gap has narrowed, it remains large in absolute terms. The percentage of students scoring proficiently on the MEAP in Detroit is often half the state average. Even when the student population is broken down by family income level, race, or gender, Detroit students underperform their subgroup peers in the rest of Michigan.

There is no evidence of a similar improvement in the district’s finances. A financial report released this spring by the firm MGT concluded that the district’s fiscal discipline has eroded since 1999.

In the "five year period preceding the (takeover). ... there were two years where expenditures exceeded revenues to some extent," the report noted, but "the 1996-1997 through 1998-1999 period reflects a consistent pattern of operating the General Fund within the limitations of current available resources." That pattern subsequently changed, as MGT concluded that "[w]ith the exception of the 2001-2002 fiscal year, DPS has consistently expended resources in excess of current revenues since 1999-2000."

Data shows continued imbalance in DPS revenue and spending

Detroit Public Schools increased spending in 2004 despite the loss of several thousand students. Revenue to the district was also up on a per-pupil level, but not by enough to keep up with the district’s spending.

Michigan Department of Education Bulletin 1014, released over the summer, shows the Detroit Public Schools overall operating expenditures grew by $67.5 million in 2004, a 4.3 percent increase over 2003 expenditures.

The district’s per pupil revenue rose as well. State and local revenues per student increased by 7.4 percent, and federal revenue rose nearly 28 percent per pupil. These increases came during a year when inflation was 2.6 percent.  Despite the revenue increases, DPS spent $23.4 million more than it brought in during 2004.

A review of Bulletin 1014 data for DPS from 1994 through 2004 shows significant investment in the district and a significant reduction in the number of students it served. Since the passage of Proposal A in 1994, the revenue received by the district has increased 67 percent per pupil. Total revenue for the district grew from $1.1 billion in 1994 to $1.5 billion in 2004, an increase of 38 percent during a period when cumulative inflation was 21 percent and the number of students served by the district declined by 17 percent.

With a revenue increase 17 percentage points above the rate of inflation, and the loss of 30,000 students, the district struggles financially. Spending by the district increased by more than the amount of revenues received. Between 1994 and 2004, total operating expenditures by the district increased $532 million (48 percent), while revenues increased $417 million (38 percent). When adjusted for the enrollment decline, the increase in district expenditures is 79 percent per pupil between 1994 and 2004. Administrative expenditures increased 108 percent during the same time period. Adjusted for the decline in enrollment, the district spent 150 percent more in 2004 on administration per pupil than it did in 1994.

Increases in per-pupil revenues similar to those received by the Detroit Public Schools have been the norm across the state under Proposal A. Districts in Michigan received an average increase in state and local revenues of 4.4 percent per pupil from 2003 to 2004 (state and local revenues to Detroit Public Schools increased by 7.4 percent over the same period), while inflation was 2.6 percent. Since Proposal A, the amount of state and local revenues per pupil has grown by an average of 54.9 percent statewide, compared to 61.1 percent for Detroit. Total inflation during the same 10-year period was 20.9 percent. Per pupil expenditures, up 55.1 percent at the state level since Proposal A, have predictably kept pace with revenue increases. This does not include infrastructure expenditures, which are funded by local millages. Revenues from such millages are up 217 percent since Proposal A in 1994.

Source: Anderson Economic Group analysis of MDE Bulletin 1014 data

More recently, the district was discovered to have collected $259 million in property taxes to which it does not appear to have been legally entitled.

In a subsequent response, the district questioned the validity and completeness of the MGT report.

"Perhaps the most troubling aspect of the (MGT) report," the district wrote, "is that it does not address the core issues that led to the current budget situation." The district’s position is that MGT should have considered "the adequacy and equity of district funding," especially as compared to "that of peer districts."

The Mackinac Center reported in July 2004 that Detroit’s inflation-adjusted per-pupil spending rose from $8,830 in 1996-1997 to over $11,000 in 2003-2004.