Part 3. Interview with David Olmstead

On August 4, 1992, Adam DeVore of TEACH Michigan interviewed Finance Chairman of the Detroit Board of Education David Olmstead. Olmstead has been intimately involved in school finance reform efforts since 1967, when he did the original research establishing the basis for attacking State Aid Fund allocations in the name of equal education opportunity. He was on the Harden commission in 1987 and wrote the Quality Report, along with Brian Malone, who has been the editor of the Ann Arbor News, and Peter Eckstein, an AFL-CIO economist. That report, which was widely praised across the state, focused on public education reform vis a vis empowerment and Choice. He was later recruited by Lawrence C. Patrick to run for the Detroit School Board in 1988 under the slogan "Empowerment, Diversity, Choice." Although his first efforts were directed toward getting the district "fiscally resurrected," his focus has been on chartering and school empowerment. Olmstead was defeated in his re-election bid in November 1992. The key to having successful Schools of Choice programs, Olmstead believes, is having tuition dollars follow students.

DeVore: How long has the Detroit Public Schools district been involved in Schools of Choice in one form or another?

Olmstead: I think people would say that we've always had Schools of Choice in Detroit. It depends on what you mean by Choice. A School of Choice generally means "a theme school with open enrollment." That generally means top-down managed schools. We've had those kinds of Choice schools for decades, and we might have even had some small increase in the number of those schools in the early 1980s, perhaps at the rate of one or two per year. All those schools had long lines formed of people who could not get in, and there was absolutely no mechanism to deal with the people still waiting in line-without even taking on the initiative of reaching out to people who hadn't even though about standing in line. So, there have always been Choice schools, but they've always been the exception rather than the controlling ethic or organizational strategy of the district.

In 1988, we ran on the slogan "Empowerment, Diversity, Choice." The administration, in my judgement, did everything possible to thwart and confuse that slogan for a couple of years. Our next gasp at it, as we brought in a new superintendent in 1991, was the concept of chartered schools.

Let me just say this: What we're really talking about is moving from a command model, or a public school model, to a market or private school model. That's what we're talking about, when you strip it all down.

The essence of that is what we call the per-pupil budget allocation. We adopted a program last year on chartered schools. We essentially commanded an unwilling administration to come up with a mechanism so that schools could budget according to a per-pupil budget allocation. We insisted that each school that so chose would receive 95 percent of whatever our guaranteed membership amount was, per the state formula, for each student it enrolled. Not only would they get and be able to budget that amount, but they'd be totally free to procure goods and services from whomever they wanted, so they didn't have to go to the company store anymore. The central administration thereafter would have to function as an enterprise on a competitive, as-needed service basis.

The point then was that once schools organized themselves within the public system and got that much freedom, then schools that were private – several Afrocentric schools, several schools that we'll call "value-laden" – that could survive a stringent reading of the First Amendment might also be willing to come in as public schools.

We had a great debate. The president of the teachers' union asked rhetorically, "Why would any private school want to join the public school system?" I said, "John, you're absolutely right. But if we could identify the reasons why they might not want to join, they may be the very reasons why public schools aren't succeeding. So we're going to offer it to them so that we can get into a discussion with them about the things that they think are wrong with the system."

At this juncture, we've been proceeding on three fronts:

  • First is to free up our existing public schools.

  • Second is to let educators, ministers, universities-any interested groups out there-organize new schools, knowing that they will get budgeted on the number of their enrollees.

  • Third, we haven't lost sight even of the notion of chartering schools that heretofore have been private schools to convert them into public schools.

DeVore: How essential is bringing in private schools, which are "outsiders," as opposed to schools that are currently public?

Olmstead: I don't think that it's necessarily critical, just as in the end I'm not sure that Choice is critical as a first step, even though it can drive the change and mean that you really do get the market model. Let me go at this a little bit differently. I'm being somewhat simplistic, but there are four freedoms that a school needs to have. Unfortunately, given the mentality of the typical public school educator, they don't even realize that they've lost these freedoms.

  • Schools want to have, in my judgement, freedom from the administration itself. They want support from the administration, not control. They might be, and should be, willing to be monitored and assessed as to results, but they shouldn't be controlled.

  • Secondly, they should be free from the work rules and the labor contracts. By work rules, I also mean things like staff selection.

  • Thirdly, they should be free from Board policies that cut into their freedom, like whom they can contract with, enrollment policies, and things like that – provided that they are open and non-discriminatory in their enrollment, unless a school like Cass Tech is chartered, or unless we say that the school is for gifted students, etc. But otherwise, they'd have to offer open enrollment.

  • The fourth freedom that they need is to be free from this legislature, a legislature that says you've got to tell kids how to get abortions and other sorts of things that legislators regard as within their purview of control. This, by the way, is a concern that I also raise to people who say that they want vouchers. I tell them that they want to be sure that whatever they get has no strings attached to it. They want that as much as they want the money; otherwise the money doesn't do them any good. It may be that vouchers is the way to do it in the end, and it may be that the public school model with the per-pupil budget allocation and all the four freedoms I talked about is the way to do it. We're not really sure, but I think that by interacting between those two initiatives, we'll get to where we want to be.

To come back to your question, I think that the reason why you want to entertain private schools is because, frankly, I think that there's more initiative and leadership out there in the private sector right now than there is in the public sector. I think it'd be helpful to bring that leadership inside to help the lethargy that's in the public domain. Secondly, I think those people would be very sensitive to helping us fight off the legislative and the board intrusions. It's also a means of fairness, too. I think what's happened over the last hundred years – as the public educators have dominated public education and allowed it to sink to the lowest common denominator – has essentially been, "If you want anything other than what we have, pick up the tab."

My thinking changed when I read about the three Afrocentric schools that we have on the northwest side of Detroit, and that's what really inspired me to move with this chartered schools initiative. At those three black, Afrocentric schools, all the faculty is composed of people who left the Detroit Public Schools system in disgust and impatience at not being able to implement a curriculum that they thought was responsive to their students. The schools are attended by students who left the public school system. The only differences now are that teachers get paid half as much, the parents have to dig into their pockets and pull out $3,000, and we lose the state aid. Why shouldn't those schools be public schools, if we would say we'd support that? They wouldn't be charging any tuition in that situation, but that would be good. Once you accept that notion, then you see that this is what's happened all the time. It's what went on a hundred years ago when the Southern and Eastern Europeans came over here. I'm sure the Anglo-Saxon establishment said that they had a great school system, and if you didn't like it, pick up the tab. That's where the pick up the tab tradition came from. And it has just gotten more forceful as that establishment has fought fairly easy pedagogies, like Motessori schools, religious schools and Afrocentric schools.

The third reason why you want to invite private schools into the public sector is that, frankly, it's discriminatory against private schools to disallow them the funding. On the other hand, I'll also say that vouchers are discriminatory, too, if you do it in the sense that dollars go to some schools that do not have free tuition, where some kids are favored over others. This is a hard thing to sell out there, and you have the right wing and the left wing and here Larry Patrick and I are just trying to sashay through the middle and tell people that there's a consensus that can be forged out there.

DeVore: One of the documents that Dr. Gibbs' office sent me mentions teachers founding their own schools or at least giving proposals for new Schools of Choice.

Olmstead: Yes. You've got several different things that are going on, and I'll break them dawn into empowerment, diversity, Choice, and then I'll come back and talk a little bit about the compacts. Empowerment, obviously, I dwelt upon. That's my piece. The diversity piece essentially comes about in schools that wanted multicultural curriculums or a foreign language, or you could even say that single gender schools or Afrocentric schools fall under that rubric.

The Choice initiative is essentially Dr. McGriff's, and I give her credit on it. Her point is that Choice schools basically are schools that have a theme and open enrollment. They might still have the same governance structure; they might still be controlled by the central administration, as far as dollars flowing and expenditure of monies. But I think her thought is that those schools will take on a self-identity and that could very well lead to chartering. Finally, of course, you've got the compact initiative out there from the business community, which is something that is endeavoring to give students certain attitudinal incentives. But anyway, Dr. McGriff is very disposed toward Choice, and that's fine. That's not the predominant reform we're seeking, but that's fine. On the other hand, I have to say that the teachers seem to relate a lot more to that; they're not used to thinking about taking on budgets and things like that, so they relate very well to Choice. It was a very inspiring day when all those Choice schools came in to plead for their budget funding for this coming year. So, between the 14 empowered schools that we currently have, our 20-some Schools of Choice, and a similar number on compacts, you've got all these initiatives going at once. It may tend to be confusing to someone who is a little distant and maybe doesn't understand the subtleties. On the other hand, they're all starting to interact, and they all tend to be mutually supportive.

DeVore: It certainly seems like one of those initiatives could essentially initiate a dynamic that another could overtake or refine further. What other dynamics is the Board encountering as it seeks reform?

Olmstead: The absolutely critical thing that's coming up for us right now is the collective bargaining. Again, coming back on these four freedoms, the first freedom we want is to liberate schools from excessive administrative control. That was the one thing that we could control the most as a board. The second thing is the collective bargaining. I'm being a little simplistic on this, but the heart of it is the work rules. We're not saying anything about salary at this point, though that could be a factor looming down the road. Right now it's work rules.

Compare big city school districts like Detroit with companies like Ford Motor Company. In the auto industry, contracts are negotiated company-wide, but work rules are on a plant-by-plant basis. Of course, this caused some tension with the Willow Run/Arlington, Texas episode. In the school system it's different. Economics are are system-wide, and work rules are system-wide. Why is that? Because the union leadership does not want teachers in one school working harder or longer than they do in another school. To my way of thinking, that's antithetical to professionalism.

By work rules, I think we're also starting to get into staff selection and peer group evaluation and some other things that lead to accountability. But that is the critical piece in this year's collective bargaining. We've always been a little bit shy, we haven't been quite ready, but this time (I'm not saying we're as ready as we'd like to be) we cannot duck the battle; we have to take this on.

DeVore: What, in particular, do you think will be some of the most difficult obstacles? What sort of concessions or agreements?

Olmstead: I remember joking a couple of years ago that the way to conduct the collective bargaining that year was to tell the union to make a list of everything it wants. They'd make a list, and we'd say, "Yes, on this condition: you accept what we want. And what we want is empowerment." Actually what's happened is that we thought that we were getting some agreements on empowerment, with a nice collaborative basis, and then we were profoundly disappointed to find out that there were embargoes, they won't waive work rules, and so on. The way it is now, the notion is that a school could vote to get empowered, but then if it wanted a work rule waved, it had to go to the union to ask for a waiver of the work rule. Well, I'll tell you who's empowered in that situation – the president of the teachers' union has all the power. I'm not anti-teacher; I think we've got to be able to give the rewards to recruit and retain people in the classroom. And that means two things: 1t means that we're going to have to pay more money generally, but secondly, we're going to have to break up the lock-step salary sequence that we have right now. You have to pay your best teachers more than they would get being in the administration to get them to stay in the classroom. Anything we can afford to pay the teachers this year, I'm all for paying them. It may well be that if they they'll take full scale empowerment, try this thing out, and it seems to be working, we'll even go out and get a millage increase next year. Of course, I'm all for school finance reform. But it's critical that they be willing to focus on the quality aspect, the product, the outcome, and what structural changes need to be made in conjunction with the salary issue.

DeVore: So, who ends up getting empowered, ideally?

Olmstead: You get into a lot of interesting issues here. When you talk about empowerment, there's a lot, of confusion out there. Everybody assumes that the power going to a school means the power goes to the principal. That's not necessarily so, because where the power ends up is something to be worked out at the school level – whether it rests with the principal, the faculty, the parents and/or community.

A watchword in places like Detroit for 25 years has been community control of schools. They've also said that they want more money spent at the schools. The only way they're ever going to achieve those goals is through empowerment.

I don't happen to believe in community control of schools. I don't think I'd believe in community control of a doctor's office or a lawyer's office. But if some people want that, and they're agreed, and they can hire some teachers who are willing to work there, I'm not going to fight that. That's fine, but they'll get their money on an enrollment basis. If they can attract some students, that's great. That's sort of what's going on in Chicago to a certain extent. But to me, the real critical issue of the empowerment piece is whether it's going to be professional control or community control. You can have either one of those models, and we would leave that up to the individual schools.

DeVore: In terms of data and information, what do you think parents have to know in order to operate within a system like that? What kind of outcome scores and measurements need to be available?

Olmstead: There are different views out there on a lot of these subjects. I think that it'd be unfair and unfortunate to have schools feel that they are competing against other schools, comparing those grades one school to the next. I think in the early stages what's much more important is for each school to show its progress against a base year. I think that's really all you can ask, so that there's no trickery going on, trying to change the composition of the student body. It may well be that schools that have the least-achieving students at some point might have some advantage, for all I know. Maybe it's possible for kids who are behind to gain more quickly than those who are already achieving at grade level. But 1 think it's that kind of information. Contrary to what gets reported in the papers, I don't think that if we put that into effect, the Board of Education wouldn't have to open or close any schools. All we would do is put a sign up on the school that says, "The Board of Education determines that this school is hazardous to you child's educational development. See such-and-such report." If people want to send their kids there, fine.

I know this gets into touchier ground, but I'm not even opposed to a school being an athletic school and having a dream team that can beat every other school in town. Maybe nobody else would want to play them at that point, but I'd even keep out of that. I'm pretty much laissez-faire.

But on the reporting, I think that's the critical thing. We talked about empowerment; that's not carte blanche empowerment. They have to report so that we can assess fiscal integrity and academic performance of students. There might be some other factors you would want to put into a model, such as volunteerism .

Another thing that we're doing right now-and a lot of this is technical, too-is setting up a data management system. You've got to have one. We are spending $60 million to revamp our data management, so that we can audit, after the fact, all those schools that have control over their budgets. We're not going to have them come downtown to get prior approval, but we'll be able to assess fairly readily whether they seem to be cruising along within budget constraints or if something about where the money is going looks a bit strange.

As a society, we have a lot of work to do on the two vital questions, "What shall our children learn?" and "How shall we measure it?" We have a lot of work to do on those, and I don't think it should slow us down.

DeVore: Let's go back to the importance of funds following students and the dynamic that it can install. What about the critics and skeptics who are afraid of having the system degenerate into rabid competition? They don't take the Austrian line that competition, in some form, is the modem form of cooperation. They'll argue that competition inevitably degenerates into in-fighting and is, on the whole, counter-productive ...

Olmstead: Do you want to get philosophical about it? If you compare America as a market against Japan or Germany, two staunch national competitors, they've got a very homogeneous society. We have a very diverse society. We've got to use that to our advantage. I think it's to our advantage. Frankly, I think the market, if you will, is the best way to play to diversity. So I would argue that philosophically. When you get into this realm, that's where the discussion ought to be. Don't get me wrong – I’m not saying that 1 know for sure that this system will work; I'm saying that we certainly ought to try it. In Detroit, for example, nobody is trying to force this system on anybody. All we're saying to the union and to others is, "Let those schools that want to be free be free." It could turn out that, as we move from what we'll call the melting pot theory of public education to the accentuating and facilitating of compatible diversity, the whole thing gets politicized and we lose certain aspects of the melting pot that we discover we need. I think that when we get to that, if we get to that, then we'll deal with it as a separate issue – and it's an important one. But I don't think that anybody should be against competition for its own sake. If anybody thinks that the telephone companies are worse than they were a couple years ago, or thinks the airline business is different, if anybody likes the Post Office vesus Federal Express, let them argue for the existing system. On the other hand, if you say that education is something special, and there are some concerns that we have to address out there, I'd agree; let's not switch the system overnight Let's just put a new possibility into play. Problems are going to occur, and we'll deal with them. But let's not allow the parade of imaginary horribles to stop us from taking a first step.

DeVore: A different criticism I've heard of charters depends upon how much autonomy you grant – how far you take the charter idea. It goes like this: You've got to have a two-way street. There has to be some responsibility on the part of the administration. If you make the school completely autonomous, then you loose that linkage; there's no incentive, and no need for the administration to work with the school. One rejoinder might be, "Who says you need the middleman?" What do you think?

Olmstead: That's really one of the points that people within the Detroit school administration are making right now. You always have to watch that argument; it really amounts to their still wanting to exert some control over the schools. My point is, look, give them all the money; if you've got a service to provide, they'll come and buy it from you. The only people who are going to be assured of some position is the people who are going to do the audit or the assessment functions. There's still a need for some small group, but even there you've got to be doggone careful that that power is not being abused and shifted over to a control mechanism. So, I just say that if buildings want services provided by the central administration, they'll make it known. If service providers within the central administration are trying to hang on to their power or jobs when they don't perform up to snuff, then giving buildings control over their resources will help solve those problems. Give schools the money and they'll probably take care of themselves.

We also have a problem right now because educators haven't been trained to do this. Also educators seem to feel that this throws a lot more work on them; this is an argument the unions use. You're going to be working your tail off doing these budgets and doing the procuring. But that misses the point. Right now, those schools pay at least 30 percent off the top to people who take the money and say, "We're going to supply a service to you." With that 30 percent, they may be able to go out and purchase contract management from people who can provide that service more responsively, more effectively, more efficiently and more cheaply. As a matter of fact, that's exactly what'll happen.

DeVore: What about other districts? Do you think they could look at what Detroit is trying to do and model some reforms on that, or is it just a question of economies of scale, where Detroit has the "luxury". . .

Olmstead: [Laughs] I've never heard of that size being a luxury. Part of this gets back to all those Marxists back in the early 1920s. They said, "When and where is the revolution going to occur?" Well, there's a revolution in public education right now. Where is it going to occur? Frankly, it's ultimately going to occur across public education. No public education system is doing the job. But I think in cities like Detroit, predominantly the black populations are desperate to get their kids educated. The plus side of that is that people are realizing that the opportunities are there, especially in the wake of the civil rights legislation, if they can just get their kids educated.

Public Sector Consultants (based in Lansing) had a poll last year asking who wanted radical change – it was something like 50 percent or 40 percent across the state; it was two--thirds in Detroit. We've obviously been rousing the crowd a little bit, but I think that the feeling was there and helped get us elected in the first place.

Right now, I'm sort of talking not-for-profit competition. I think those people who have the notion of for-profit competition might be thinking a few years ahead. In 20 years, I don't think public education will look anything like it does right now.

DeVore: I'm not terribly familiar with the transportation system in Detroit, but I know that many other districts, faced with the mandate to provide Choice students with transportation, cringed at the likely costs.

Olmstead: Well, we have a little bit of an advantage, or a disadvantage, depending upon how you want to see it. Going back to the desegregation cases of several years ago, we have a lot of transportation equipment which we would have otherwise phased-out. So it's nice to be able to use that for another kind of transportation. I think it is a legitimate concern. I do feel that in the Choice mechanism you really do have to provide equal access; equal access, I think, does warrant transportation. That's one concern that districts raise that I look at as legitimate. But, on the other hand, probably a better way to do it is just to do it first and then see what the bill is. The state probably should give some assurances on that. By the way, I don't think the state has done all that great a job in terms of providing thoughtful leadership or a program.

DeVore: That raises another complaint I've heard. Some have said that there was a lack of legislative direction in the Choice mandate and that it offered no cogent vision from the legislature ...

Olmstead: ... and the governor. Again, I come back to what I said before: empowerment, diversity, Choice. Don't worry so much about the Choice aspect right now. That'll come. Focus more on the site-based management and empowerment which will lead to Choice. It's probably also the best way to get some reconsolidation of school districts. You'll find that people aren't concerned about the size of the district; they want to know whether they'll have influence in their own school. That could lead to some economies of scale, too. So, there's no crystalized thinking going on up in Lansing. It's mostly gibberish and more regulation.

DeVore: How about parental involvement? What's Detroit's situation with respect to that?

Olmstead: I think it will improve. I think every one of those things we just talked about – empowerment, diversity, Choice – every one of those leads to more parental involvement. As a matter of fact, with regard to the empowerment piece, one of the decisions that would go down to a local school, even though it has to provide free tuition, is whether it makes parental involvement a condition of admission. For example, a school could say to parents, "You must acknowledge or participate in homework assignments, you must be there for teacher conferences..." And then again, this is where we come up against the lowest common denominator syndrome. People say, well, not everybody in Detroit has a parent. Well, that's a sad truth, and it absolutely has to be addressed. But there's a situation where we can really use mentors and volunteers to work just in that area.

We've already seen, with regard to the diversity, the number of parents who immediately identified with the male academies. They get involved because they're interested. One turn-off for parental involvement is if there's no decision-making actually going on at the school. And Choice supports parental involvement, too, because people who choose to be somewhere will be more involved. So every one of those initiatives supports more parental involvement, which in the end is one of the things you're really looking for.

DeVore: A recent article in the Detroit News noted that many of the schools aren't to capacity yet. Other districts, however, are finding that they don't have a whole lot of space available.

Olmstead: Once again, Choice doesn't go far enough. It just doesn't get to the heart of the matter. You've got to have a mechanism for organizing new schools or schools within schools. Granted, if you've got four schools in a particular school district and they're all filled to capacity, it's going to be pretty difficult to set up a dynamic where people are able to select and opt into educational programs whose philosophies suit them. Now, Detroit has a certain advantage there – we’ve got some closed-down buildings, and we've got some buildings that are not fully enrolled, so that gives us a lot more flexibility. It's a luxury, as you called it earlier. But the critical thing is how to organize these schools, and Choice doesn't tell you anything about that. But I think that empowerment and per-pupil budget allocation tell you what you need as far as organizing your schools.

DeVore: Is there anything that you'd like to add, any other topics you'd like to cover'? Olmstead: Sure. I know where you're coming from philosophically, and I have a split political identity these days. I'm arguing against the liberals and the conservatives. But we're talking about restructuring public education. That can be frightening to all of us when we have to go through that process. It seems to me that if you're asking people to take on the risks and responsibilities of change, then two things:

  • There probably should be some opportunity for personal reward, just like there is in the private sector.

  • Secondly, you should be willing to say that we are going to fund the enterprise until it has some chance of success. There's no crueler hoax out there than the Sisyphus thing-where you have to keep working but you're not going to achieve anything.

Right now, people like me and Larry Patrick get caught in that cross-fire. We get caught in the cross-fire of the John Elliots of the world who say, "The system is fine, send more money," (by the way, this year for the first time he's saying the system isn't fine anymore) and what I'll call the business roundtable (and to a certain extend they've got the governor there, too), which basically says, "Change the system first, and then we'll send more money." Now some teachers are afraid of change, and they were messed around with, until they got unionized. Unfortunately they got off on the wrong track by starting an industrial union rather than a professional union. You've absolutely got to link the two. If you're trying to drive change, you've got to drive it with the stick and the carrot. There's got to be some linkage of more funds, and I really would call on your organization and other organizations to look at the governor's tax cut proposal that's out there right now as a dreadful and dishonest tax cut proposal. It's a horrendous shift of resources that's going to occur as the governor sends a billion dollars out to the wealthiest areas of the state in the form of property tax relief. Maybe the people should have tax relief, but they shouldn't have state-subsidized tax relief. It's those dollars that are going to flow in that direction which could have been linked to change in the poorer school districts. I don't ever miss an opportunity to get the governor called out on that. I like this governor, he helped us get elected, and he's been with us, but he's absolutely off-track on this proposal.

Again, I'm for tax relief, but you have to cut back rates. A "cut and cap" does not reduce millage rates. It just says that everybody gets their taxes reduced across the board. In effect what it says is property valuations are 30 percent less than they are. So it's a phony premise. It's only calculated for political appeal. It doesn't have any policy justification whatsoever.

But if that passes, I stop, because I don't have any way then of arguing to teachers that they've got to change to get more money, because the state will have mortgaged its future.