How Student-Based Budgeting Could Help Rescue Detroit’s Public Schools

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How Student-Based Budgeting Could Help Rescue Detroit’s Public Schools

Michigan Gov. Rick Snyder's plan to get Detroit's schools out of debt should utilize backpack funding

Michigan Gov. Rick Snyder recently unveiled a plan to split the underperforming and debt-ridden Detroit Public School District in two. Gov. Snyder’s proposal would create a new body – the City of Detroit Education District – to take over the responsibility of educating Detroit’s students while leaving the old school district, Detroit Public Schools (DPS), in place with the sole purpose of paying off the district’s enormous $438 million in debts and $1.2 billion in unfunded liabilities.

Gov. Snyder’s plan would leave the currently elected school board and state-appointed emergency manager of DPS to oversee it, while a new school board of gubernatorial and mayoral appointees would run the new City of Detroit Education District. While the governor would make the majority of appointees initially, the board would transition to an elected membership over six years. In the meantime, Detroit Public Schools would continue to receive $72 million per year in pre-existing local millage funding to pay its debts. Until the DPS debt is retired, the state would provide an additional $72 million in funding for the Detroit Education District to finance its operating costs.

Sending state funds to pay off Detroit’s debt would cost Michigan’s other school districts about $50 per student, according to a report by Citizens Research Council. Gov. Snyder isn’t calling it a bailout, but in light of Detroit’s recent bankruptcy, some Republican lawmakers are.

Meanwhile on the left, teachers’ unions and other interest groups are criticizing Snyder’s proposal because they say it exerts too much state control through political appointees and allows for too much potential charter school growth.

The Coalition for the Future of Detroit Schoolchildren, which proposed a rival reform plan, argued that the state and mayoral-appointed Detroit Education Commission, which selects a manager for the city’s public and charter schools, would side-line the locally-elected school-board left in the former DPS. The group’s own plan called for Michigan to retire DPS’ debt with very few strings attached, allowing the district to retain most of its control, while increasing regulatory burdens on charter school growth and financial reporting. The Detroit Federation of Teachers, the city’s largest teachers’ union, also worried that Snyder would use his plan to usher in a majority-charter school district, similar to what New Orleans implemented following Hurricane Katrina.

Interestingly, New Orleans’ implementation of student-based budgeting and a comprehensive school choice program after Katrina are just the types of accountability-inducing reforms that could greatly improve the Detroit’s reform plan. Rather than allotting funds based on staff positions or specific programs, student-based-budgeting allocates a set amount of dollars for every student. The money then follows the students to whatever schools they attend and varies somewhat based on their individual educational needs (English as second language, special needs, etc) of the students.

School choice programs strengthen this funding method by allowing parents to select the schools they feel will best serve their children. Gov. Snyder’s plan already features a new common enrollment system, which will make it easier for families to “vote with their feet” and move to the schools they think are the best fits for their kids.

The groundwork is also already in place for Gov. Snyder to tie Detroit’s school funding to individual students. If the city’s schools have to compete for students, it will help Detroit identify its best educational practices, while also holding officials accountable for failed policies.

Detroit’s public schools are in crisis. Student-based budgeting allows parents and students to choose schools, forces schools to improve to attract students, and breaks free of the budgeting disasters that helped cause the debt crisis.

Tyler Koteskey is an education policy analyst at Reason Foundation.

Tyler Koteskey was an education policy analyst at Reason Foundation, a non-profit think tank advancing free minds and free markets.