Detroit schools near bankruptcy

Detroit’s public schools are on the verge of bankruptcy, reports the Wall Street Journal.  District schools, already educationally bankrupt, have lost half the city’s students to charter and suburban schools. Of those who start ninth grade, only a quarter claim a diploma four years later.

As with General Motors Corp. and Chrysler LLC, bankruptcy may not be the worst thing for Detroit’s schools. A filing under Chapter 9 of the Bankruptcy Code, which covers public entities like school districts and municipalities, would allow the district to put major creditors such as textbook publishers, private bus operators and DTE Energy, the local gas-and-electric utility, in line for payment. It also would give (emergency manager Robert) Bobb broad latitude to tear up union contracts without protracted negotiations.

But a filing also could hurt the district’s debt rating and ability to float bonds.

Detroit Public Schools have lost money to corruption and mismanagement.

Bobb,  brought in to handle finances, is trying to save the system. With Barbara Byrd-Bennett, his chief academic adviser, he’s fired principals and “hired private companies to take over 17 of the district’s 22 high schools.” But it’s probably too late.

Detroit would be the first major urban district to go bankrupt, but it probably won’t be the last.

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  1. Richard Aubrey says:

    Bobb, having heard of ghost employees, arranged for all paychecks to be picked up in person with identification, rather than mailed or directly deposited.
    At the end of the exercise, about 250 checks were unclaimed.
    Figure a couple of dozen folks were sick or out of the country.
    Means about 225 ghost employees. Figure that some are being paid as part-timers, some as maintenance, and that the average ghost pay was one-third of a teacher’s pay. That means that the payroll of about 75 teachers was going to non-employees.
    Then there were administrators caught pilfering various funds and laptops by the dozen if not score.

  2. I remember Barbara Byrd-Bennett from her tenure as CEO of the Cleveland Municipal Schools. She brought in her own highly-paid crew of cronies, installed them in positions, and proceeded to run the school finances into the ground – $ 100 MILLION in the hole over her last 3 years.

    We had to lay off 1400 teachers, and slash many programs to the bone. I ended up moving to SC for a job. Good thing, too. I love it here. Nice to be treated with some dignity. Kids are very nice and respectful, too.

  3. So which chapter are they filing under? Chapter 7, or Chapter 11? Regardless of the chapters the are opting for, it’s really a shame that a BASIC building block of an economy has to go for bankruptcy.

    So where’s the support from the government? Do we have to leave the school to capitalism?