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.