Chapter 9 in Detroit

What happens when a school district files for bankruptcy?  We have heard of LEAs on the brink before, but we’ve never witnessed a district actually enter bankruptcy court, as they are usually saved at the 11th hour by the city or state.  But the latest talk and action coming out of the Motor City points to a new first for K-12 public education in the United States — a school district seeking bankruptcy protection from the courts.  The Wall Street Journal has the full story here.

We’ve obviously heard a great deal about corporate bankruptcies, what with General Motors and Chrysler (Detroit Public School neighbors) already seeking help from the courts.  In a previous life, Eduflack worked with a wide range of companies on bankruptcy communications issues, helping consumer goods manufacturers, healthcare companies, and microprocessor producers navigate the Chapter 11 process.
On the corporate side, there are often a great number of misperceptions regarding Chapter 11 bankruptcy filings.  Despite popular belief, it is not usually the first step to liquidation or closing one’s doors forever (that’s left the Chapter 13).  It does not mean that salaries won’t be paid or pensions and benefits have been lost.  It does not mean that vendors will never be paid.  And it certainly does not mean that core business operations will not continue.
Bankruptcy is a chance to reorganize.  Typically, an organization has lost its way and has strayed from its core business.  Expenses have gotten out of hand, debts and obligations have risen, and what has worked in the past simply won’t work again.  As circumstances and conditions change, these organizations need a fresh start.  They need a second chance, an opportunity to break from bad deals and bad situations.  And they need a chance to shed the status quo and refocus on what works and where the future is taking them.  We’ve witnessed companies such as Macy’s, 7-11, and others used bankruptcy reorganization to help them strengthen their business, improve their brand, and better serve their customers.
So when Detroit’s Public Schools talk about filing Chapter 9 bankruptcy (a distinction under the federal code for public entities like school districts), it does not mean Detroit is giving up.  It certainly doesn’t mean we are shuttering public schools in the Motor City and telling all of the area’s students that they need to move on to Catholic schools or similar competitors.  It means Detroit is looking to take control of its own destiny, seeking the flexibility to restructure so it can focus on its core business of educating students and deal with the realities of shrinking student numbers and local tax pools.
Earlier this year, EdSec Arne Duncan referred to Detroit’s schools as a “national disgrace.”  The term drop-out factories may very well have been created to reflect the state of secondary school instruction in Detroit.  While the nation may have been focused on leaving no child behind, Detroit failed to get the memo.  Despite statewide efforts in Michigan to improve public education, boost the high school graduation rate, and better prepare Michiganders with the skills and knowledge they need for the 21st century Michigan workplace, Detroit was a reality we tried to forget, or at least chose to write off.  It stands as the worst-case scenario for the modern-day school district, used as the butt of jokes and an example of what other struggling districts want to avoid. 
All of that makes it very easy for Detroit leaders to simply throw up their hands, say nothing can be done, and simply accept the status quo as the way things need to be in Detroit.  But it doesn’t have to be that way.  DPS Emergency Financial Manager Robert Bobb should be commended for charting the course toward Chapter 9 bankruptcy …. as long as he intends to use it effectively.  

Detroit cannot, should not, and must not simply use bankruptcy to clear the books and go back to operating in the same old way.  Enrollment has dropped nearly 50 percent in less than a decade.  Schools have been closed.  Teachers have been laid off.  These are major changes for a school district.  Such changes mean that one cannot simply go back to the administration and operations of old, content that old debts are behind you.  Doing so simply allows Detroit to run up new debts and likely find themselves in this same situation not too far down the road.
If Bobb and his team take the final step and file for Chapter 9 bankruptcy, they need to use the opportunity to change the administration, culture, expectations, and results of Detroit Public Schools.  The courts will provide Detroit the time to reorganize.  They need to take that time to build a better system.  Let’s be honest here.  Students have left DPS in droves for private and charter schools because of quality and outcomes.  Parents want to see their kids succeed.  They want them to be safe.  They want them to learn.  They want them to graduate.  They want them to gain the skills and knowledge necessary for success.  Too many parents haven’t seen those qualities in Detroit Public Schools, so those with the ability — even in this tough economy — have turned to alternatives to ensure their kids are getting the education they need.
Bobb has already taken major steps to clean up Detroit’s administrative issues.  He’s scrubbing the books, rooting out fraud, and providing a clearer view of what, exactly, Detroit is spending its school money on.  Bankruptcy protection provides him additional time and additional power to continue these efforts and build a better operational infrastructure for the schools.  But he must also take the opportunity to focus on the product — ensuring that Detroit is taking the steps to improve the delivery, quality, and results of a Detroit Public Schools education.
How?  Eduflack has three ideas for Mr. Bobb and his team:
* Teacher quality — Simply staffing Detroit’s public school classrooms with whatever warm bodies are coming out of local ed schools isn’t getting the job done.  Detroit needs to demand higher-quality teachers.  They need to require a more rigorous teacher education program from local colleges and universities, one that demands a more rigorous curriculum, a strong clinical experience, and the content and pedagogy that moves classroom educators from “qualified” to “effective.”  Detroit needs to invest in rigorous, content-based professional development for all its teachers, striving for constant improvement.  It needs to reward effective teaching.  And it needs to recognize that not everyone with a teaching degree is cut out to successfully handle the rigors of teaching in Detroit.  Challenging times require the best teachers.  Detroit needs to invest in getting those teachers, and not simply setting for those willing to be part of a failing system.
* Innovative programs — Two weeks ago, Bobb announced plans to bring in partner organizations to help turn around Detroit’s high schools.  This was a master move, and it needs to be followed through (the school board seems to be balking since the announcement).  Bankruptcy be damned, Detroit needs to invest in innovation and new approaches.  it also needs to focus on return on investment.  Elementary school investments make people feel nice, as we help little kids, but their impact isn’t felt for a decade.  Bobb’s plans for the high schools can yield immediate return.  If implemented with fidelity, these partners can boost high school test scores and graduation rates.  They can better prepare today’s high school students for tomorrow’s jobs.  They can be the first step in bringing Detroit’s schools into the 21st century.  We need more thinking and action like this, and fewer roadblocks from those that fear c
hange or embrace the status quo.  These contracts need to be honored and these programs need to be up and running by the start of the new school year this fall.
* Customer focus — Companies that file for bankruptcy often do because they strayed from their core business and invested in products and efforts that didn’t fit their mission.  Detroit Public Schools should have one focus — dramatically improving student achievement.  Every decision coming from the central office should be proceeded by the question, how does this impact student performance?  The hiring of teachers and principals.  The adoption of textbooks.  The selection of instructional programs.  The introduction of technologies and supplemental education.  School build repairs.  Scheduling.  Course offerings.  Professional development.  Every aspect of school operations should focus on the customer (the student) and how to deliver a better product (an education) to that customer.  If an expenditure or a decision is not going to improve the quality or effectiveness of learning, it is likely not needed.
The citizens of Detroit need to see this as an opportunity.  Those voices across the nation calling for school reform and innovation need to see this as an opportunity.  The teachers and students of DPS need to see this as an opportunity.  Bankruptcy filings mean you are not bound by what has happened in the past.  You get a new start, an opportunity to do things differently and take the right steps forward.  It is a chance to succeed when success had been out of grasp for so long.  While many will try to steer Detroit back into its past ways, Bobb needs to keep his eyes on the prize and focus on the end game.  Forget what has been done and focus on what Detroit’s students need to succeed.  We are approaching a new era for Detroit Public Schools.  Here’s hoping it is an era of the new and the innovative, and not a retrospective visit to an era that has failed far too many Detroit students.

367 thoughts on “Chapter 9 in Detroit

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