Peter Karmanos, the founder of Compuware and owner of the Carolina Hurricanes hockey team, offered a counter-intuitive solution to the woes of the Detroit MI school system. Student scores have been flagging, costs soaring, and school properties shuttered in a city that has become the poster child for American de-industrialization, fiscal crisis, and demographic collapse.
Speaking last week on the Charlie Langton radio show, Karmanos suggested that by paying teachers at a rate of between $125,000 to $150,000 would serve to attract educational talent to the beleaguered city. The scheme could cost as much as $500 million per year. And, if it is superimposed on the Detroit public school district’s current salaries and the Michigan’s pension system, it would add up to $462 million to the Detroit school district’s $642 million annual operating budget. This would mea a 72 percent increase.
In its reports to the state of Michigan, Detroit Public Schools show a $238.2 million deficit in its operations budget. To cover the gap between revenue and expenditures, DPS borrows another $1 million per day. DPS owes the Michigan Department of Treasury $572 million to a state loan authority for money borrowed to cover previous years’ overspending. Those figures reflect money borrowed to cover routine operating expenses, including salaries and heating bills. These are expenditures that are supposed to be covered by regular operating revenue DPS receives from local, state and federal taxpayers. The school district also owes approximately $2 billion to bondholders for long-term debt incurred for land, buildings and major school infrastructure improvement projects.
According to state records, DPS currently has 3,677 teachers on staff, earning $57,758 a year on average. To pay teachers $125,000 in salary across the board would cost an additional $247 million. Paying teachers $150,000 per year would require an extra $339 million. The proposed salary hike would also make DPS responsible for much higher contributions to the underfunded state-run school pension system. These expenses tack another $90 million or $123 million to the cost of paying Detroit teachers $125,000 or $150,000 salaries.
Undeterred by the figures, Karmanos says that he wants a school system operated under the authority of the city mayor. Karmanos said “You’d have to make it one of the more esteemed jobs around, they would have to be recognized for being teachers, and you would have to insist that people who sent the kids to your public school system would have to spend some time on those kids’ education.”
DPS finished last nationwide among urban school districts in reading and math scores in the recently released 2015 National Assessment of Education Progress (NAEP), the so-called “The Nation’s Report Card.” Nevertheless, the same school district gave 80 percent of its teachers the top ranking possible — “highly effective” — according to data from 2013-14.
A comparison of federal expenditures and NAEP scores over the last twenty years showed that increased federal spending on K-12 education has actually shown a decrease in students’ academic achievements. In Detroit, Six percent of Detroit fourth graders were proficient or above in reading, compared to about 36 percent nationally and 29 percent in Michigan. Only four percent of Detroit eighth graders were proficient or better in math, while only 7 percent were proficient or above in reading. It is well-known that Detroit's children are not safe on their way to school, while frequently at home there is little support for educational achievement.
Even so, Dr. Ben Carson - a current Republican presidential candidate - came out of the Detroit public schools and went on to become one of the world's top neuro-surgeons. He credited his parents' insistence on education for his success.
In October, Republican Gov. Rick Snyder touted his plan for Michigan taxpayers state-wide to fund DPS with $715 million. Of the suggested sum, $515 million would go to pay off the school district’s short-term debt, while another $200 million would go to create a new administrative entity to operate Detroit schools. Snyder said that Michigan’s School Aid Fund would contribute around $70 million a year for 10 years. And when the debt of DPS is retired, the district would be closed and the new entity would assume control of schools.
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