Aug 2, 2010
Two State of Michigan take-overs of the Detroit Public Schools have bled the DPS dry. The state appointees have blatantly served as fronts for the banks.
Thanks to their actions, in 2011, the district will need 523.8 million dollars to service its debt. That number comes to more than 90% of what it gets from the state in per-pupil aid for the year.
In other words, thanks to the state and its “financial managers,” the DPS takes the state funding and hands it right over to the banks!
Kenneth Burnley, who was appointed CEO in the first state take-over of the district in 2000, borrowed 210 million dollars in “deficit reduction bonds” from several banks. These are like sub-prime loans on steroids: the payments start out small, then balloon out of control after several years. And, they actually use state per-pupil funding to pay them back. State law was conveniently changed to allow such bonds.
While Burnley was CEO of the DPS, he made it look like he had solved its fiscal problems. Only after he left did the bond payments explode, leaving the district awash in even more debt. The state blamed the district’s new school board, and said it needed fiscal control: another state-appointed head.
Robert Bobb, the “emergency financial manager” appointed by the state last year – supposedly to reduce the DPS deficit – has done exactly the same thing Burnley did, but on an even more massive scale. He borrowed hundreds of millions more on these ballooning bonds, accounting for 515.5 million of the 523.8 million dollars set aside to pay the DPS debt in the 2010-2011 school year.
All the while, Burnley and Bobb have attacked district employees, as if they are the cause of the district’s financial problems. In the past two years alone, Bobb has closed tens of schools and laid off thousands of district employees.
It has all been part of an ongoing campaign, over the past ten years at least, to gut the district and hands its money over to banks, for-profit charter schools, and other corporate contractors.
Government officials all talk about how they want to “improve” schools, to “help the children.” Their actions show otherwise: they see school budgets as a source of big gifts to banks and corporations, and let the children be damned.