Politics & Policy

From the Lehman Board to the Board of Ed

The coming meltdown.

How refreshing to watch Wall Street reintroduced to “market discipline” this weekend, and how depressing to see “moral hazard” return by Tuesday night. The government’s refusal to rescue Lehman Brothers seemed to indicate that financiers would have to face the consequences of their own risky actions. But then AIG was deemed “too big to fail.”

Predictably, some education analysts are already pointing to the market meltdown as a cautionary tale about deregulation and “privatization.” I don’t know enough about high finance to say whether the 1990s-era policies that removed barriers between bankers and other investors led to this malaise. But surely there’s a better lesson in this mess for schools than just the “regulation is good” storyline that certain interests want to peddle.

Namely, in the education sector also, organizations are more likely to be bailed out if they are considered “too big to fail.” States have a long history of coming to the rescue of huge urban districts, long after they have demonstrated an utter inability to get results or balance their books. It’s only the small fry — tiny, public charter schools — that actually go under. As well they should, if they aren’t getting the job done for kids or they aren’t spending public funds prudently,

The Detroit Public Schools is the AIG of education. It’s big, it’s bad, and it’s broken. And while its ship is sinking, school-board members and the superintendent are squabbling over “rudeness.” Is there any reason to believe that current governance arrangements, political dynamics, and leadership are conducive to the systemic transformation needed to save Motown’s children from a life of despair?

What’s needed is a fresh start, a do-over, a clean slate for Detroit. Simply put, the state should declare Detroit Public Schools bankrupt.

Michigan should take it into receivership and void or renegotiate all of its contracts (including its collective-bargaining agreement with the teachers union). It should slice through any red tape that would keep Detroit from creating a world-class system, including Michigan’s cap on new charter schools and its burdensome teacher-certification requirements. It should recruit a fearless leader to build, from the bottom-up, a strong curriculum, a culture of excellence, back-office and human resource routines that work — all the elements of a functioning organization. Such an organization would give the public the transparency around spending, processes, and results that has been so lacking on Wall Street lately, and in most big-city school systems forever.

Instead, lawmakers will likely infuse DPS with yet more cash in order to (once gain) bring the district out of insolvency. And they will try to “protect” the system by keeping additional charter-school competitors out. (Clearly, Gov. Jennifer Granholm’s interest in making Michigan more “competitive” doesn’t extend to the public schools.)

Americans are understandably growing impatient with government bailouts of Wall Street. When will we become just as frustrated with government bailouts of dysfunctional public-school systems?

— Michael J. Petrilli is vice president for national programs and policy at the Thomas B. Fordham Institute, an education-policy think tank in Washington, D.C. He is also a research fellow at the Hoover Institution and an executive editor of Education Next.

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