Politics & Prejudices
Bobb goes to Lansing, seeking $250 million in loan guarantees
Published: February 16, 2011
Robert Bobb, the soon-to-be-gone emergency financial manager of the Detroit Public Schools, went to Lansing last week, asking for what amounted to loan guarantees.
The district doesn't have enough money to make ends meet, and probably never will. Bobb says it needs to borrow $219 million by next month. But the district already owes a vast amount of money. Six years ago, it took out a $264 million loan.
Assured Guaranty Municipal Corp. ensured that loan, and at the time prudently insisted on one condition: They got the right to block DPS from any more borrowing.
Why? Even back then, Assured Guaranty feared the school system might go bankrupt and leave them holding the bag. The more creditors there were, the less they'd recover. Now the schools are in much worse shape, as is the state itself. They are bleeding students — thousands leave every year — and dollars. Because most public education funding comes from a per-pupil grant from the state, the more kids leave, the more in the hole the Detroit Public Schools are.
Not surprisingly, the executives at Assured Guaranty aren't inclined to say, "Hey, go ahead! Borrow all you want! Pay us, don't pay us — it's all good!" No way, Bobby Bobb. So the man in charge had an idea. He would make like Chrysler, and apply for a loan guarantee, from the state this time, not the feds. So he went up to visit the Republican-controlled Legislature.
It is difficult to know what he was thinking, or if he really thought he had any chance of getting anywhere. Based on the lawmakers I talk with, to say he was viewed with a jaundiced eye would be to show too little respect for jaundice.
"What happens if the schools declare bankruptcy?" Bobb was asked. The emergency financial manager assured them the district had no plans to do that. Unfortunately, everyone over the age of 3 remembers that former General Motors Chairman Rick Wagoner said exactly the same thing about GM, right up until ... they filed for bankruptcy.
President Obama himself fired Wagoner. Bobb will be gone, at the latest by the end of June. I have no doubt that they won't file for bankruptcy on his watch; that will come later.
All you need to know about the Legislature's reaction is in a quote Senator Bert Johnson gave the Detroit News:
"I think you've got to question if it's a prudent move, given the nature of the district's finances. I think these committees are going to demand some serious accountability, and he's got to prove the merit of his proposal."
Bingo. Now consider this: Johnson is a Detroit Democrat. If he is that skeptical, what on earth are the Republicans who run the Legislature apt to do? They basically didn't say much, because they didn't have to. They still have no idea how they can balance the state's budget, given the giant deficit looming ahead. Does anyone seriously think they are going to give the perpetually insolvent Detroit Public Schools district a loan guarantee for a quarter of a billion dollars?
My guess is that Bobb was just making a statement for the public record. He's on his way out. He tried to save the schools. He promised, in fact, that he would do so. But he failed.
This was a classic Hail Mary pass, taken from the old Cover Your Ass playbook. When they do declare bankruptcy, or fall apart in some other spectacular and sad way, Bobb, back in California or Washington, D.C., can say this might have worked.
The fact is that he failed in his efforts to turn the schools around. Now, I am not a conventional Robert Bobb basher. On his worst day, he was better for the kids and the schools than the elected school board, with its long tradition of con men, criminals and illiterate public masturbators.
So far as I can tell, Bobb did in fact reduce corruption, close unnecessary buildings and cut costs where he could. Basically, he had the right policies, though his public relations sense hasn't always been what it should have been.
He did improve the curriculum. There were some increases in academic achievement. For the first time in four years, DPS made what the feds call Adequate Yearly Progress.
But it isn't clear to me that anyone could save these schools, as burdened as they are by the city's basic poverty, the state's stinginess, and layers of bureaucracy and incompetent political appointments. When he arrived here two years ago, Robert Bobb promised to eliminate the schools' deficit.
He failed totally, thanks in part to the Great Recession. He slashed a half-billion dollars in expenses. He closed dozens of old buildings and signed contracts to build other, more efficient ones. But the deficit is bigger than it was the year he arrived.
Doug Ross, a former liberal state senator who now runs the University Preparatory Academy in Detroit, has said he thinks saving the Detroit Public Schools as they now exist is an impossible task. That's something with which thinkers across the ideological spectrum increasingly, if reluctantly, agree.
Four months from now, when Robert Bobb is gone, the state can either get ready to try an elected board again, get another emergency financial manager, or turn the Detroit Public Schools over to Mayor Dave Bing, who has his hands full trying to keep the SS Sinking Ship Detroit barely afloat.
What should they do?
Clearly, something entirely different.
Nolan Finley, the editorial page editor of the Detroit News, isn't someone traditional leftists look to for advice on anything having to do with the city. But he has an idea worth thinking about when it comes to the Detroit Public Schools.
Finley suggested in a column turning DPS "away from an operating model and towards a management model ... instead of running schools, the district would oversee a portfolio of schools that are actually run by contractors ... selected from a list of education providers with a proven record of success."
> Email Jack Lessenberry