This emergency manager says better management wasn’t enough. The Detroit district needed cash.

Emergency managers appointed to heal the Detroit district’s finances did little more than apply Band-Aids to a major wound, according to a recent report.

Robert Bobb, one of those emergency managers, says Band-Aids were all he had.

Like others appointed to run Detroit Public Schools amid a financial crisis, Bobb took out loans to cover the district’s short-term costs, an approach that led to ballooning debt and interest payments.

“We couldn’t make payroll. The district could not even pay its utility bills,” he recalled. “Either we close the doors, or we go to short-term borrowing that will have a negative impact in the long term.”

The report, which was commissioned by the school board, found “startling mismanagement” by the state officials who largely ran the district between 1999 and 2015.

The era of state control ended in 2016, when the legislature created a new district to educate students while the old district collects tax revenue and pays off debt. The new, debt-free district is in better financial shape, although it faces a looming facilities crisis.

Bobb’s comments add to a long-running debate surrounding one of the thorniest education policy problems in Michigan: What do you do when a school district is headed for a financial cliff? The stakes could hardly be higher for the thousands of students currently enrolled in districts that are struggling financially and academically.

The four other emergency managers appointed to run the Detroit school system did not respond to requests for comment.

While the Detroit district is in much better financial shape today, recently posting a small budget surplus, its leaders warn that the progress is threatened by the district’s aging buildings. And across the state, school districts like Benton Harbor and Flint face the same challenges that pushed Detroit Public Schools to the brink of bankruptcy.

The report argues that emergency managers didn’t solve the problem. Rather, they “failed to address the structural operational issues plaguing DPS,” the report’s author, an attorney for the Allen Law Group in Detroit, wrote.

Bobb, who ran the district from 2009 to 2011, was a highly controversial figure. He closed dozens of schools, cut a lot of positions, and privatized many services. He also pushed for the conversion of some district schools into charter schools.

The school board at the time successfully sued to stop him from overhauling the district’s academics operations. A judge ruled that Bobb had overstepped the boundaries of the emergency management law at the time. In response, Bobb pushed the legislature to give emergency managers more power. When Republicans won control of the legislature the next year, they followed his advice, passing one of the most powerful — and controversial — emergency management laws in the country.

One of Bobb’s hires, Barbara Byrd-Bennett, would later come under scrutiny after the district entered a $40 million curriculum contract with her former employer, Houghton Mifflin Harcourt. Byrd-Bennett is currently in federal prison for her role in a corruption scandal in the Chicago school district.

As emergency manager, Bobb had nearly complete control over the operation of the school district.

Bobb wasn’t interviewed for the report, and he said its basic conclusion — that the district was mismanaged by state-appointed officials — is “baloney.”

Bobb agrees that he and other emergency managers didn’t solve the basic problem of shrinking enrollment and shrinking revenue.

They couldn’t, he said, without more help from the state: “You need a cash infusion.”

David Arsen, a professor at Michigan State University whose research has focused in part on emergency management, says Bobb’s efforts to cut costs — he closed 72 schools — were hamstrung by school choice policies.

“He closed lots of schools, but the deficit kept getting bigger, because when you close schools in a city like Detroit, the students don’t come back, they go to charters or to schools in the suburbs,” Arsen said.

Bobb recognized the problem by 2010, when he proposed legislation that would have provided a major influx of cash to the districts hardest hit by declining enrollment.

That’s ultimately what happened in Detroit, which got $617 million in additional state funding in 2016 to avoid a default. (No Detroit-based legislators voted for the deal, objecting to what they saw as an incomplete solution with too many strings attached.)

“The whole idea of emergency management is that the school district’s problems are due to poor management and the failure or local democratic governance,” said Mike Addonizio, a professor of education at Wayne State University. “By 2016 it became apparent to policymakers in Lansing that there was no way to manage DPS out of its budget deficit.”

In the meantime, children in Detroit were left with chaotic and subpar schools, the report points out. The district’s academic operations fell into disarray, and the financial picture got worse.

Bobb points out that there were some wins: He established an independent office to investigate fraud and corruption in the district, and he says he rooted out corrupt contracts and eliminated unnecessary expenses. He also brought in thousands of volunteers to tutor students in reading. 

Addonizio agrees that a major cash infusion was the only way to solve the problem. He believes it didn’t come sooner because of a political consensus in the Republican-controlled statehouse that the structural issues would be solved by school choice measures.

“They were convinced that more choice could resolve problems of educational deficiencies and management problems. I guess maybe they thought that failing schools would close and that children would then enroll in schools that were succeeding.  But when students leave schools and districts, the schools don’t close. The children remaining in the district just suffer.”

The students who left the city didn’t get a great deal, either: A recent report found that they tend to end up in schools with higher discipline rates, more new teachers, and higher teacher turnover. 

But while Bobb agrees that the state should have been quicker to send extra funds to the district, he’s not convinced that emergency management is a bad idea.

“They also need to be smart with respect to how much cash do you actually need and then your ability to manage these situations. Outside help can figure these things out.”

Editor’s note: Nov. 27, 2019: This story has been updated to include more information about Robert Bobb’s tenure as emergency manager of Detroit Public Schools.