Editorial: Debt is crushing state’s schools

The education financial crisis in Michigan extends well beyond Detroit Public Schools, as a new report from a major credit rating service confirms. The findings should move the talk about fixing school finances well beyond the state’s largest district.

Moody’s downgraded 47 of the 206 Michigan school districts it rates, and expects the number to climb again next year.

Since 2009, the debt of 150 Michigan schools has been downgraded.

The service blames a number of factors, including enrollment declines and unfunded pension liabilities.

It singles out competition from charters as a factor in the loss of students at traditional public schools.

That will inevitably stir cries to limit the growth of charter schools, as it has in Detroit.

But the answer to a financial crisis brought on in considerable part by the academic failure of school districts should not be to trap more children in those failing schools.

As Gov. Rick Snyder prepares to introduce legislation restructuring DPS, he has to stick to the commitment to not only address the debt and deficit, but to also push the schools to improve classroom performance.

Simply limiting access to charters will not stem the enrollment decline in Detroit or elsewhere. Parents who can’t find quality schools in the city will move to the suburbs, as they have been for decades.

Other solutions must be explored. The unfunded pension liability is not a small matter. Much of the increase school districts receive in the per-pupil foundation grant is eaten up each year by increasing pension obligations.

Add on rising health care costs and very little of the additional money ever makes it to classrooms.

Michigan also has too many school districts, particularly given the overall decline in school-age children. Total school enrollment has dropped 12 percent over the past decade.

Districts should be consolidated to reduce overhead costs, and more schools closed.

Moody’s concludes that the best option for school districts is cost cutting, particularly through renegotiating union contracts.

It notes that the soaring pension obligation is a prime driver of the school debt. The unfunded pension liability in the rated districts has risen 345 percent in recent years, increasing the required payments districts must make into the system.

This is unsustainable.

While the governor has been trying to pay down the pension shortfall through additional annual payments from the state, it is a slow process.

Other adjustments are needed. Solutions such as raising the eligibility age for collecting pensions and requiring a greater contribution from teachers and other employees must be considered.

This debt is crushing Michigan schools and choking off money needed to upgrade classroom performance. A statewide approach to wiping out the obligation is needed.

Fixing Detroit is a start, but the work doesn’t end there.