Detroit Teachers Face "Payless Paydays" As Dilapidated School District Faces Financial Reckoning

Tyler Durden's picture

When last we looked at the effect America’s multiple state and local government fiscal crises are having on the country’s school systems, we noted that budget drama across both Illinois and Pennsylvania threatened to force layoffs and class cancellations.

In Chicago, for instance, the Board of Education has variously been described as “a gambler at the end of his run,” a reference to officials’ bad habits when it comes to skipping pension payments and borrowing heavily to stay afloat. “Let’s be clear Chicago Public Schools are in dramatic trouble,” Governor Bruce Rauner said in December. “They’re looking at a disaster somewhere in the next nine months.”

Just this month, the Board sold another $725 million in bonds at punishing interest rates of up to 8.5%. Here's a look at the 2042s:

Things have gotten so bad that Rauner wants to block the system from borrowing more money and take over the schools. “If it determined that any school district was in financial duress, the state board has the right -- the legal authority -- to block any debt offerings,” he told reporters on Monday. “The state board has not ever chosen to do that for the city of Chicago. I hope that never becomes necessary, but we’ve got to be ready to take action and step in.”

As for Pennsylvania whose schools, you're reminded, started the year minus $1 billion in funds, Governor Tom Wolf warned earlier this month that the state's ticking budget timb bomb would eventually force massive layoffs. "At the Senate hearing Monday, Majority Leader Jake Corman, R-Centre, challenged Mr. Wolf’s claim during his budget address that if his proposals are not enacted, thousands of teachers will be removed from Pennsylvania schools," the Pittsburgh Post Gazette writes. "Mr. Corman noted that the Republican budget would have increased education funding, though not by as much as Mr. Wolf wants."

Whatever the case, partisan budget brawls and gross fiscal mismanagement are imperiling the future of America's school children. Literally. That's not some attempt to employ hyperbole in order to tie the future of America's youth to economics and finance. It's a reality in more locales than one. 

Case in point: today we learn that Detroit's public schools have officially reached their borrowing limit which means absent some manner of intervention from the state government, the district will run out of cash by April.

"This month the amount of state aid that’s siphoned off to service debt will jump to roughly what is spent on salaries and benefits, pressuring the district’s ability to pay its bills," Bloomberg writes, and that means "the district may have to stop paying workers if lawmakers fail to reach an agreement."

Detroit's school system is sitting on more than a half a billion in debt to the state loan authority and will be insolvent in less than 60 days. Last month, some schools were forced to close because teachers called in sick to protest poor conditions. Poor conditions like those shown below:

"The city began inspecting the buildings last month after the teacher strikes began," Bloomberg goes on to note. "On Feb. 6, the district announced it was reallocating $300,000 from other spending to begin repairs to buildings."

"DPS is finally on the brink," State Treasurer Nick Khouri told lawmakers today. “When they run out of cash, sometime in the spring or early summer, without legislative interaction, they will have payless paydays," he warned.

In order to "fix" the situation, lawmakers want to split the district into two entities one that will carry the debt burden which the state will help to pay down, and another to administer the schools themselves. 

"The package of six bills would split the 46,000-student DPS into two entities, creating a new debt-free school district," The Detroit Free Press reported, earlier today. "Two bills already pending in the Senate contains a similar plan, but the House bills have been more controversial because they add collective bargaining restrictions to teachers and don't restore a fully elected school board to the city for eight years."

Each year, the district spends $70 million more than it brings in in revenues, but a bankruptcy would result in 12 months of "chaos," Khouri cautioned. 

So, just another day in the heart of America's gutted manufacturing heartland. For anyone who is still clinging to the idea that US manufacturing is in the midst of or is somehow capable of experiencing a renaissance in the years ahead, we encourage you to have a look at one last chart from Bloomberg, which should tell you everything you need to know about the Rust Belt's future.

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papaswamp's picture

...coming to a city near you...

Father Thyme's picture
Father Thyme (not verified) papaswamp Feb 24, 2016 6:10 PM

<<-- Flee the Black Plague!

<<-- Welcome Vibrancy!

KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) Father Thyme Feb 24, 2016 6:14 PM

Feel the Bern (coming to a city near you, or NOT... the other choice is downtown Damascus looking the same way)

cossack55's picture

Looks much better than the schools in Homs and Alleppo

BuddyEffed's picture

And Detroit used to be the center of the known universe
Didn't it have the highest per capita income in the country in the early 60s?

CrazyCooter's picture

This is precisely why I will never own a house again - because if my muni goes full retard I am packing and moving.



SafelyGraze's picture

the problem is evident from the graph: tying funding to enrollment is the real problem.

the solution is as obvious as it is simple.

keep the funding level the same even when the number of students declines.

even better, increase the funding level when the number of students declines.

this simple strategy should be applied in every school.


Kissy Ass's picture

Obamanation! Let them run it all.

max2205's picture

Schools are the biggest part of the FSA

I am sure Barry will 'fix' it before he leaves.


infotechsailor's picture

Free market always wins.

This is the state monopoly dying.

Me and the Koch brothers and all other Austrian libertarians just watch and laugh.

Sucks for the kids but we tried to warn their grandparents.

DaveA's picture

Scenes from the upcoming History Channel program "Life After White People".

wee-weed up's picture



"And Detroit used to be the center of the known universe
Didn't it have the highest per capita income in the country in the early 60s?"

Thank the Libs. Everything they touch turns to shit.

RafterManFMJ's picture

Once the percentage of Canadians in your city goes north of 8-10%, your city is doomed; it's simply a matter of time.

Fuckin' Canadians.

COSMOS's picture

Lets also not forget that Detroit turned to shit when the factories started being shipped to China and Taiwan.  Thank capitalism for that one.

roddy6667's picture

The factories can't be brought back. A Chinese auto worker makes about $5.75 USD an hour. This is a good job with health insurance, job security, a pension, and good working conditions. The pay buys ( IN CHINA) a solid upper blue collar lifestyle. that includes a nice home by western standards, lots of western style consumer goods, and money left over for savings.  An American worker would have to make at least 5X that to have the same lifestyle. The game is over for America.

OneOfUs's picture

PCR where art thou? have thou forsaken me?  PCR Save Us!!!

goldsansstandard's picture

Thank Banksterism.

When gold was money, gold would flow to the country running a trade surplus. , say China.

There being more gold money in China, chasing real estate, food, doctors, etc., the cost of operating in China would rise.

Meanwhile , gold would leave the US, Prices in the US would decline, and this would bring manufacturing back.

Now you stupid fffng boot licking statists wanted free warfare and welfare, so you have supported the debt based money system. Useful idiots to the banksters.

The collapse of mid America corresponds in time with the default. Of the US dollar redeem ability. By Nixon on August 15 1971.

Go YouTube his speech,

Trickery Dicked the world.
Political money, not free market money is the problem.


JonNadler's picture

gold is flowing to the country running a trade surplus i.e. China.

azusgm's picture

Funny, just a couple of months ago a retired teacher complained to me that she had not received a raise in her pension benefits for several years. I told her about Detroit and Chicago and explained that it is the younger teachers who are going to be ripped off by the promises that cannot be kept because of the poor likelihood that the pension fund can recover from 2008 and prosper in an environment of low bond yields. Saw her again last weekend. She didn't mention her pension.

She will be voting for the democratic candidate. (Always has.)

Antifaschistische's picture

She will get her 1%. Then her taxes will go up 3 1/2%. Thats the way the math works. In the end, msth wins every time

OneOfUs's picture

I keep hearing Democrat or Liberal but all I see is "No Child Left Behind" 

DownWithYogaPants's picture

........and no one mentions the Niggerians in these school districts????

we all know if the students were caspers this problem would not arise because no one but no one does corruption like Niggerians.  

StychoKiller's picture

You can blame the students if you want, but it would be more accurate to place blame with the Decepticrats!

Kobe Beef's picture

Africans in America reverting to the African mean. Nothing to see here.

20% of Africans in Detroit are literate. They are simply rent-seeking by pretending to teach the 80% of illiterate Africans.


True Blue's picture

How about funding a school based on how many literate and mathematically able students it graduates instead?

greenskeeper carl's picture

I don't own a house for similar reasons, but I wouldn't worry as much in rural areas. Every major city will end up going full retard before its over.


Karl denninger made an excellent point not to long ago in response to a "please take pity on us, help us, its for the children" article highlighting a bunch of teachers in detroit pointing out all the problems. All those teachers were middle age, and every single one of them was somewhere between really overweight and morbidly obese. Every. Single. One. There wee a few white people pictured(also just as fat) but most of them were those insanely obese black women with a butt like a bag of wet cloths you tend to see if you are unfortunate enough to wander into a walmart on the day the EBT cards get refilled. His point was that people that fat, including generations of retired teachers who are still using detroit dollars with their massive healthcare costs, run up hundreds of % more in healthcare bills than normal sized people, and that they would probably free up a nice chunk of money if they didn't have to pay for all the dia-be-tus care and shit like that. Since the teachers don't seem to care at all about that, why should anyone else.

Kissy Ass's picture

Fuck owning a house. Shitbox American homes are built to last 25 years, if that.

I rent and I only rent the cheapest apartment that I can find and ONLY non-jew landlords. On Saturday I always go out to watch that somebith mow the lawn and I laugh at his little American Dream... HA!

Jon Bong Jovi's picture

Let me tell you, it's rough out there for property investors. The portion of my net worth generated by my investment property is only $30 million, but fuck man, you must be doing so much better renting than owning.

And if you see me mowing the lawn, it's because I needed get out of the house to get away from wifey. Rest of the time, I'm smoking weed, watching porn, and making menancing collection calls.

Hitlery_4_Dictator's picture

Typical scum bag land lord / property "investor" living off the backs of others while being a total dirt. Can't wait unitl the property bubble pops and you lose it all. 

espirit's picture

@ H_4_D

Typical sarc bs from above post, not average ZH poster.

Jon Bong Jovi's picture

I'm actually looking forward to a real estate crash. We need these little corrections to help shake off the crap. Besides who doesn't like a good sale? Economic turmoil? BRING IT! That's where fortunes are made!

I don't lose during down periods. I'm usually the asshole buying when people are panicking. I haven't really found any compelling properties to buy since 2010. That's where I turned to development instead. Use tax credits (NMTC, LIHTC, Fed & State Historic Credits) to add to the equity stack, most projects subsidized by 45%+. It's hard to lose.

Jon Bong Jovi's picture

I'm a capitalist. The concept of hell for me is being poor which fuels my insatiable greed. I'm not that greedy. I'm just planning to work until I have enough for the next 2 - 3 generations. Teaching my children how to think generationally as opposed to paycheck to paycheck. Probably pull a Jim Rogers and move to SE Asia in five - ten years and live life. 

quietdude's picture

Spoken like someone who never had rentals. Ever have the police raid your unit because the tenants were selling drugs? Section 8 was paying the rent for these drug dealing scum. The end result? My tenant rolled on her supplier and was never charged, so, she still qualifies for section 8. The good news is the cunt moved away to avoid being killed by the people she rolled on.

I evicted another tenant because he went off his meds and began doing odd shit, such as storing bags of WELL USED cat litter in his bedroom. It took 6 months to get him out. The smell would have R. Lee Ermey weeping and begging for momma. Wound up cutting out the piss soaked floorboards and putting in new.

If landlording is so easy give it a try. I will hold your coat.

tunnelvizn's picture

They also die sooner

Almost winning

WillyGroper's picture


wise choice.

get a load of the agenda21 international building codes.
OneOfUs's picture

So...95% reduction eh? How many of you think you and your loved ones will survive a 95% purge? I'm guessing not many, so yuk it up now while you can. Meanwhile I'll be getting ready for hunting season. The concrete beckons me.

nmewn's picture

Hey, I hear Maduro will be back on the market as a leader pretty soon, maybe he can sort it all out ;-)

LasVegasDave's picture

As Paul over at is so fond of pointing out, you can either pay for niggers, or you can have a civilization.


But not both.

KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) LasVegasDave Feb 24, 2016 6:47 PM

So I guess that Sheldon Adelson feels more 'civilized' by hiring you to clean his pool instead of Kunta Kinte

greenskeeper carl's picture

enjoy that site. It lays it all out, in plain language. As a libertarian, I disagree with him on some finer points, but he can lay out the problem like no other. And that statement is 100 % correct. Those two things cannot coexist.

KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) greenskeeper carl Feb 24, 2016 7:04 PM

Of course, that depends on what you consider 'civilization' to be...


If, by chance, you consider 'CIVILIZATION' equate to western style democracy eventually to be usurped by money counterfeitting jew overlords (with YOU as their slave)... & using that same POWER to wreak death & destruction over the entire world... Well, whatever suits you...


Frankly, I'd rather be Kunta Kinte with whip marks on my back & retain my dignity than to be a fucking soccer mom sucking jew circumcised dick for a larger wedding ring (& pretending that nothing bad ever happens)...


You know? SERIOUSLY... FUCK YOU!!! CIVILIZATION??? Is that what you call the 'veneer' of civilization that would collapse in a nanosecond except for the SWORD OF DAMOCLES tthat world central banks hold over everyone's heads?

LasVegasDave's picture



looks pretty bleak from where you're sitting.


Too bad.


Now get to work sucking circumcised cocks, you schmuck

KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) LasVegasDave Feb 24, 2016 7:18 PM

I won't have to worry about having to do that, ever, because I do the one thing that hurts them the most... I DON'T BANK, OR BORROW MONEY FROM THOSE LEECHES, I DON'T WATCH THEIR TV, READ THEIR NEWSPAPERS, GO TO THEIR MOVIES, OR VOTE FOR THEIR POLITICAL CANDIDATES...


& that's how... I can call myself 'civilized'

Ms No's picture

I think we might be going too far when we judge a penis by it's cover.

RafterManFMJ's picture

Never judge a penis by its cover; or who you're gonna love by your lover.

MsCreant's picture

No one ever asks the babies about it, do they?