Milwaukee city government is authorizing up to eight charter schools controlled by the California-based organization Rocketship. These schools may pull several thousand additional students from Milwaukee Public Schools and place the school system into a near bankrupt situation.
MPS has fixed costs that can not be decreased because of dropping enrollment. Like most school districts, MPS provides some form of health insurance benefits to their retirees. Under state law, these benefits are considered as legal property and can not be changed once employees are vested in the system.
MPS simply followed actuarial standards at the time these benefits were given to employees. If the school system had none of its students transferring to other schools through choice, open enrollment and non-MPS charters, MPS would have over 100,000 students and only minor adjustments would have to be made to future retirement packages.
However, many students have left the system, and if more students leave MPS, soon the school system may have only one school employee working for every retiree. At that point, MPS will have a difficult time paying its bills.
If you want a good comparison, think of GM, Ford and Chrysler. Foreign competitors, like Honda and Toyota, could build newer automotive plants in the U.S. and undercut the cost of the Big Three because their plants had none of the “legacy” (retiree) costs associated with older operations.
The same is true for newer choice and non-MPS charter schools. They haven’t been in business long enough to have a large pool of retirees. And they are structuring retirement packages differently given the new economy. Suburban schools systems are actually using open enrollment to increase their student populations to help pay for their legacy costs.
No one knows just what would happen if MPS would declare bankruptcy because there are no provisions within Wisconsin state law for a school system to go through such a procedure.
What the Milwaukee Mayor and the City Council may not realize is that if MPS goes under, the city may have to pay the bills. MPS is the only school district in the state which is actually a branch of city government. All MPS buildings are technically owned by the city. All MPS bank accounts are city bank accounts. When MPS passes its tax levy, it must legally be approved by the Common Council, although the Common Council has no legal authority to change the MPS tax levy. This year, MPS must kick in an additional ten million dollars into the city pension fund because many of the non-instructional MPS employees are technically employees of the city.
Some, who favored mayoral control, argued that because MPS is a part of city government and yet neither the Mayor nor the Common Council have much to say in how MPS is run, that city government should be given a larger say in the operations of the school system. That will make it more difficult for city officials to walk away from MPS bills by saying MPS is not part of city government.
Of course, the city has a lot to say about how MPS is run indirectly, and the city has the authority, under state law, to establish its own charter schools.
So as aldermen merrily charter more and more non-MPS schools, they have little understanding that they are undercutting the very school system that is a part of city government. And if MPS goes down, it may take city government with it.
