The sad reality is that all too often when unscrupulous businesses take advantage of unwary consumers, they target the most vulnerable populations. Consider how finance companies target high-interest rate loans to those least able to afford them. Or how payday lenders offer short-term loans for interest rates as high as 780 percent or more. Or how mortgage brokers enticed aspiring homeowners with the low initial rates of adjustable-rate mortgages (ARMs), leading us into our great financial crisis of 2007.
The rallying cry of the defenders of these predatory industries is often “the people could have chosen not to borrow the money” or “they didn’t really need that big house or that nice car.” But when you dangle money today to help a family whose income does not pay for basic living expenses, is that really a choice? Why is the American dream increasingly only afforded by the very rich?
Consider the proliferation of charter schools. So-called because they are run by private entities who sign a contract, or a charter, with a sponsoring organization such as a school district to operate a school with public funds. The requirements placed upon these operations are often meager, under the pretense that such freedom will lead to innovation. As indeed it has in certain places, with a disproportionate number of America’s best high schools according to U.S. News and World Report being charter schools.
But consider the experience in my home state, Michigan. I live in a suburb just across 8 Mile Road from Detroit. As a result, several charter schools have opened up in my community, many catering entirely to Black students fleeing the chaos and ineffectiveness of the Detroit public schools. But are these students getting something better in these charter schools? The research says no.
A victim of white flight, Detroit was once a great city, until the end of World War II opened up the suburbs for development. The U.S. Supreme Court’s 1948 Shelley v. Kraemer decision banning the use of racially-restrictive deeds — a common practice in Detroit at the time — led to White people fleeing en masse. By the time of the Detroit riot in 1967, the city was 50 percent Black, 50 percent White. This shows the rapid change that was occurring as the city had been 91 percent White in 1940, despite having a substantial Black population. After all, in 1950, Detroit was America’s fourth-largest city.
The riot only accelerated white flight. Between 1950 and 2010, the city lost 95 percent of its White population. In theory, this shouldn’t have made a difference. The problem was that the White community took their wealth with them, much of which had been accumulated with racially discriminatory government policies. As a result, with white flight, the city’s overall population dropped 20 percent, much business investment left as once-imposing car factories were shuttered, and the tax base dropped precipitously. With the plummet in tax revenues came a commensurate decline in school funding.
Like many states, Michigan largely funds its schools with property taxes. Despite an effort in the early 1990s to decouple school funding from local wealth, the disparities continue to be endured. When officials tried to even out educational opportunities with buses shuttling students to the better-funded suburban schools, such inter-district busing was outlawed with the Supreme Court’s 1974 Milliken v. Bradley decision. Detroit schools became an underfunded ghetto with some of the worst-performing schools in the country.
To the Republican Governor John Engler and his ally conservative activist Betsy DeVos, these failing schools represented an opportunity in the early 1990s. They believed in the idea of charter schools, a policy that had been initiated in Minnesota. Michigan’s approach, driven by the evangelical libertarianism of DeVos, was a complete lack of regulation of these schools. There would be no centralized oversight, and private entities could own and operate the schools.
Now, the charter schools in the Detroit area perform as poorly as the traditional public schools. But yet they remain popular. Indeed, research seems to indicate that parents seek out these schools simply to find a safe environment for their children. The educational performance of the school, not surprisingly, seems to be of only secondary concern.
So here’s what we now have in Michigan. We are one of the states with the largest number of charter schools in the country. Eighty percent of these schools are operated by for-profit entities, with much of the public funds going to excessive real estate costs and management fees, in other words directly into the pockets of the investors. At least the students are safe from violence.
But the overall impact of charter schools in Michigan has been a disaster. A 2016 review commissioned by the National Education Policy Center found that Michigan’s per-pupil spending, compared with that of neighboring Midwestern states, had fallen “from the middle of the pack to near the bottom.” Charter schools had just become another way to warehouse the children we don’t prioritize.
The truth is that in Michigan’s elite school districts, where high property values support extravagant school spending, families feel no need to send their children to charter schools. It is only where the public schools are more than terrible, they are unsafe, that parents flee to charter schools.
Consider this contrast. Bloomfield Hills public schools, located in one of Detroit’s wealthiest suburbs, spend $16,309 per year on each student’s education, with 60 percent of that total going directly to instruction. Only 9 percent of the students there are Black, and 81 percent of the students there go on to college, twenty points higher than the state average. By contrast, in the Detroit public schools, only 45 percent go on to college, sixteen points below the state average, not surprising considering that the per-pupil spending is 43 percent lower than in Bloomfield Hills, and only 35 percent of those funds are spent on instruction. The Detroit district, by the way, is only 2 percent White.
Just as this situation was a political opportunity for Conservatives, it has become a business opportunity for hedge funds and other investors. Each student comes with a certain guaranteed per-pupil revenue. Gather together enough of these students, offer a low level of services that the lack of regulation allows, and this has become be a very profitable enterprise.
The problem is that this comes at the cost of improving the schools that are mostly populated with Black students. In some respects, dividing Detroit’s population between charter schools and its public school district has reduced the political power of Detroit’s public school families, taking away any incentive for the state to address the continuing poor educational prospects of the Black children ghettoized in Detroit.
Unfortunately, this story has national implications. DeVos, of course, was narrowly confirmed by the Senate to her current position as Secretary of Education. In that position, she has pushed to increase the federal government’s support of charter schools, especially those that conform to her vision of radical deregulation. In states where she has had the most influence, such as Florida for example, the result has been some shockingly bad charter schools.
But it doesn’t have to be that way.
In New Orleans, after the devastation of Katrina, the school district chose to rebuild itself with the help of charter schools. Unlike in Michigan and Florida, however, these schools are heavily regulated with aggressive oversight, and they have banned the for-profit operators which are so widespread in Michigan. The result has been better schools.
Ultimately, this challenge will be resolved by decoupling the link we have established between a community’s wealth and its schools. When we accomplish that goal, the elites will push for all schools to be exceptional, not just the ones in their neighborhoods. Once that occurs, there will no longer be any need to enforce segregation since opportunity and quality of education will be equal no matter where you go.