Fed bailouts and public schools

Lauren Ruhland, 2008 MCPP intern

Over at National Review, Michael J. Petrilli compares the recently announced federal bailouts of large financial firms with the phenomenon of states bailing out their largest and most troubled school districts:

Predictably, some education analysts are already pointing to the market meltdown as a cautionary tale about deregulation and “privatization.” I don’t know enough about high finance to say whether the 1990s-era policies that removed barriers between bankers and other investors led to this malaise. But surely there’s a better lesson in this mess for schools than just the “regulation is good” storyline that certain interests want to peddle.

Namely, in the education sector also, organizations are more likely to be bailed out if they are considered “too big to fail.” States have a long history of coming to the rescue of huge urban districts, long after they have demonstrated an utter inability to get results or balance their books. It’s only the small fry — tiny, public charter schools — that actually go under. As well they should, if they aren’t getting the job done for kids or they aren’t spending public funds prudently.

Petrilli’s case in point is the troubled Detroit Public School system.  He urges the state to declare DPS bankrupt and overhaul its operations, as opposed to bolstering the failing district with endless funding bailouts.


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