Bankrupt

Detroit public schools are just about bankrupt.

Behind DPS's predicament are many of the same problems that have haunted the city's auto industry for years: excess capacity, high labor and pension costs, fleeing customers, ineffective management, outside competition and -- except for a handful of respected programs -- a reputation for low quality.

Even after millions of dollars in budget cuts in the spring, including 29 school closings and thousands of layoffs, the district started the fiscal year this month with a $259 million deficit. To meet payroll and pension obligations, the district has had to seek advances on state funding and other stopgap measures.

DPS's enrollment -- which largely determines its allotment of state funding -- is about half what it was in 2001, as suburban districts and charter schools have siphoned off tens of thousands of students. By this fall, DPS will have 172 schools open and more than 100 vacant. Meanwhile, the high-school-graduation rate is 58%; coupled with the enrollment losses, only about one-quarter of students who start high school in the district graduate from it in four years, according to outside estimates.

But DPS's problems go beyond the type that sank GM and Chrysler. Wide-scale corruption has depleted district coffers, which held a $103.6 million surplus as recently as 2002. In June, Mr. Bobb's new team of forensic accountants found DPS paychecks going to 257 "ghost" employees who have yet to be accounted for. A separate Federal Bureau of Investigation probe in May led to the indictment of a former payroll manager and another former employee on charges of bilking the district out of about $400,000 over four years.

How telling is this: enrollment has dropped nearly in half this decade: from 159,000 to a projected 83,000 in 2010. Between ghost employees, drop-outs, economic devastation, a mayor who was just in jail, a former city council president who is heading to jail, and a myriad of other problems, I'm not surprised that Detroit public schools rival the auto companies for most incompetent local business. But these schools, described as a "national disgrace" by Arne Duncan, can't just be eradicated because of the unions. Too bad the entire system can't be scraped in favor of universal charter schools or school choice. But no one is really to go that far for change.