Surprisingly, Big Tobacco could well lend a hand to Motown’s efforts. In the mid-1990s, Michigan joined 45 other states to sue the tobacco industry seeking compensation for healthcare expenditures for ailments arising from tobacco use. Michigan’s initial payment from the tobacco industry was $104.5 million, to be followed by $279 million to $365 million annually for 24 years. The state securitized those settlement dollars to create a $2 billion fund to invest in alternative energy, advanced manufacturing, homeland security/defense, and life sciences over a 10-year period.
Repairing the School System
As one would imagine, a full economic turnaround is not only decades in the making but also rife with challenges. Perhaps the biggest in the case of Detroit is the poor educational attainment of its residents. Metropolitan areas that succeed tend to have a thriving central city with a highly educated population. In Detroit, roughly 11% of residents 25 years and older have a bachelor’s degree. Grimes says: “If you look at Seattle it’s over 50%; Boston is over 40%. It’s really important to have an educated population in your central city and Detroit does not have that.”
Illustrating this point, an April 2009 study by the EPE Research Center, a division of the nonprofit Editorial Projects in Education Inc., ranks Detroit’s graduation rate 48th out of the 50 largest cities—ahead of only Cleveland and Indianapolis. Some 27% of its students dropped out in 2008, and only a fraction of its high school graduates go on to college or technical school. This is a serious issue for a city whose workforce may not be ready for industries policymakers are hoping to attract. Granholm is trying to address it statewide by offering scholarships to every student in Michigan who graduates from high school. “We’ll give them a $4,000 scholarship to college, which is essentially two years of community college tuition here,” she says. “No matter where you are, no matter where you live, we want to double the number of college graduates, which is part of the strategy to diversify our economy.”
In response to the school system’s projected $259 million budget deficit following years of mismanagement, Granholm appointed Robert C. Bobb as emergency financial manager for the Detroit Public School System earlier this year. He assumes full financial authority for a school district with a sharp decline in student enrollment and poor academic performance. To solve its fiscal problems, Bobb may be forced to file Chapter 9 bankruptcy (the chapter of the Bankruptcy Code providing for reorganization of municipalities). He believes that to resolve long-term financial issues, the school system must “put in place, aggressively and urgently, methods for 21st century teaching and learning.”