Detroit Childrens Fund

Building Detroit's Population

In all popular surveys identifying the best communities in which to live and those surveys dealing with growth communities, a number of measurements are used to create each city's rating: crime rates, climate, transportation, job growth, tax burden, cost of living and cultural attractions are all considered but the quality of the school system is weighed heavily by families with children.

Families, for the most part, make decisions based on the best interest of their children: Cities and States with good educational resources, both public and private, attract new residents and retain their populations.

While many factors in the past have combined to generate population losses in the City of Detroit, the current perception of the poor performance of the Detroit Public Schools continues to spur middle-class family flight. Creation of a viable public school system coupled with innovative educational incentives will stem Detroit’s population loss.

Cities and States offering subsidized or guaranteed higher educational programs to their residents and high school graduates have been successful in retaining and attracting new residents. The experience of California demonstrated that subsidized college tuition programs do matter.

Problems that Need to Be Addressed

Continuing population loss has been documented to result from a number of factors including segregated schools, low achievement, and generally poor educational expectations.

Finally, 75% of Detroit students are on public assistance, and the city suffers high drop-out rates in the majority of the public high schools.

Detroit’s Population Loss

The City of Detroit has suffered significant population losses throughout the 1990’s resulting in declining city revenues effecting the quality of life and economic vitality of our city including the ability to support a viable public school system.

Education & Poverty

Research shows that poverty is the single most significant factor in the achievement of children:

In the State of Michigan, nearly one-third of Michigan’s students (30.9% of enrollment) participated in the free school lunch program.

Seventy five percent (75%) of the children who attend the Detroit Public Schools are eligible for free or reduced cost lunch which means they are from poor families.

Changing Our Educational Mindset

Poverty predicts poor performance and results in a lack of incentives for students of Detroit Public Schools which is Michigan’s largest district and continues to suffer, on average, 2.2% loss in enrollment (3,558 students) per year.
 
The exodus of students from the district is not only reflected in the declining enrollment and high dropout rates; it is also reflected in the fact that the grade 1 enrollment of 15,628 students is more than twice the number of grade 11 students (7,005 students).
 
This difference is exceptionally larger than the state average of 19.7%. Apart from any random grade-level population fluctuations that may exist, the district’s larger grade 1 enrollment appears to support the observation that a large number of students tend to leave the Detroit School System as they get older, whether by transferring to other district or charter schools, or by dropping out of school.

Funding Gap for Higher Education

Continuing inability of families to finance current and future College Tuition Costs adds to problem of Detroit lagging behind other communities in developing a college educated, adaptable workforce resulting in a disincentive to invest in Detroit.

Increasingly, Michigan families are unable to finance rising college tuition for their children.

The principal driver of the increased cost of attending college is higher tuition and only the wealthiest families have seen their incomes keep pace with increases in tuition.

The lowest-income families have lost the most ground and this is a major factor in diminishing their rates of college attendance. For example, for the lowest-income families in 1980, tuition at public two-year colleges represented 6% of their family income.

For the lowest-income families in 2000, tuition at these colleges represented 12% of their income. Likewise, tuition at public four-year colleges and universities represented 13% of income for lowest-income families in 1980.

In 2000, tuition at these colleges and universities equaled 25% of their income. Tuition increases for State and Private Colleges continues to grow faster than the Federal, State Loans and College Grant Student Assistance.

Tuition Increases Outpace Median Incomes

The median income of low and moderate income families trying to save for their children’s future higher education has not increased at the rate necessary to meet the projected future college tuition growth.

Statewide Educational Challenges

The 2001 statewide graduation rate was 86.3%. The statewide drop-out rate was 3.7% , but across the state, drop-out rates as low 0.0.% and high as 30.4% have been seen in some school districts.

Lack of College Grads Hurts Job Market

The City of Detroit is hampered in its efforts to attract industry that can produce salaries and wages to support family college saving. In addition, the lack of a highly educated work force slows our efforts to attract and retain job-creating industries in the new global economy. Workforce skill gaps and shortfalls stall economic growth.

• Industry is now avoiding workers when the training costs are too high to bring workers up to speed.
• U.S. students lag behind the rest of the world in literacy.
• Almost 1 in 4 U.S. youth suffer from low literacy skills.
• One in four U.S. workers say they are under-trained
• New technologies and greater employee involvement in problem-solving and decision-making require higher skill levels of workers

Proposed Solution: Detroit Children's Fund

The Detroit Children’s Fund will offer guaranteed four (4) year tuition to any accredited college or university to any high school student who graduates from any high school located in the City of Detroit and whose family has also been a resident of the City of Detroit for at least 8 years.
 
Each student need only be accepted to an accredited college or university and remain in the City of Detroit during the students’ matriculation.

DETROIT CHILDREN’S FUND IS MODELED AFTER OTHER SUCCESSFUL PROGRAMS ACROSS THE NATION

Various Tuition Endowment Funds have produced dramatic results in increasing school attendance, lowering drop-out rates, improving achievement and graduation rates. These programs have been studied and their results are well documented.
 
One of the oldest and most successful programs is the “I Have Dream Foundation” In the case of the children of PS 121 in New York City, 90% graduated or obtained a G.E.D. degrees: Prior history suggested that only 25% would graduate. Half of the original New York “Dreamers” went on to postsecondary education.

Funding the Endowment

For a total endowment of $75 million per a year, every Detroit Public School High School Graduate would begin to receive full tuition in 8-10 years after the first deposits to the fund.
 
Contributions to the endowment fund, through Private Contributors and others, including corporations, could provide an earlier start date for the fund and financial resources for payment of other expenses including books, room and board, etc. State Funded and Private Pre-Paid Tuition programs have been successfully operating throughout the nation for years with tremendous success utilizing the contributions of individuals, parents, grandparents and corporations.

$ 75 MILLION IN A YEAR FROM PRIVATE, PUBLIC AND TAX CONTRIBUTIONS COULD GENERATE:

A $1.2 Billion principal in 10 years

Detroit Children’s Fund Growth

Assuming conservative investments, at 6.5% Interest on Principal, a $1.2 Billion Endowment Fund would be available after ten years. The Detroit Children’s Fund principal would never be spent. The principal is invested to provide both the current Scholarship Funding and growth on the fund principal. The investment return would be used to pay the scholarships.

How the Fund Would Be Administered

• City Council appointed Independent Board would manage the Fund and Scholarship Program: one appointed per council member and four appointed by majority vote, all to serve staggered terms.
• The Endowment Funds would be held in trust, outside of the City of Detroit General Fund Budget, and audited annually.
• Administrative costs would be severely restricted so that more than 98% of the interest generated from the fund is paid directly to colleges and universities for tuition and other student costs.
• Each graduate would be required to have lived in the City of Detroit and attended High School in Detroit for a minimum of 8 years. Tuition grants would begin to be given in approximately 8 years, depending on fund growth.
• Tuition would be available for students attending college in another state, but at a reduced rate, consistent with rates paid to similar institutions in Michigan.
• Room and Board assistance would not be provided within the guaranteed tuition grant unless additional funds are generated through other efforts.
• Corporations and Individuals would be encouraged to contribute to the fund.
• Grants could be used for two-year accredited colleges/universities but the tuition grant for any student would not exceed 4 years.
• Tuition payments would be made directly to the college/university for the student.