Part Time Legislature

The DPS Bailout – Debts & Obligations

Part II - The Eventual Cost of DPS Liabilities to Michigan Taxpayers and Detroit Schoolchildren

Debt ImageDPS has two types of formal debt: operating and capital. Operating debt is a conversion of present and past annual operating deficits into ‘long-term notes’ sold to the financial markets, as well as more immediate debts owed to the State of Michigan directly. DPS capital debt exists only in the form of bonds which were sold to financial markets to purchase and rehabilitate facilities.  DPS’ formal bonds are identified by Series, which consists of the year issued and a letter suffix when different purpose bonds are issued in a single year.  The financial markets apply a further identifier, CUSIP, which is a unique identifier of municipal bonds by series and their intended dates of redemption.  All of the DPS debt sold to the financial markets has been enrolled in Public Act 92 of 2005, a program designed to reduce interest rates to local school districts in accordance with the 1963 Michigan Constitution’s Article IX, Section 16.  Most DPS debt is effectively secured by a general obligation to pay, which requires Detroit taxpayers to increase taxes and reduce spending should financial difficulties repaying arise.

DPS 2009B Bond StatementDPS pays off its capital debt in annual installments of both interest and principal, before it pays off (or adds to) its operating debt.  Bond interest and principal payments are required by bond terms which – if ignored – would result in immediate default and bankruptcy.  The exact contract terms of DPS debt sold to the financial markets are laid out in official statements which detail all the formal legal and financial features of the bonds.  The official statement is essentially a contract between DPS and its bond purchasers.

DPS’ operating debt payments are somewhat more flexible than capital debt payments because only a portion of operating debt has been converted into formal bonds covered by statements; much of it is separately owed to the Michigan School Loan Revolving Fund. The SSLRF can best be thought of as a State sponsored credit card. School districts tap into it when they are short of cash, and pay off their balance when they are flush.  Operating debt is only converted into formal bonds when Michigan school districts exceed their limits at the SSLRF.  Those limits are not exact, and generally come into play when DPS goes through one of its periodic financial spasms.

You Betcha! (8)Nuh Uh.(0)

The DPS Bailout – The Bankruptcy Alternative Not Taken

Part I - No, The Richmond USD Case Did Not Challenge U.S. Bankruptcy Court Authority

Daniel Howes ImageGovernor Snyder browbeat the Michigan Legislature to approve the $ 617 million bailout of Detroit Public Schools which he signed today by regaling them with a parade of horribles which would occur if the bailout was defeated and DPS was forced to file for bankruptcy. Daniel Howes regurgitated Governor Snyder’s compelling tales of impending doom delivered behind closed doors in a Detroit News article, but was any of it true?

Right at the top of Governor Snyder’s parade of horribles was the Federal bankruptcy filing of the Richmond [California] Unified School District on April 19, 1991 . Governor Snyder portrayed the outcome of this action as the U.S. Bankruptcy Court denying the petition and ordering the State of California to financially bail out the district.  From Daniel Howes’ article:

There is scant precedence for school districts filing for bankruptcy, the Snyder administration found. In 1990, according to an administration letter to state Rep. Laura Cox, R-Livonia, the Richmond Unified School District in Northern California filed for bankruptcy because of $42.5 million in debt. The judge ruled the district could not be protected by the court in bankruptcy and ordered the state to provide the district with operating funds.

Nothing could be farther from the truth.

You Betcha! (8)Nuh Uh.(0)

I can’t wait until the rest comes due!

Gov. Snyder, Sen. Meekhof and Sperker Cotter demonstrating their best use for Michigan Taxpayer dollars.

With that conveniently (and consistently) “overlooked” $3.5-billion in debt, the Mi(a)GOP just handed the Michigan House to the democrats in the fall.

Screwed Image 1

Here’s a not-so-subtle hint.

 

More to follow…

 

You Betcha! (5)Nuh Uh.(2)

Greasing The Monkeys

Apparently there is never enough choice choking regulation for some in our legislature.

car-repairWithout written permission to spend less, your auto repair bill will cost you more.

Incredibly, that first line above was a last minute ‘fix’ in HB4344.  Prior to it being added as an amendment by Pete Petallia, there was no wiggle room for any aftermarket part that wasn’t subjected to the extremes set up by the automakers to make their parts competitive.  The section of HB4344 addressing this:

House Bill No. 4344 as amended May 31, 2016

1  original warranty, or during the first 5 years of the vehicle  manufacturer’s original warranty, whichever is less, the motor  vehicle repair facility shall replace the major component part, and  a person that is an owner or operator of the motor vehicle repair facility shall ensure that the major component part is replaced, with 1 of the following:

(a) A new original equipment manufacturer part.

(b) A used or recycled original equipment manufacturer part.

(c) A part that meets any applicable federal motor vehicle safety standards established under 49 CFR 571, and meets the standards for parts recognized as OEM comparable quality as verified by the Certified Automotive Parts Association, NSFInternational, or another nationally recognized automotive parts testing agency.

(d) A part that does not meet subdivision (a), (b), or (c), if the facility is directed by the owner of the motor vehicle in writing to install that part.]

Michigan Capitol Confidential might be thanked for bringing this up originally.

You Betcha! (6)Nuh Uh.(0)

Absentee Voter Ballot Applications Available Now

You Can File One Form For Both The State House Primary and the Presidential/General Elections

Michigan Capitol ImageThe standard form required to request an absentee ballot in the upcoming August 2nd Michigan primary and November 8th general elections is now available online as a .pdf file here. The large print version of the application for the visually impaired as a .pdf is here. Completing and filing this application also gets you the ballot(s) for any local candidates and/or issues also voted on in August and November.

Absent Voter Ballot Application Header
Just download this application form, fill it out, and mail it to your clerk.

You Betcha! (4)Nuh Uh.(0)

Democratic Socialism Comes to Southeast Michigan

RTA Funding Could Buy All Their New Riders New Cars, And Pay For Their Fuel and Insurance To Boot!

RTA Transit Map aThe new Regional Transit Authority of Southeast Michigan is out today with their transportation master plan to soak taxpayers in Macomb, Oakland, Washtenaw, and Wayne Counties for another $ 3.3 billion in property taxes over a 20 year period.Michael Ford Smiling RTA CEO Michael Ford released the regional mass transit plan RTA will submit to voters on November 8th under PA 387 of 2012. A 1.2 mill property tax increase and $ 1.7 billion in new Federal & State subsidies will provide four new bus rapid transit lines, 11 cross county connector lines, one regional rail line, and some extended/intensified local service.

Let’s have some fun by subjecting the new RTA regional mass transit plan to some real, pre Common Core, mathematics.

You Betcha! (16)Nuh Uh.(0)

Forensic Audit – Now!

Rhodes Image 1aRetired U.S. Bankruptcy Judge Steven W. Rhodes, now the Detroit Public Schools’ ‘Transition Manager’, just let another financial whopper out of the bag. Detroit Public Schools received about $30 million in U.S. Department of Education reimbursements for the pensions of grant-funded employees, but failed to forward those federal funds to the Michigan Public School Employees Retirement System. So DPS owes MPSERS $ 30 million dollars, give or take. They are ‘negotiating’.

DPS officials knew of this funds misappropriation in December 2015. Judge Rhodes knew “in March 2016”. Before or after the Michigan Legislature got suckered into passing HB 5296 and HB 5385, the DPS emergency bailout and purported financial review commission?  HB 5296, the $ 48.7 million emergency DPS bailout, cleared the Michigan House on 17 March and the Michigan Senate on 24 March. Governor Snyder signed it as Public Act 54 on 12 April.

Did anyone in Lansing know that 60% of the PA 54 DPS bailout was headed straight to the MPSERS?

If so, why did they not share this little detail with the rest of the Legislature and the public prior to the passage of HB 5296?

You Betcha! (13)Nuh Uh.(0)

Irony

i·ro·ny (ī′rə-nē, ī′ər-) Incongruity between what might be expected and what actually occurs. An occurrence, result, or circumstance notable for such incongruity.

Lansing City Hall & Court ComplexMichigan House Speaker Cotter just lost a round in the Courser/Gamrat felony criminal case preliminaries. Ingham County District Court 54-A Judge Hugh B. Clarke Jr. ruled Friday it would be “patently unfair” for Gamrat’s and Courser’s attorneys to not have an opportunity to question Cotter in their defense:Judge Hugh Clarke, Jr.

“Without answers to these questions, the Court cannot adequately balance the rights of the Defendants against the right of the Speaker to be free from being compelled to testify,” the order states.

“To make this decision, the Court believes an in camera hearing with counsel for the Defendants, Speaker Cotter and his attorney is warranted. This procedure would allow the court to properly balance the interests of the Defendants against the privilege sought to be accorded Speaker Cotter.”

Speaker Cotter has been claiming immunity under Public Act 27 of 1984 in Judge Clarke’s courtroom:

“AN ACT to provide immunity from civil action to members of the legislature of this state for acts done pursuant to duty as legislators; to prohibit members of the legislature of this state from being made parties to contested cases or other administrative proceedings for acts done pursuant to duty as legislators; and to provide for certain exemptions from subpoenas.”

Specifically Speaker Cotter is claiming immunity from a subpoena ad testificandum under the third section of PA 27 of 1984

MCL 4.553
Subpoena as to statements made by legislator
Sec. 3.
A member of the legislature shall not be subject to a subpoena for any matter involving statements made by the legislator pursuant to his or her duty as a legislator.

The issue here will be that the legal action against Courser and Gamrat in Ingham County District Court 54-A is a criminal action, specifically a felony action, not a civil action. Speaker Cotter is claiming immunity under a statute which pertains to civil actions, not criminal actions.  Michigan’s legislators have no constitutional or statutory relief from subpoenae in felony matters.

You Betcha! (10)Nuh Uh.(0)

21st Century Education Commission

This Summer's Dog and Pony Shows Commence With A Brazen Common Core Promotion

Dog and Poney Show Image 4Governor Snyder announced his 21st Century Education Commission in Executive Order 2016-6 last week. According to his press release:

“The commission will be responsible for analyzing top performing education systems in the nation, identifying issues impacting Michigan’s academic success, and recommending changes to restructure Michigan’s education system.”

You will be forgiven for harboring suspicions that this is another vehicle to promote Common Core. It is. Same type of political сове́т that did such a fine job promoting Proposal 2015-01.  Remember TAMC?  This playbook is getting old.

You Betcha! (10)Nuh Uh.(0)

RICO !!!

It's Spring and Lawsuits Are Busting Out All Over

Blind Justice Image 3Just a few short weeks ago, it appeared that the Presidential race and State House elections would dominate political news in Michigan for the rest of the year. Now it appears that courtrooms in Detroit and Lansing will provide compelling political drama as well. Drama which is going to cost Michigan taxpayers a bunch of money.

There have been a number of lawsuits filed over the Flint water fiasco (over 71!), but yesterday a consortium of law firms filed a Federal class action lawsuit on behalf of Flint residents using the 1970 Racketeer Influenced and Corrupt Organizations Act. This represents a whole new level of legal pain. Civil RICO provides for treble damages when a pattern of racketeering is proven to have occurred over time. It also guarantees the plaintiffs’ lawyers fees, a small fact which assures that civil RICO lawsuits will be pursued with enthusiasm to the bitter end. Conviction applies the stigma of typical previous RICO defendants, such as mobsters and drug kingpins, to a losing defendant. Michigan, at large, is a defendant in this suit. Capisce?

You Betcha! (17)Nuh Uh.(0)