Tag Archive for Detroit Public Schools

Rewarding stupidity.

Come and meet the news boss…same as the old boss.

OPM.

Isn’t it grand to not be responsible for money.

Large sums of money, even.

Money that you would’ve thought SOMEONE would’ve learned their lesson after having their fat pulled out of the fire multiple times in the past.

Same characters played by different actors.

{This week’s stupidity players are revealed below the fold}

You Betcha! (9)Nuh Uh.(1)

Catch-22

Bleakley Image aMichael J Talbot ImageAttorney Thomas H. Bleakley (P23892) has to be feeling a lot like Captain John Yossarian, the harried protagonist of Joseph Heller’s great satirical novel Catch-22. Chief Judge Michael J. Talbot of the Michigan Court of Claims dismissed Attorney Bleakley’s Helen Moore et al v. Rick Snyder [16-000153-MM] lawsuit challenging the constitutionality of the Legislature’s passage of the DPS bail out on August 4th, in an order published on August 8th.

The Michigan Court of Claims was moved from the Ingham County Circuit Court to the Michigan Court of Appeals by PA 164 of 2013 to:

MCL 600.6419 Court of claims; exclusive jurisdiction; exceptions; claims less than $1,000.00; powers and jurisdiction; counterclaims; res judicata; setoff, recoupment, or cross declaration; writs of execution or garnishment; judgment as final; no jurisdiction of claim for compensation under MCL 418.101 to 418.941 and MCL 419.101 to 419.104; jurisdiction of circuit court over certain actions and proceedings; “the state or any of its departments or officers” defined.

Section 6419(1)

(a) To hear and determine any claim or demand, statutory or constitutional, liquidated or unliquidated, ex contractu or ex delicto, or any demand for monetary, equitable, or declaratory relief or any demand for an extraordinary writ against the state or any of its departments or officers notwithstanding another law that confers jurisdiction of the case in the circuit court.

But, according to Judge Talbot, not the constitutional claims pleaded in Helen Moore et al v. Rick Snyder

You Betcha! (7)Nuh Uh.(0)

Quid Pro Quo: How The DPS Bail Out Passed

Pavlovian Conditioning In Michigan Politics

Money Transfer ImageMichigan’s campaign finance laws were designed to expose quid pro quo donations to legislators and politicians by the individuals and groups having special interests in government actions. A particular goal of campaign finance laws was to prevent politicians from benefiting personally from their votes and actions. In the American Civics version of representative government, politicians are expected to represent their voters exclusively. Selling their votes and actions to the highest bidder creates an unresponsive, alien government in short order. Think Venezuela, Illinois, or Detroit. Where Michigan is now heading.

Political campaigns are expensive today. Consultants and media outlets are the particular beneficiaries of lavish campaign spending and have, in turn, convinced candidates that money is the sine qua non of political success. Today, you are not considered a serious candidate for the lowest rung in the Michigan political firmament – State Representative – unless you have a $ 100,000 campaign war chest.

American politicians and their special interest backers are developing a technique which directs quid pro quo donations right into politicians’ pockets.  This technique is fast becoming a staple of Michigan politics and Michigan’s nitwit media have ignored this ingannation of representative government.

Michigan politicians are now morphing into vending machines that cater to the highest bidders in Lansing and Washington.  This explains the passage of the PA 192 – 197 Detroit Public Schools bail out over the objections of many outraged Michigan voters.

You Betcha! (18)Nuh Uh.(0)

August 2nd Matters

The DPS Bail Out Can Be Spiked By Defeating Just One State House RINO

Michigan Capitol Building Image 1The six bills (PA 192 – 197 of 2016) of the Detroit Public School bail out package passed in the Michigan House of Representatives by margins of 55 – 53 to 60 – 48. The same six bills passed in the Michigan Senate by margins of 19 – 18 to 21 – 16. Close votes; over 50% + 1 but nowhere near two-thirds. And these close votes were only obtained after an entirely false narrative of doom and gloom was presented to the Legislature. This is becoming a major issue in the August 2nd primaries which Michigan’s nitwit media are conveniently ignoring.

Attorney Thomas H. Bleakley (P23892) filed a lawsuit (Helen Moore et al v. Rick Snyder, 16-000153-MM) in the Michigan Court of Claims on the 5th of July which alleges that the entire DPS bail out package’s passage was unconstitutional; the claim being it was in fact a collection of local acts according to the Michigan Constitution of 1963.  Local acts require two-thirds legislative vote margins and voter approvals to become law.  The six bills of the DPS bail out package were all passed, in both houses of the Michigan Legislature, under the more liberal 50% + 1 voting rule allowed only for general acts.

The Michigan Constitution of 1963, Article IV, Section 29 states “No local or special act shall take effect until approved two-thirds of the members elected to and serving in each house and by a majority of the electors voting thereon in the district affected….”. Article IV, Section 30 further states that “….two-thirds of the members elected to and serving in each house of the legislature shall be required for the appropriation of public money or property for local or private purposes.”.

You Betcha! (18)Nuh Uh.(0)

The DPS Bailout – An Alternative History Under Bankruptcy

A Bankruptcy Postponed Is Not A Bankruptcy Avoided

US Bankruptcy Court ImageThe $ 617 million PA 192 – 197 bail out package signed by Governor Snyder on 21 June (plus the $ 48.7 million emergency down payment earlier this year) will not fix the Detroit Public Schools. The culture of corruption and incompetence long fostered within DPS suggests that the new DPS – same as the old DPS, except for some liabilities – will fail miserably a few years hence in an avalanche of new liabilities. Michigan will then be left to sort out two separate DPS entities with unsustainable liabilities. This could easily occur even before Governor Snyder leaves office in 2019. Karma. Déjà vu all over again.

Governor Snyder secured the Michigan Legislature’s approval of the $ 617 million bailout by regaling them with an entirely false narrative of the aborted 1991 Richmond, CA Unified School District bankruptcy, then implying that the entire $ 3.5 billion in DPS liabilities would fall upon the taxpayers of Michigan. The Michigan Legislature’s Republicans (and our nitwit media) bought Governor Snyder’s tale hook, line, and sinker – then delivered a $ 617 million gift to DPS for its past ill behavior. The Michigan Legislature’s Democrats had the chutzpah to hold out for even more taxpayer paid goodies.

There was another, better option: bankruptcy.

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

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! (7)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)

Blowback

When A Devious, All Too Clever Plan Goes Awry

Rhodes Image 1aRetired U.S. Bankruptcy Court Judge Steven W. Rhodes got just a bit too clever in his latest ploy to stampede the Michigan Legislature. He is trying to ram a $ 720 million bail out for the Detroit Public Schools through the Legislature, but wound up creating a labor relations firestorm. He even managed to grievously damage the prospects of the bail out in the Legislature. As always, it is the DPS students who are suffering the fallout.

Judge Rhodes, the DPS ‘transition manager’, sent out an email on Saturday telling all and sundry that DPS would have no money to pay teachers after June 30th. He urged Michigan lawmakers to “act thoughtfully, but with the urgency that this situation demands”. The Detroit News later reported:

Rhodes, who warned over the weekend the district would run out of money June 30 and stop making payroll for employees who get paid over the summer, urged employees, parents and others Monday to press lawmakers to pass the rescue plan.

Rosen ImageThis is a reprise of the successful panic tactics he and his buddy U.S. District Judge Gerald E. Rosen developed to force acceptance of the phony Detroit bankruptcy Plan of Adjustment. This effort, celebrated by Michigan’s nitwit media, left a smoking, $ 491 million crater in Detroit’s post bankruptcy finances. Mayor Duggan has been reduced to chiseling money from demolition contracts. Don’t forget that the $ 720 million bail out plan also turns total, absolute DPS control over to Mayor Duggan and his crack team of demolition contract negotiators. Out of the frying pan and into the fire we go.

This is how Michigan’s devious elites now get what they want, when they want, from an embarrassingly slow and cantankerous constitutional government process which they despise.

Whoopee Ti Yi Yo, Git Along Little Dogies

Some boys goes up the trail for pleasure,
But that’s where you get it most awfully wrong;
For you haven’t any idea the trouble they give us
While we go driving them all along.

You Betcha! (13)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)

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)