"While shutting down the schools would be horrible. It is a better option than the alternative."
“This marks a new day for Detroit families, with DPS free from debt and strong accountability measures for all schools in the city that promises a brighter future for all of Detroit’s children.” – Michigan Governor Rick Snyder after signing the DPS bailout package last month.
If only that were really true.
There’s a story making the rounds here locally, that to put it mildly, I am more than a little surprised hasn’t been picked up by other media outlets around Michigan.
It seems that
Emergency Manager Transition Manager Stephen Rhodes, Michigan Treasurer Nick Khouri, Gov. Snyder and a few select others within Michigan Government have felt that it is more important to bury some rather disturbing facts relating to Detroit Public Schools, rather than to make them public (Read: Better make sure that Michigan Taxpayers don’t EVER get wind of this!).
And what is this little nugget you may ask?
H/T to the good people at Channel 7 in Detroit for breaking this story.
Let me start from the beginning, around March of this year.
TM Rhodes asked for and received some assistance from financial experts on where to go with the DPS bailout.
He got a response from a Southfield based firm called AlixPartners, whose specialty is corporate turnarounds and restructuring which offered to do the job pro bono.
After looking at DPS operations, their findings and recommendations were not very encouraging.
They found that DPS’ accounting practices were no better than the City of Detroit’s (which they said in no uncertain terms). Because of such poor record keeping, it was nearly impossible to get a handle on exactly what DPS really owes its creditors and couldn’t really begin to for at least several months.
They also addressed the arguments about Gov. Snyder’s plan to break up DPS into OldCo & NewCo (A quick sidenote here: Gov. Snyder thought that he could save DPS by borrowing a page from the federal government’s handling of the GM bankruptcy and split DPS into two entities for an easy-peasy fix). After providing a brief synopsis on what REALLY happened with that undertaking at GM, here is what Al Koch from AlixPartners had to say about applying that solution to DPS:
“The DPS would have no such financial benefit and, we believe, it would prove to be a frustrating and enormously costly exercise to actually set up a NewCo. It is an action that we believe should be avoided if at all possible to do so.” (emphasis mine)
Obviously, their findings didn’t sit too well with TM Rhodes, who then asked to meet with Michigan Treasurer Nick Khouri to discus the findings.
When pressed for comment by the local media, TM Rhodes does what he does best: Run away and hope that those asking for comments aren’t persistent.
After realizing that was not an option, he released two fluff media replies commenting on the pro bono nature of the group working on the report and that actions were being taken prior to Rhodes being made TM.
When they asked Gov. Snyder for his take on this, his office replied:
“It was determined that the method the state went with…splitting DPS in two…was the best option for the district, the families of Detroit that it serves, and the state as a whole.”
It should be noted that AlixPartners has been doing corporate turnarounds for over 30-years.
The CPA with the MBA…not so much.
Two final notes here:
You may wonder if Gov. Snyder and TM Rhodes wanted to keep this from Michigan Taxpayers so much, then how did it ever come to light?
For that, you can that general reprobate Robert Davis (yes, the same dirtbag Robert Davis who stole several hundred thousand from Highland Park Public Schools). It was from one of his frequent legal fishing expeditions that this report surfaced. So maybe he is good for something once in a while.
My final note: The remnants of the DPS board are still looking at getting a judge to issue an injunction to stop the DPS bailout.
This report (that TM Rhodes, State Treasurer Khouri & Gov. Snyder didn’t want you to know about), only strengthens their case.
So, is it back to square one?
Channel 7 story: