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.
Whoopee Ti Yi Yo, Git Along Little Dogies
When the night comes on and we hold them on the bedground,
These little dogies that roll on so slow;
Roll up the herd and cut out the strays,
And roll the little dogies that never rolled before.
Whoopee Ti Yi Yo, Git Along Little Dogies
Michigan’s tax-and-spend establishment continues to demonstrate world class tactical flexibility as they pursue their dubious ends. Their latest tour de force is the setup for the impending Detroit Public Schools bailout. Michigan’s legislators are being driven like cattle.
The new state appointed
emergency transition manager of the Detroit Public Schools, retired U.S. Bankruptcy Court Judge Steven W. Rhodes, announced that the district would shut down on April 8th due to a lack of funds. This chilling announcement came a week after Governor Snyder appointed him to replace Darnell Early, who resigned at the end of February. Darnell Early, for some reason, failed to inform Michigan of the April 8th drop dead date. Judge Rhodes made his announcement four weeks in advance of the projected shutdown in a full court press to get a bailout from our State Legislature.
The first problem here is the State Legislature is scheduled to take two weeks off in the four weeks leading up to April 8th. The last week of March and the first week of April. Judge Rhodes certainly knew this, so the dilatory announcement is unquestionably a deliberate effort to stampede the Michigan Legislature into immediately delivering $ 50 – 70 million to DPS, no questions asked. Two weeks is not a reasonable legislative time frame, rather it is herding legislators like cattle on a two week drive. An echo of the tactics used by Judge Rhodes to ram through the bungled Detroit bankruptcy.
Governor Snyder has been floating an inchoate plan to rescue the Detroit Public Schools since the middle of last year; one which originally envisioned the creation of a ‘bad debt’ shell district and a new, debt free district by cellular division. Wasn’t really well received anywhere, even after he added dissolution of the much hated Education Achievement Authority. As his problems in the Flint water fiasco have mounted, Governor Snyder decided to wash his hands of the DPS situation by throwing $ 700 million at them to extinguish their ‘operating’ debt and return control to the next generation of
local thieves elected school board members.
The second problem here is that $ 700 million, even though it is spread out over 10 years. That amounts to a $ 1,489 annual extra grant for each of the approximately 47,000 DPS students. Even if you trim that to $ 500 million, it amounts to a $ 1,064 annual extra grant per student. This can’t come from conventional Michigan school funding without reducing the funds available to every other public school student.
Michigan has 1,540,005 students in 909 public school districts across the state. No way are the administrators of those other districts going to stand idly by and watch Detroit eat their lunch. Nor are the parents of the other 1,493,000 public school students in Michigan. A violation of fundamental equality is in the offing here, and the political fallout is going to be wicked. So it won’t happen.
Treating all of Michigan’s public school students equally raises the 10 year cost of the DPS bailout to $ 16.4 billion at a $ 1,064 annual extra grant per student, $ 22.9 billion at a $ 1,489 annual extra grant per student. This is an awful lot of money for a state fisc which couldn’t pony up $ 1.2 billion in extra annual road funding last year without massive new taxes.
Governor Snyder has attempted to circumvent the equality issue by proposing the use of tobacco settlement funds for only DPS, but this is nothing more than eyewash. Those tobacco settlement funds, regardless of what you think of their legitimacy, are the property of all Michigan residents. Diverting them to Detroit just camouflages the equality issue. Governor Snyder seems to hold the general intellectual capacity of Michigan residents in contempt.
The third problem here is Governor Snyder’s determination to return DPS to local control. DPS was not a well functioning school district, even before Governor Snyder was inaugurated. Governor Granholm actually appointed Robert Bobb as the first emergency financial manager of DPS. It is worth noting that Robert Bobb found a cesspool of corruption behind DPS’s financial difficulties:
“Indeed, I found Detroit Public Schools to be a magnificent vessel of wholesale theft and graft. Not one area of management escaped the thieves and defrauders: One high school food service worker stuffed as much as $200 daily from lunchroom sales into her apron and bra. A teacher and her mother, a contract accountant, placed $500,000 worth of orders for supplies from a sham company they had created. Ten people collectively stole more than 1,500 laptops. Even sworn police officers assigned to my security detail committed fraud, submitting phony overtime reports.”
Anecdotal evidence suggests that corruption is still an issue, but its current extent is just unknown. Does anyone think returning DPS to local control pell-mell won’t usher in a new golden age of corruption? Detroit politicians seem more focused on self aggrandizement than public service. Everything they touch, from water to home demolitions, reeks of corruption. Why Detroit politicians are so opposed to state management of city functions. It cuts off the gravy train.
What to Do?
First, keep DPS alive to the end of the school year, but don’t just hand them a $ 70 million down payment on Governor Snyder’s ten year plan. It will not require $ 70 million to keep DPS alive until the end of the school year. There is plenty of time to develop a long term plan once a few facts are established. Legislators should not be stampeded like cattle.
Second, spend the summer doing a good forensic accounting of DPS books. Governor Snyder has a bad habit of tossing out large numbers preceded by dollar signs which he is provided by his brown nosing bureaucrats (remember $ 1.2 billion?). Provide a detailed assessment of DPS’ current predicament and likely progression under an established set of assumptions.
Third, our full time legislators should put some real effort into developing an array of alternative plans. One of which should be a genuine bankruptcy. Mayor Duggan and the DPS bureaucrats can propose their own plans, as long as they consider the statewide ramifications.
Then we can have an informed debate on the future of the Detroit Public Schools.
The overarching problem with education finance in Michigan under Proposal A is that we have local bureaucrats of disparate abilities and intentions spending state funds without any accountability to the actual source of those funds: the State of Michigan. Yes, they answer to their local voters through elected school boards, but those local boards are not raising the funds they spend. Candidates for local office can make generous spending promises without any consequences. Once in office, their poor mouthing is incessant.
School districts all get the same per pupil State grants to spend with little oversight unless they crash into one of the PA 436 triggers. Due to the miracle of debt financing, the mysterious nature of pension funding, and the vagaries of enrollment, a school district’s fisc can go from fine to PA 436 trigger in the bat of an eye. Responsible school districts rarely get into trouble. Irresponsible school districts, such as DPS, are in continuous trouble.
Michigan’s 1963 Constitution was written 30 years before the Proposal A school financing scheme was devised. Article IV, Section 53 establishes the Office of the Auditor General, but limits its jurisdiction to auditing only post transaction, and only “financial transactions and accounts of the state and of all branches, departments, offices, boards, commissions, agencies, authorities and institutions of the state established by this constitution or by law, and performance post audits thereof.” Note that this effectively exempts local governments and school boards spending state funds from the jurisdiction of the Office of the Auditor General. Roughly a quarter of all State funds spent are excluded from review by the Office of the Auditor General.
Should anyone be surprised that school outcomes (or road outcomes, for that matter) vary markedly across our state? From great to awful. With varying degrees of corruption.
Before you dismiss this proposal as a heresy which creates state control of local schools; please note that this proposal is only equilateral auditing of school boards (and other local government units), only insofar as they are spending state funds. The goal would be to rank comparable units of local government so local voters can know what their officials are accomplishing. Local units of government and school boards have been able to hide behind 100 plus page CAFRs, rendering local control impossible. In some cases – such as DPS – very bad things happen behind this veil.
Expanding the jurisdiction of the MOAG is not control, rather it is reporting to the residents of Michigan the usage of their tax dollars. Financial and performance audits, post transaction. Not control, not even adult supervision. Just a system to compare the effectiveness and performance of local government units’ expenditure of state funds. Fun statistics and rankings which can be used to shame the laggards.
A select few of Michigan’s local government units have been lead by socialist demagogues who have spent wildly on the presumption that they can blackmail the State into paying off their extravagances by claiming racism or class discrimination. Their irresponsible spending has been greeted with enthusiasm by voters, employees, nitwit media, and corporate parasites. This is why the repetitive cycle of emergency management, followed by a return to socialist demagogue local control has failed miserably. Everyone benefiting from local government extravagances have been able to claim that they were innocent, ignorant parties and transfer the costs of the inevitable reckoning to Michigan’s taxpayers at large.
Auditing and ranking performance of local governments’ usage of State funds would quickly end this vicious cycle. Knocking the props out from under socialist demagogues would allow the pain of genuine bankruptcies, disciplining those demagogues and all the parasites who enable them.