Before I get to the stories, thanks to my referrers:
- The Other McCain, where wombat-socho (Kevin Trainor) includes me in his links. Check out Kevin’s books: What Did You Do in the Cold War, Dad? and The Last Falangist: Essays on Culture and Politics in America
- Wirepoints with Mark Glennon. Check out Mark’s interview on the $12 billion cash post the state treasurer is sitting on.
- Pension Tsunami with Jack Dean. Subscribe to his site to get notifications when he updates.
And thanks to all who came via facebook, google, and twitter. Not sure who sent you, but I’m glad you’re here!
NEW DATA! YAY!
Prof. Nation shared with me the database behind the stats on the new site. I look forward to doing some visualizations in the future.
Pension Tracker also finds a disproportionate impact on the “average” pension debt calculations due to the extraordinarily large impact of the “market based” pension debt per household for three states — Alaska, Illinois and California:
1) Alaska $113,137
2) Illinois $77,822
3) California $77,700
More to come!
DETROIT PUBLIC SCHOOLS: KICKBACKS AND THE CHICAGO CONNECTION
A while back, I mentioned that Detroit Public Schools (not unlike Chicago Public Schools) are having a bit of a financial problem.
While this isn’t a cause, this didn’t help:
A former principal who spent 28 years working for the Detroit Public Schools pleaded guilty to bribery today, admitting she accepted roughly $22,000 in kickbacks from a vendor and spent the money two ways: buying jewelry, perfume and clothing for herself and helping her school.
“Other than the gift cards, it was used for the schools,” ex-DPS principal Gerlma Johnson said today in U.S. District Court, where she sought to explain how she spent the rewards she received for helping a vendor submit phony invoices for paper and other school supplies.
Johnson, 60, former principal at Charles Drew Academy and Earhart Elementary-Middle School, admitted that she accepted $22,884 in kickbacks as a thank you for helping school supply vendor Norman Shy bill DPS for materials that were not delivered. Under the terms of her plea agreement, she faces 24-30 months in prison when she is sentenced in September.
Johnson and Shy are among 14 defendants who were charged in March with running kickback schemes that cheated DPS students out of $2.7 million in school supplies over 13 years. So far, eight defendants have pleaded guilty: seven principals and one assistant superintendent. All face prison time.
A businessman at the center of a years-long kickback scandal involving more than 12 Detroit Public Schools principals pleaded guilty on Wednesday to federal bribery and tax evasion charges and was ordered to pay back $2.7 million to the cash-strapped district.
Norman Shy, owner of Allstate Sales and an approved school supply vendor, faces five to seven years in prison under the terms of a plea deal entered in U.S. District Court in Detroit, according to court documents.
Shy and 13 current and former Detroit principals were charged in late March with engaging in the bribery and kickback scheme lasting from 2002 to January 2015.
Prosecutors said the school officials submitted fraudulent invoices to Shy in exchange for prepaid gift cards, cash and checks that totaled more than $900,000.
In February, Michigan Governor Rick Snyder appointed the federal judge who oversaw Detroit’s historic bankruptcy case to tackle the financial problems of Detroit’s schools, which are drowning under $3.5 billion of debt.
So the first story mentions $2.7 million in cheating, and $3.5 billion in debt. Recalling that a million is 0.1% of a billion, this cheating is a wee little bit on the overall problem. More on the same case.
What is the Chicago connection, you ask?
Ex-Chicago public schools chief to plead guilty in contract kickback scheme
CHICAGO — Former Chicago Public Schools chief Barbara Byrd-Bennett plans to plead guilty to federal charges that she steered more than $23 million in no-bid contracts from the school system to her previous employers in exchange for kickbacks that would have made her millions of dollars, federal prosecutors announced Thursday.
Zachary Fardon, the U.S. attorney for Northern Illinois, said Byrd-Bennett is cooperating with investigators and that her lawyer has indicated to prosecutors that she plans on soon pleading guilty to the charges. Byrd-Bennett, 66, who lives in Solon, Ohio, faces 15 counts of mail fraud and five counts of wire fraud.
The announcement came as Fardon announced the grand jury indictment against Byrd-Bennett, who left her post in a cloud of controversy in May, several weeks after news reports that federal authorities were investigating her and her former employers, the education training firms SUPES Academy and Synesi Associates.
“Graft and corruption is never a good thing, but it is particularly troubling when it impacts our schools, our kids,” Fardon said. “Public servants and city vendors who conspire to violate the public trust in order to line their own pockets will be held accountable. Today’s indictment reflects that accountability.”
Oh, and Byrd-Bennett had also been an accountability officer for DPS. Heh.
ANOTHER CONNECTION: TEACHER ACTIONS… OR, RATHER, NON-ACTIONS
Remember that “day of action” in Chicago on May 1 of dubious legality? Detroit teachers also pursued a dubious protest, on May 2:
A massive teacher sick-out shut down 94 schools in Detroit Public Schools today, as teachers protested Saturday’s news that the district won’t be able to pay them past June 30.
The district enrolls about 46,000 students in 97 schools.
The Detroit Federation of Teachers on Sunday called for the mass sick-out of the district’s 2,600 teachers.
DPS emergency manager Judge Steven Rhodes told the union Saturday that unless the state Legislature approves sending more money to the district, there is not enough in the coffers to pay teachers their already-earned salaries after June 30. Summer school and extended special education services would also be canceled.
DETROIT SCHOOLS: FINANCIALLY SQUEEZED
Senate leaders, Detroit Public Schools parents hope House will reconsider funding
LANSING, Mich. – When Michigan House Republicans passed a stripped down version of a state rescue package for the state-controlled Detroit Public Schools district, leaders were adamant it provided more than enough “transition” funding to get the new district created in the plan on a solid financial start.
The district’s current operating debt is $467 million.
The Senate was a lone voice saying it fell short, but now its a chorus.
Gov. Rick Snyder, DPS transition manager Judge Steven Rhodes, Business Alliance of Michigan, Coalition for the Future of Detroit School Children and now an independent Treasury report suggest that under the House plan, the district would be in an $80 million hole as soon as September — when the new school year is only a few days old.
“I think we need additional resources beyond the $515 million. That simply repays the debt. There are investment needs, working capital requirements to really put people in a position for success,” Snyder said.
Steven Rhodes is the judge who oversaw the Detroit bankruptcy, btw.
The state-appointed manager of Detroit Public Schools laid out his plan to turn the struggling district around during a public meeting Tuesday night.
Judge Steven Rhodes told a hostile crowd that included teachers, students and community members that he’s trying to set a path for long-term success for students and educators.
Dozens of people at the meeting repeatedly interrupted Rhodes during his presentation.
Some called for a forensic audit of the district’s finances, while others demanded the district be returned to local control.
After Rhodes explained his financial and operating plan, he encouraged people to contact lawmakers in Lansing about getting DPS the money it needs to keep its doors open.
He says money from the state under a $717 million Senate plan would be used “to substantially upgrade our buildings and facilities to make them more efficient.”
A different $500 million proposal was approved last week by the state House.
I believe Michigan itself is in a better financial position than Illinois is, so Michigan may be able to help Detroit’s schools more than Illinois can do anything about Chicago.
SOURCE OF MUCH OF THE PAIN: ALREADY-ACCRUED PENSIONS
We know about the Chicago Teachers pensions causing trouble:
What about Detroit teacher pensions?
That’s a bit tougher to get at, because, from what I can tell, they don’t have a pension plan separate from the rest of the public teachers in Michigan. Due to that fact, their pensions weren’t cut in the city bankruptcy.
And that’s a problem.
I haven’t dug through the reports yet, but I wouldn’t be surprised if the relatively recent shortfall in pension contributions stem from Detroit’s troubles.
Also, they’ve been hovering at a 60% funded ratio for a while, so I expect they’ll be popping up on my 80% fundedness = healthy watch soon.
I’ve taken a quick look at the financials and oof, it’s not good. I see a different name as emergency manager from the most recently adopted budget, so even without looking at news items, it’s obvious that person wasn’t working out. Looking at the official site, Judge Rhodes is the fourth (or maybe 5th) emergency manager for the DPS since 2009. Earley had been named in January 2015…and been the emergency manager for Flint before that. Ah, that’s why he had to quit.
So there’s been an “emergency manager” for 7 years now. That does not sound like an “emergency” thing. That sounds a bit more permanent.
So something to think about.
Public Pension Watch: The Fragility of "Can't Fail" Thinking
Borrowing for Operational Costs is a Bad Idea: Detroit and Chicago Schools
Words Have Meaning: Neither Kale Nor 80 Percent Funded Public Pensions are "Healthy"