Hallelujah!

[Caricature by DonkeyHotey from photos by Anne C. Savage for Eclectablog]

The small town of Ecorse, Michigan, under control of an Emergency Financial Manager or Emergency Manager since 2009, has been deemed to have emerged from its emergency and will now be indefinitely under the control of a Transition Advisory Board (TAB).

Joyce Parker, the Emergency Manager for both Ecorse and Allen Park will be on the TAB. Gov. Snyder provided a list of her accomplishments:

Among the benchmarks noted by the governor: eliminating the deficit as well as a $5 million structural deficit; reorganizing the police and fire departments into a public safety department; cutting annual operating costs by $4.3 million; raising annual revenues by $2.3 million; saving $2.8 million by rebidding city services; securing more than $4 million in grants to support city operations and services and setting a two-year budget.

The city also merged court services with River Rouge and Lincoln Park and implemented a police and fire special assessment.

It’s a great thing and, Stephen Henderson at the Detroit Free Press describes, Parker has accomplished this by being as much of a true partner with Ecorse as an EM can be:

[S]he did it all pretty cooperatively. She held lots of public meetings to get citizens’ input, and actually worked with unions on altering collective bargaining agreements; it wasn’t all kumbaya and sing-alongs, but in general, her approach was inclusive rather than purely dictatorial.

Parker leaves behind an entire community planning model that’s based on citizen participation and input.

My concern, one that I have been voicing for over a year now, is shared by Henderson, as well: the conditions that led to Ecorse’s situation have barely changed. It is still a city with far fewer resources and a dramatically shrunken tax base – the result of the departure of the auto manufacturing that once made southeastern Michigan a middle class engine. Here’s Henderson:

If there are doubts about Ecorse’s future, they arise from more systemic issues that are affecting all cities. Is there enough of a tax base left to support city government? Should cities like Ecorse be governed by larger jurisdictions that can leverage greater tax revenue to provide services?

In short, can Michigan (which has some 1,800 local governments) afford to maintain as much local control as it has historically?

I am, of course, thrilled to see Ecorse emerge from emergency management. I pray that they can sustain it.

Another failure of Emergency Management

The southeastern city of Hamtramck (spelled correctly, pronounced “Ham-tram-ick”) is facing the prospect of its city being taken over by an Emergency Manager as the state has ordered a financial review team to assess its financial situation.

Hamtramck is a small city of just over 22,000. Its population is just over half (53.6%) white and has an unusually high population of Asians (21.5%.)

This would be Round Two for Hamtramck. In 2000, Governor John Engler installed an Emergency Financial Manager, a familiar player Louis Schimmel. Six years later, books balanced and financial crisis “solved”, Schimmel left and, in 2007, the city was once again back in charge of its government.

However, that didn’t last long. In 2010, facing continuing budget issues, Hamtramck asked the state to be allowed to declare bankruptcy. They were denied.

Today, Hamtramck is still in trouble:

By 2012, the city faced a $3.5 million deficit and began a series of measures, including demands for concessions frompublic safety workers, talks with the treasurer’s office and the publication of an independent audit. So far this year, the city’s deficit is $2.7 million.

The report’s findings, published in August, prompted the City Council to ask the FBI to conduct an investigation into potential misconduct among department heads over contracting of services.

Councilman Bob Zwolak said Hamtramck’s troubles aren’t unique. With a dearth of tax revenues, skyrocketing health care and legacy costs, and cities locked into union contracts, cities are struggling.

These are not problems caused by unionized workers. They are problems caused by the collapse of the manufacturing tax base, shrinking populations and a lack of investment in aging manufacturing cores. Balancing the books the first time around didn’t solve these ongoing issues and, as has been the case for the other cities under Emergency Managers, there’s little reason to believe they will be solved by a second attempt to do so either.

It’s hard to keep up…

It’s been awhile since I’ve done a summary of the latest news about Michigan’s Emergency Manager Law and the new surrounding our illustrious saviors dictators Emergency Managers so I thought it would be a good time to so. On a personal note, I was interviewed by freelance journalist Chris Lewis this past week for a piece he’s doing for The Atlantic so it’s clear to me that this story continues to receive national attention.

Detroit Emergency Manager Orr issues Order putting himself in charge of the City

On April 11th, EM Kevyn Orr issued Order No.3 (pdf). The key section of the order is this:

Any orders, ordinances, resolutions, appointments, approvals, terminations, appropriations, contracts, permits or other related actions of the Detroit Mayor and City Council from and after March 28, 2013, shall be submitted to the Emergency Manager for consideration, but will not be considered valid or effective unless and until approved by the Emergency Manager or his designee in writing.

The other Orders can be found HERE.

Detroit Emergency Manager Orr’s former boss/company hired to fix Detroit

In a move that some are calling a conflict of interest, Jones Day, the law firm that Orr worked for before resigning to become the EM of Detroit, has been hired to sort out Detroit’s debt issue. The meeting where the City Council approved the hiring, which passed on a 5-2 vote with Council members JoAnn Watson and Brenda Jones dissenting, was disrupted by protesters.

Council members JoAnn Watson and Brenda Jones voted against the $3.3 million contract. Council President Charles Pugh, president pro tem Gary Brown and members James Tate, Saunteel Jenkins and Andre Spivey voted yes. Kenneth Cockrel Jr. and Kwame Kenyatta were absent.

Nearly 100 protesters yelled “shame” repeatedly as they left the council’s chambers. Although Orr severed his ties to Jones Day after he was appointed in Detroit, protesters say using his former firm represents a conflict of interest.

“Jones Day is a disgrace. They are taking away our rights,” the Rev. W.J. Rideout said after Tuesday’s session. “… This is our city. We pay taxes here and they deserve to stand up for democracy (and) the wrongdoing of our people. Gov. Snyder, Kevyn Orr, Mayor Bing and some of our city council are all sitting in bed together.” {…}

As the council attempted to weigh the issue, a few dozen protesters began kneeling down, holding hands and singing and chanting. They chanted “Whose City, Our City” and sang “We Shall Not be Moved” as Pugh temporarily adjourned the session.

Detroit Emergency Manager Orr moving quickly to privatize city services

In what has become a familiar refrain, Detroit EM Orr is moving quickly to privatize city services to for-profit vendors:

Even as Emergency Manager Kevyn Orr is quietly meeting with city officials and studying Detroit’s grim financials, plans are accelerating behind the scenes to transfer selected departments and programs to outside agencies.

The likely moves could be announced as early as this week. They initially are expected to target the city’s 120-person Planning and Development Department, the demolition of abandoned property and other functions whose mismanagement are considered to be blocking deployment of federal dollars, tax revenue generation or both.

“The inertia is what causes problems for the city,” a ranking source familiar with Orr’s thinking said in an interview. “He’s got a lot of projects on the griddle and he’s ready to move soon. Things are moving pretty fast.”

Detroit Emergency Manager Orr redefines role of Financial Advisory Board

Detroit EM Orr is keeping the Financial Advisory Board put together under the City/State consent agreement active, giving them a new role in turning the city’s finances around:

[Detroit's] Financial Advisory Board will meet today for the first time since Emergency Manager Kevyn Orr took office, amid questions about why it still exists.

The panel’s role is unclear — and some council members question whether it’s necessary — but Orr’s spokesman said he intends to keep the group even though its “scope and role” will change.

“He wants to keep them in place to provide some operational and financial accountability,” said Bill Nowling, Orr’s spokesman.

“We have a lot of people on that board who have a tremendous amount of financial experience. Having them there, looking over everyone’s shoulder is a good thing. It’s reassuring to our creditors and our taxpayers that there’s an extra level of oversight. Kevyn thinks that’s important.”

Councilwoman Brenda Jones, though, said the board is “supposed to be gone” with Orr’s arrival and has questioned why its members are still paid. Its nine members are eligible to make $25,000 per year and have met monthly about the city’s finances since Detroit agreed to a consent agreement with the state last April.

Unionized Detroit firefighters will have a new contract imposed on them July 1st

Deadline Detroit reports that unionized Detroit firefighters are going to have a new union contract imposed on them by EM Orr on July 1st:

The stark new world of Detroit under an emergency manager became clear for Detroit’s firefighters this week when the city told them they would get a new contract July 1.

And, for the first time in 80 years, there will be no negotiations.

“They are using the new Emergency Manager Law to purposely avoid bargaining with us and, instead, force new terms of employment on us,” the executive board of the Detroit Fire Fighters Association told its members in an email.

“Please be aware of our situation and operate accordingly.”

Dan McNamara, the longtime union president, said city representatives refused to be specific. He said changes could be imposed on work rules, conditions, pay, health benefits, safety, pensions and the department’s unique seniority system.

“This is important,” McNamara said. “This is historic.”

The 930-member fire union, organized in 1933, has fought over the years to keep seniority, in which longevity is the only criteria for moving up in the ranks, from firefighter to sergeant to lieutenant to captain to battalion chief.

Detroit Tigers’ opening day game was disrupted by EM protest on I-75

An increasingly common form of protest of the new Emergency Manager in Detroit is to clog Detroit highways with lines of slow moving vehicles. The most recent protest of this type was on April 5th, opening day of the Detroit Tigers home season:

A procession of vehicles traveling barely above idling speed leisurely rolled southbound on Interstate 75 in Detroit about 10:45 a.m. Friday. Spedometer dials quivered below 10 mph as 70 mph speed limit signs passed slowly on the roadside.

It was another of what some are calling a “slowdown in Motown,” an act of civil disobedience meant to protest the installation of Emergency Manager Kevyn Orr in Detroit.

“We want to do it on opening day today, not just to bring attention to Snyder’s policy and the EM in Detroit but also that there are documents that indicate Mike Illitch owes the city of Detroit some… tax revenue,” said David Bullock, an organizer. “We believe the corporate entities in Detroit should be part of the solution and not part of the problem.

“The people of the city of Detroit are not happy about the present state of affairs.” {…}

The protest began at Clay Road on the border of Hamtramck and traveled south to near the Madison exit on I-75.

Cars backed up, many honked, some drivers were visibly frustrated, one driver of a commercial truck pounding his steering wheel and visibly yelling to himself as he tailgated within feet one of the crawling protestors.

At least one protestor vehicle occupied each lane. Impatient motorists passed on either shoulder, sometimes rolling down their windows to shout at the impeding vehicle.

Suit to rid Detroit of Emergency Manager tossed out of court

Robert Davis’s ongoing effort to keep Detroit out from under the control of an Emergency Manager was dealt yet another blow last week when a Lansing Circuit Court judge dismissed his lawsuit:

A lawsuit seeking to block the appointment of Detroit emergency manager Kevyn Orr has been dismissed.

Attorney Andrew Paterson said Monday that the lawsuit became “moot” when a Lansing Circuit Court judge refused last month to hold a hearing before Orr’s hiring by the state’s Emergency Loan Board.

Paterson represents Citizens United Against Corrupt Government, headed by activist Robert Davis.

The group sued on March 8, saying Gov. Rick Snyder was unlawfully recruiting and interviewing candidates for the emergency manager job.

Former Highland Park Emergency Manager Blackwell sees his day in court, gets sentenced to probation

Former Highland Park EM Art Blackwell reneged on an agreement to take a lower salary and, instead, paid himself handsomely for his work there. He was originally indicted for embezzlement and, yesterday, was sentenced to two years of probation and must pay the city back $264,000 in restitution:

Blackwell, who was originally charged with embezzlement, took a plea deal ahead of a scheduled trial in May.

He pleaded no contest to a charge of public money safe keeping.

He was also ordered to pay $264,000 in restitution.

Blackwell was accused of raking in the money that wasn’t authorized or part of his contract.

Blackwell was appointed by then Michigan Gov. Jennifer Granholm in April 2005 to bring the city out of financial trouble. He promised to work for the cash-strapped city for $1 a year.

Pontiac Emergency Manager Schimmel planning to eliminate health insurance coverage for city retirees

Self-proclaimed “dictator” of Pontiac, EM Lou Schimmel has plans to eliminate health insurance coverage for retired city employees to fill the city’s budget gap:

Schimmel plans to ask the Michigan Department of Treasury within the next month for permission to eliminate health care benefits altogether for the city’s 1,000 or so general employee retirees, most of whom are Medicare-eligible.

The city would also stop providing supplemental Medicare Advantage insurance for general retirees, for which it pays $362 per retiree per month. The emergency manager said he’s planning to provide an opportunity for retirees to continue to purchase their health insurance as a group.

“I would simply love to pay for retiree health care, but — it’s a problem,” Schimmel said. “This will structurally fix the city financially.”

It’s so typical of the rude bedside manner of our state’s EMs that Schimmel would call the health care for retirees “a problem”. It will certainly be a problem for those retirees who have never thought they’d need to plan for health insurance coverage in their retirement. This is a promise made and broken and these people have not had enough advance notice to plan for it.

Former Detroit Public Schools superintendent sues DPS Emergency Manager after being fired

Shortly after PA 436 took effect and gave DPS EM Roy Roberts control over non-academic parts of running the school system, he fired Superintendent John Telford. Telford is now suing Roberts for violating his due process rights and the contracts clause of the Constitution:

The former interim superintendent of Detroit Public Schools is suing Emergency Manager Roy Roberts, the governor and state treasurer in federal court, alleging his termination violates his due process rights and the contracts clause of the U.S. Constitution.

John Telford filed a 19-page complaint Friday in U.S. District Court in Detroit, accusing Roberts, Gov. Rick Snyder and Treasurer Andy Dillon of violating his 14th Amendment right to due process when he was fired March 28, the day the state’s new Public Act 436 took effect.

The new emergency manager law restored Roberts’ full authority over the district, including terminating personnel in positions of academic authority.

A lower court had ruled that under Public Act 72, the state’s prior EM law, Roberts had financial power and Telford — who was appointed by the school board — had academic power.

When Roberts fired Telford, he reappointed Karen Ridgeway, who had been demoted by the board in February after a judge ruled P.A. 72 required the EM to share power with the board.

You can listen to Tony Trupiano’s two-part interview with Telford from last night here:

Pontiac Mayor and City Council get their paychecks back while Flint Emergency Manager Kurtz ends pay for Mayor Dayne Walling and entire City Council

Earlier this month, Pontiac EM Lou Schimmel restored wages to the Mayor and City Council. In Flint, however, Ed Kurtz reversed a decision by former EM Mike Brown and once again took away the paychecks of Mayor Dayne Walling and the Flint City Council:

Flint City Council members and Mayor Dayne Wallling aren’t getting paid – again.

When the state’s new emergency financial manger law took effect March 28, the salaries and benefits of elected officials were automatically eliminated where the state has appointed an emergency manager.

Flint emergency manager Ed Kurtz said he plans to meet with the Flint City Council within the next couple of weeks to talk about giving the council and mayor their pay back.

Flint’s nine-member council and Walling had their pay partially restored December 2011 by former emergency manager Mike Brown after he previously eliminated their pay.

Walling was making $55,080 a year, plus his fringe benefits. Council’s pay was $7,000 per year with no benefits.

Highland Parks Schools Emergency Manager rescinds diplomas for 18 students

In an unprecedented move, Highland Parks EM Donald Weatherspoon rescinded the diplomas of 18 students who were awarded credits for classes they did not pass:

The state-appointed emergency manager for Highland Park’s public schools has revoked diplomas awarded last year to 18 students.

MLive reported Friday that a review of transcripts determined the students were given credit for failed classes or didn’t have enough credit hours to graduate.

Emergency manager Donald Weatherspoon says the students in the academically and financially struggling Detroit area district were “misled” by school officials.

Weatherspoon also is manager of Muskegon Heights Public Schools in West Michigan.

He says he is seeking funding for a plan to allow students who graduated from Muskegon Heights High School as long as six years ago to receive free online learning. Weatherspoon says he believes the students received an inadequate education.

Weatherspoon is also offering free online classes for students who graduated from Muskegon Heights schools in the past six years because of the inferior education they received:

People who graduated from Muskegon Heights High School as many as six years ago would receive free online learning under the emergency manager’s plan to address what he perceives as an inadequate education that was provided to them. {…}

Testing of Muskegon Heights High School students found the vast majority – including 92 percent of ninth-graders – began the school year at least three grades behind in math and reading. That prompted Weatherspoon to explore what can be done for those who have graduated from the district as well as those yet to graduate.

He calls it a “plus six, minus six” approach. That means that people who graduated as many as six years ago or who will graduate as many as six years from now would be entitled to the free educational support. Weatherspoon is trying to find a way to fund the program he said is “still in a concept stage,” and is exploring state job training money.

Weatherspoon said he does not anticipate rescinding diplomas in Muskegon Heights, where he said there is confusion over whether 17 or 21 credits were required to graduate.

It was actually a newsflash to me that the same person is the EM for two school districts.

Roy Roberts may be a convincing liar but he is still a liar

Michigan’s experiment with Emergency Managers has begun to catch national attention, thanks largely to the efforts of Rachel Maddow and her staff. One of the things that has become quite clear from the things I have written about here and the terrific reporting by The Rachel Maddow Show is that, despite the fact that our state is relying on budget-cutting Emergency Managers to solve problems that are complex and multi-faceted, they have yet to show that they actually WORK. Simply stated, outside of one tiny village, there has yet to be a city or school district that has emerged out from under and Emergency Financial Manager or an Emergency Manager and remained financially stable.

The Detroit Public Schools has been under the control of an Emergency Manager or Emergency Financial Manager for many years. The first Emergency Financial Manager, Robert Bobb, actually left the school district in a bigger financial hole than when he arrived. He was replaced by Governor Snyder by an auto industry marketing and sales guy, Roy Roberts. With Public Act 436 kicking in this past week, the law which thwarts the will of Michigan voters who struck down the previous Emergency Manager Law in last fall’s election, Roberts now has complete control over the school’s academic program once again (he had it for over a year then lost it after the November election.)

Roberts is very proud of his work and went on national television to tell the world that the Detroit Public Schools are back and, not only are they back, they are kicking some serious academic ass, surpassing the state average MEAP scores in a majority of categories. Here he is on NBC’s Education Nation Detroit Summit last week:

ROBERTS: But the key is, the academic side that you talked about, this past year on the state testing MEAP test, every grade in the Detroit Public Schools increased and improved and, in 14 out of 18, did better than the state average. That’s what it’s all about.

HOST: That deserves applause.

Holy cow! This is terrific news! Finally — FINALLY! — an Emergency Manager success story! It’s what we’ve all been waiting for!

Unfortunately, it’s probably best NOT to get excited. Why?

It turns out that it’s complete bullshit. Dr. Thomas Pedroni at the Detroit Data and Democracy Project blog analyzed the test scores for the Detroit Public Schools, both with the EAA schools included and without them. What he found is that, simply put, Roy Roberts is lying. Boldly lying you might say. Detroit Public Schools are not outperforming the state average in 14 out of 18 categories. In fact, by and large, they aren’t even making gains:

Given all the recent bad news in Detroit, Roberts might be forgiven if his facts were a bit off the mark. It turns out, according to the Michigan Department of Education, that DPS did not outshine the state in 14 of 18 MEAP categories. The actual number was somewhat lower —- zero. DPS trailed the Michigan average in proficiency in all 18 categories. And not just by a bit—by more than 10 percentage points in the two science categories, and by 20 or more in the other 16. But it was a happy moment at the summit. No one—not one panelist, not one moderator, not one preselected member of the audience—raised an eyebrow over Roberts’ innovative facts.

Perhaps Roberts had merely stumbled over his own words. Maybe he really meant to say that DPS schools were gaining ground on the Michigan averages -— that yes, DPS was still behind, but was steadfastly narrowing the achievement gap in 14 of the 18 categories.

Unfortunately, that’s not the story the MEAP numbers tell either.

Instead they show that the Detroit Public Schools have fallen even further behind the state average since gaining an Emergency Manager in 2009. The picture the numbers paint is particularly bleak when the 15 schools handed to the EAA just before the fall MEAP administration are factored in. They show that Detroit’s third through eighth graders continue to lose ground in reading and math proficiency in most categories.

The hardest hit have been our youngest test takers—those who have spent most of their school years under emergency management—our third, fourth, and fifth graders. Although Detroit students scored among the worst in the nation in 2009, Detroit’s third graders have since fallen 5.3 percentage points farther behind the state average in reading proficiency. In math, they have fallen another 5.1 percentage points below the state average.

I’m not sure how Roy Roberts gets off making blatantly false statements and then enjoying the applause from the audience as if he somehow deserved it. What’s worse is that our state media is giving him a complete pass on this. Perhaps it’s because they got scooped by a blogger. Dr. Pedroni offered this to the Detroit Free Press but, after many machinations, they turned him down. Here is his description of what happened and I find it shameful:

This column was submitted for consideration to the Detroit Free Press on Monday, March 25. The column was accepted, and slated to run online beginning Tuesday morning. However, on Tuesday afternoon I received a call from the paper’s editorial desk that more time was needed to go over the column. I had already emailed the editorial office links to the Education Nation Detroit Summit video with the times at which the pronouncements by Roberts (at 25:39) and [Chelsea] Clinton (at 43:00) were made. I had also emailed a link to the MDE site where the relevant MEAP data is stored, and shared my Excel Worksheets on which I had done the calculations underlying the analysis. The Free Press staffer and I carefully went over on the phone all the numbers and how they were derived. She thanked me for my time and care. The column was again cleared for publication, this time for Wednesday at noon. Just before noon I received another communication from the Free Press— that if they ran a piece accusing Roberts of lying, then the paper at least needed to check with him on what he intended to say. I pointed out that the column did not accuse Roberts of lying, but merely used data to analyze his claim. Later Wednesday afternoon I received a final email, that based on Roberts’ response, there was too much that would need to be changed in the column, and that I was welcome to take it elsewhere.

It’s bad enough that a state-appointed czar with complete control over the largest school district in the state boldly lies in public about success that he has, in fact, not achieved. It’s even worse when our state media is complicit in the lie by refusing to report on it.

I have been saying for some time that the demise of legitimate journalism in our country is leading the collapse of democracy, a collapse that I would argue is epitomized by Michigan’s Emergency Manager Law. The fact that one of the top media outlets in the state chose to turn a blind eye to the story is the clearest example I have seen yet about how they are failing us and leading to a loss of democracy in Michigan. Make no mistake: we NEED solutions to the problems our failing schools and cities face. What we also need is an honest accounting of whether or not our efforts are working so that, if they are not — and they decidedly ARE NOT at this point — we can make changes and move on to solutions that DO work. I would suggest that newspapers like the Detroit News and the Detroit Free Press start asking the hard questions and demanding that our state begin reinvesting in Detroit, its schools, and all of the other cities and districts that are being run by Emergency Managers. Because continuing to do the same things that aren’t working over and over again is not going to produce different results, no matter how much cheerleading they do.

[Caricature by DonkeyHotey from photos by Anne C. Savage for Eclectablog]

The fight to reclaim our state in 2014 starts TODAY

Today Michigan, the birthplace of the labor movement, becomes the 24th Right to Work state in the USA. It’s also the day that PA 436, the Emergency Manager law Republicans passed to thwart the wishes of Michigan voters, goes into effect. PA 436 transforms all Emergency Financial Managers to Emergency Managers (EMs), giving them powers above and beyond financial matters as they are the sole rulers of the schools and municipalities over which they have complete power.

Right to Work is being challenged by at least three different lawsuits. The Rev. Al Sharpton will join Rev. Charles Williams, President of the Detroit National Action Network (NAN), and other local community leaders to file a lawsuit in federal court in Detroit. A silent vigil is planned at the State Capitol building, as well.

The switch from Emergency Financial Managers to Emergency Managers is being heralded in by action by Roy Roberts, the EM for Detroit Public Schools (DPS). He has announced that he will be firing DPS superintendent, John Telford.

Roy Roberts, the state appointee who runs the Detroit Public Schools, announced in a letter dated today that he will fire the superintendent that the school board hired and reverse decisions the board made since it acquired academic powers in August. {…}

Lamar Lemmons, the board president, said Wednesday that he was not surprised at Roberts’ first actions under the new law.

“We are essentially spectators,” he said of the board.

This action is a key component of PA 436. It allows the EM to assume control over academic decisions. In other words, a man with no experience or training will be running academic programs and usurping the power of the elected officials. Here’s a bit from his biography:

Roberts, former Managing Director at Reliant Equity Investors, has decades of managerial, financial and organizational experience, having served as the highest-ranking African-American executive in the U.S. automobile industry as Group Vice President for North American Vehicle Sales, Service and Marketing of General Motors Corporation (GM). He also served as Vice President and General Manager in charge of Field Sales, Service and Parts for the Vehicle Sales, Service and Marketing Group of General Motors Corporation.

He’s a finance and marketing guy. Nothing in his resume qualifies him to run academic programming in the DPS.

It’s a bellwether day for us in Michigan. It also marks Day One of the battle to reclaim our state from the misguided, drunk-with-power ideologues that are working so hard to crush unions, destroy our public school system, set women’s rights back decades and to privatize anything not nailed down to for-profit businesses that bankroll their campaigns.

If you aren’t actively engaged in replacing these Republicans in 2014, you should be seriously considering how you can get involved NOW. Everything we do between now and November 4th, 2014 should be aimed at that single goal. Get involved.

UPDATE: Here is a list of forums, rallies, and other events taking place across the state today (many thanks to Eclectablog reader Larry):

Right to Work Community Forum – March 28th, 6pm
Right to Work is temporary, Solidarity is forever! Governor Snyder is tearing our state apart and cannot be trusted! This Thursday, the community will converge on the UAW Vote Center at 6pm, for a frank discussion on the real effects of Michigan’s new Right to Work laws on working families. Please plan on attending, conversing, and planning with many of your elected officials, community leaders, labor leaders, teachers, co-workers, and friends. Click here and tell us that you’re coming.

Confirmed guest speakers: (List will be continually updated)

• State Senator Bert Johnson
• Wayne County Clerk Cathy Garrett
• Detroit Councilwoman Brenda Jones
• Rick Blocker – Chair of 14th District Dems and Sec/Treasurer of UFCW 876
• Sherry Gay-Dagnogo – National Congress of Black Women Greater Detroit Chapter, Education Chair
• Rev. Charles Williams II – President, National Action Network Detroit Chapter

UAW Vote Center
15140 Livernois, south of Fenkell
Detroit, MI 48238

Oakland County “Stand Up to Snyder” Rally – March 28, 3pm
March 28th marks the sad start of Right-to-Work-for-less in Michigan! This Thursday at 3:00PM, stand up for Oakland County’s working families by wearing red and coming out to old Pontiac Central High School to protest Rick Snyder’s war on workers!

Old Pontiac Central High School
300 W Huron Street
Pontiac, MI 48341

Utica Solidarity Rally – March 28, 12pm
Workers across the state will stand together on Thursday, March 28th, the day that the misnamed Right to Work legislation takes effect. Michigan’s working families know that Right to Work is temporary, solidarity is forever. Join us on Thursday to stand in solidarity and hold Governor Snyder accountable for his attacks on working families. In Utica, working families will rally to let the governor know that working families are paying attention and we WILL hold him accountable in 2014!

Utica City Hall
7550 Auburn Rd.
Utica, MI 48317

Hamtramck Solidarity March – March 28, 3:30pm
Workers across the state will stand together on Thursday, March 28th, the day that the misnamed Right to Work legislation takes effect. Michigan’s working families know that Right to Work is temporary, solidarity is forever. Join us on Thursday to stand in solidarity and hold Governor Snyder accountable for his attacks on working families. In Hamtramck, we will gather at the High School and march together in Solidarity.

Hamtramck High School
3201 Roosevelt
Hamtramck, MI 48212

Western Wayne County Solidarity Event – March 28, 4:30pm
Workers across the state will stand together on Thursday, March 28th, the day that the misnamed Right to Work legislation takes effect. Michigan’s working families know that Right to Work is temporary, solidarity is forever. Join us on Thursday to stand in solidarity and hold governor Snyder accountable for his attacks on working families.

• Soup and bread available to commemorate the 1932 Ford Hunger March
• Showing “Koch Brothers Exposed” several times. 4:30 and 6:30 (60 min in length)
• We will have children’s activities available.
• There will be plenty of opportunity to make signs and educate the good people on Telegraph about the issues.
• Around 7:45 we will start a candle-light vigil. If you can, please bring your own illumination device.

9650 Telegraph Rd
Taylor, MI 48180

The country is waking up to what’s happening in Michigan

The U.S. Department of Education is investigating a civil rights complaint over the use of Emergency Managers in the Detroit Public Schools. The complaint alleges that black and brown students are being singled out for takeover of their school systems while kids in majority white districts facing similar financial problems aren’t similarly impacted. It also claims that black and brown students face discipline that their white counterparts do not.

It appears that the rest of the country is beginning to wake up to egregious overreach by Michigan Republicans that has an inordinate impact on people of color.

The US Department of Education is now investigating the state of Michigan over alleged civil rights violations.

The department’s civil rights office was already investigating two civil rights cases against the Detroit Public Schools.

“OCR is currently investigating a complaint alleging the Detroit Public Schools District has discriminated against African American and Hispanic students on the bases of race and national origin by closing and/or converting to charter schools a number of district schools,” Education Department Jim Bradshaw said in an email.

“And, that the district has treated African American students differently by disciplining them for participating in student protests while not disciplining students of other races/national origins who engage in similar protests.

There is no question that minority students are far more likely to see their schools taken over by the state or to have them privatized. What remains to be seen is if this is happening unfairly and, if so, what the remedy is.

I’m inclined to say that a return to democracy and actual investment in our schools, rather than a diversion of education funds to private corporations, is the answer. We’ll see if the federal government agrees.

It’s an EMERGENCY!

Congressmen Gary Peters and John Conyers have asked the Government Accountability Office to look into the efficacy of the Emergency Financial Manager Law in Michigan as well as whether or not it has resulted in any conflicts of interest or other improprieties as the law has been enforced.

In their letter to Comptroller Gene Dodaro (pdf), they write:

We write to request that the Government Accountability Office (GAO) conduct a study of the Michigan emergency manager law, including the operation of federally-funded programs (such as education, transportation, Medicaid, and public safety) in jurisdictions declared in financial crisis, and placed under the authority of an emergency financial manager.

The refer to specific items such as “misuse of federal or other funds”, “efficacy in apply for and obtaining federal grants, loans, and other funds”, prevention of “conflicts of interest, self-dealing or other mismanagement of such funds”, whether actions by EFMs has resulted in “greater dependency actions on federal government programs”, and “an overall assessment of costs, benefits, fiscal or other efficacy of” emergency managers.

Congressman Conyers said in a statement, “It is difficult to identify a single instance where an emergency manager has succeeded in turning around the financial fortunes of a city or jurisdiction. The history of the emergency manager Law in Michigan is replete with fiscal mismanagement and conflicts of interest. In the absence of any sort of checks or balances at the state level, it is vital that the GAO examine the law and its impact, particularly the impact on federal funding.”

Congressman Peters made a similar statement saying, “By focusing only on short-term budgetary patches, emergency managers have failed to address the long-term systemic issues confronting older urban areas. The consistent record of poor results we’ve seen from emergency managers is why I’m joining with Congressman John Conyers in calling for a GAO review.”

Congressman Peters knows about this first hand. He stepped in to make sure the Pontiac Emergency Manager Lou Schimmel didn’t allow his city to miss out on over $1 million in federal dollars over a year ago. Here’s what I wrote then:

Like Mighty Mouse saving the day, Congressman Gary Peters stepped in to save the city of Pontiac from a completely assinine decision by Emergency Manager Lou Schimmel that would have cost the city millions in federal grant funding. Congressman Peters has now confirmed that the total amount is $1.4 million. This is Exhibit A why Emergency Managers are bad for Michigan: Schimmel took the easy way out and it almost cost Pontiac, a city in deep financial trouble, over $1 million.

In December of 2011, Congressman Conyers appealed to the U.S. Department of Justice to conduct an investigation of their own. He also confirmed that Sec. Eric Holder was already investigating. Though I have inquired with his staff, so far there’s been no word on how that is going.

The letter they sent to Comptroller Dodaro point out specific instances of EFMs engaging in questionable or even illegal actions as well as times when the actions of the EFMs have proven to be ineffective.

I’m pleased to see these two men getting involved in this debate. What remains to be seen is if they can get the attention of the federal government. So far, that goal seems to have eluded them.

By the way, if you look at the footnotes in their letter, you’ll see that I am cited as one of the sources. See? Bloggers CAN make a difference!

[Graphic by Chris Savage | Eclectablog]

Well, that was quick

[Caricature by DonkeyHotey from photos by Anne C. Savage for Eclectablog]

Standard and Poor’s Rating Services didn’t wait for Detroit’s new Emergency Financial Manager Kevyn Orr to actually accomplish anything or, in fact, to even begin his first day on the job. Yesterday they went ahead an upgraded Detroit’s outlook rating from “negative” to “stable”.

These Emergency Managers are like wizards or something! Orr doesn’t start his new job until March 25th, a week from now.

Standard & Poor’s Rating Services has revised Detroit’s outlook “stable” from “negative” for the city’s general obligation bonds and pension obligation certificates.

The ratings agency made the announcement Friday, shortly after Gov. Rick Snyder appointed Washington attorney Kevyn Orr as an Emergency Financial Manager for Detroit, which owes $15 billion in long-term debt and faces a $327 million budget deficit. {…}

“We view the appointment of an emergency manager as a positive step toward regaining structural balance and improving the city’s overall financial condition,” Standard & Poor’s credit analyst Jane Hudson Ridley said in a statement.

In other news, not widely reported is the fact that the law firm that Orr worked for before being hired to be Detroit’s Emergency Financial Manager is the same firm that the city of Detroit hired to FIGHT the imposition of an Emergency Financial Manager.

I’m sure there is no possible way that there could be anything resembling a conflict of interest here. Couldn’t be. Uh-uh. Nope.

(By the way, unsurprisingly, Governor Snyder says there’s not.)

It’s good to be the king banker

[Caricature by DonkeyHotey from photos by Anne C. Savage for Eclectablog]

There’s a story emerging out of Detroit about the role too-big-to-fail banks have played in the creation of Detroit’s fiscal emergency. Last week, Dave Dayen reported at the National Memo that some banks have begun foreclosure proceedings on homeowners and then simply walked away before taking possession of the property. This leaves evicted homeowners on the hook financially for the home they are no longer permitted to live in. What’s worse is that the banks don’t even have to inform the homeowner or the city of Detroit which no longer receives any tax revenue from the property.

Not only that, banks have been reaping huge profits in debt restructuring fees and, as added salt in the wound of a city in crisis, Republicans have ensured that these same banks will be paid in full as Detroit works to get out from under its crushing debt.

Here’s Dayen on MSNBC’s Jansing & Co. last week:

It gets worse. Bloomberg reports that banks have reaped nearly a half billion dollars in fees charged to help Detroit refinance its debt over the past decade:

The only winners in the financial crisis that brought Detroit to the brink of state takeover are Wall Street bankers who reaped more than $474 million from a city too poor to keep street lights working. {…}

Banks including UBS AG, Bank of America Corp.’s Merrill Lynch and JPMorgan Chase & Co. have enabled about $3.7 billion of bond issues to cover deficits, pension shortfalls and debt payments since 2005, according to data compiled by Bloomberg. Liabilities rose to almost $15 billion, including money owed retirees, according to a state treasurer’s review.

The debt sales cost Detroit $474 million, including underwriting expenses, bond-insurance premiums and fees for wrong-way bets on swaps, according to data compiled by Bloomberg. That almost equals the city’s 2013 budget for police and fire protection. {…}

Wall Street firms could end the deals and call for full payment because Moody’s Investors Service last March cut unlimited general-obligation bond ratings to B2, five levels below investment grade, according to the city’s 2012 financial statement. In November, Moody’s cut the rating again, sending it down two levels to Caa1.

The cuts mean there is “significant risk in connection with the city’s ability to meet the cash demands” under the swap, according to Detroit’s financial report. {…}

The city has advisers working on a plan to deal with the debt, in part by reducing retiree health-care liabilities, said [Detroit chief financial officer Jack] Martin.

There’s more on banks’ profiteering, too. Ned Resnikoff at MSNBC reports that currency manipulation by banks may have contributed to Detroit’s financial crisis:

Walkaways aren’t the only way in which major banks have gouged the city’s finances: According to a 2011 financial report, Detroit also owes $3.8 billion in interest rate swaps. An interest rate swap is a type of financial instrument by which cities exchange the variable interest rates on their municipal bonds for the fixed interest rates offered by banks. However, when the federal government drove down the variable interest rate in the aftermath of the financial crisis, cities were left with a comparatively stratospheric fixed interest rate.

Many of those variable interest rates are tied to something called the London Interbank Offered Rate, or LIBOR. The LIBOR number, regularly updated, refers to the rate of interest at which the biggest London banks pay when they borrow from one another. Recently, as many as 20 of the biggest banks in London have been accused of secretly rigging the LIBOR rate, driving it down so that they could pay lower interest rates.

As it turns out, the variable interest rates involved in interest rate swaps are often pegged to LIBOR—meaning that, even as they stand accused of LIBOR manipulation, banks which hold interest-rate swaps stand to make a fortune off the extremely low variable rates which they allegedly manipulated. While the cities which hold interest rate swaps owed the banks the same flat rate which they always had, the banks, in turn, owed practically nothing. In fact, eight counties in the state of California recently sued two major banks, saying “they were cheated out of higher interest payments on investments such as interest-rate swaps and corporate bonds tied to Libor.”

Again, it’s difficult to measure how much LIBOR manipulation has cost the city of Detroit. But what we do know is that the banks are being asked to sacrifice nothing in order to keep Detroit afloat, even as working-class city employees are told that a 10% pay cut is an insufficient concession on their part.

It’s another example of privatizing the profit and putting all of the risk on American tax payers.

Sadly, it doesn’t stop there. Banks receive special dispensation and protection under the new version of the Emergency Manager law passed by Michigan Republicans and signed into law by Governor Rick Snyder, Public Act 436. The new law replaces one sent to the rubbish bin by Michigan voters last November and goes into effect later this month. One aspect of the law that hasn’t gotten much attention is Section 11(1)(b):

Sec. 11. (1) An emergency manager shall develop and may amend a written financial and operating plan for the local government. The plan shall have the objectives of assuring that the local government is able to provide or cause to be provided governmental services essential to the public health, safety, and welfare and assuring the fiscal accountability of the local government. The financial and operating plan shall provide for all of the following:

(a) Conducting all aspects of the operations of the local government within the resources available according to the emergency manager’s revenue estimate.

(b) The payment in full of the scheduled debt service requirements on all bonds, notes, and municipal securities of the local government, contract obligations in anticipation of which bonds, notes, and municipal securities are issued, and all other uncontested legal obligations.

So, not only have the big banks reaped hundreds of millions of dollars in fees and avoided taxes by walking away from foreclosed properties, they are first in line to get paid when Detroit’s debt problem is resolved. To add insult to financial injury, the banks will be paid “in full”, not risking anything if the city goes into bankruptcy. This is in contrast to other creditors who may get paid only pennies on the dollar if Detroit eventually does go through Chapter 9 municipal bankruptcy, something newly-minted Emergency Financial Manager Kevyn Orr says may be a possibility.

This one sentence buried on page 10 of the 22-page law is a big wet kiss to the banks that have already profited handsomely as Detroit circles the drain. And it’s going almost completely unnoticed.

Aww, geez…

I don’t want to beat this guy up too much since he’s just getting started and I feel compelled to wish him success in his job. He is a Democrat, after all, and I think we ALL want Detroit to do well. However, one would hope that the guy tasked with saving Detroit from its financial disaster would be a bit more detail oriented than this. It turns out Kevyn Orr has two outstanding tax liens on properties he owns in Maryland. They are related to unpaid unemployment taxes.

Oops.

The man charged with fixing Detroit’s faltering finances has been hit with four liens in four years from the state of Maryland for unpaid taxes, records show.

State records show Kevyn D. Orr, who was appointed emergency manager on Thursday, has two outstanding liens on his $1 million home in Chevy Chase, Md., for $16,000 in unemployment taxes in 2010 and 2011. Two other liens of more than $16,000 in unemployment and income taxes were satisfied in 2010 and 2011, records show.

Orr said he didn’t know anything about the liens when shown records of them Friday morning by The Detroit News.

“I don’t know what they are,” Orr said, as his new boss, Gov. Rick Snyder, sat next to him in The News’ offices. “That’s surprising to me, to be honest.”

Apparently Governor Snyder’s staff aren’t all that details-oriented either since they didn’t know anything about it.

Orr blames the mess on “an outside accountant”. Blaming others is certainly one approach, of course. However, I think he’d have been better off taking full responsibility on himself and moving forward.

An inauspicious beginning, to say the least. Actually scares the crap out of me, if I’m honest.

Aye, aye, aye…