Detroit Rock Bottom

Photo by Anne C. Savage, special to Eclectablog

Yesterday, Detroit Emergency Manager Kevyn Orr gave a frank State of the City report that showed that the city is “clearly insolvent”. Not a big surprise to anyone except a handful of folks who seem to think it’s all a big mistake and the city is just fine financially. For as much as I despise the concept of an unelected Emergency Manager taking over the running of a city, I do believe that Detroit will never move forward if those in charge aren’t living in the real world where even profit sharing they’ve been denied by the state isn’t enough to patch the holes in their budget.

Orr had some things to say to the Detroit Free Press that I thought were spot on:

[Orr] said he has found a city workforce filled with talented people who “want to do their jobs, and want to be good at it” despite understaffing, demoralizing pay and benefits cuts and grave doubts about the city’s survival.

Orr said he wants to stay away from apportioning blame among city officials, particularly Mayor Dave Bing and the current City Council.

“Especially in the backdrop of the neglect they had in the prior administration, which was extraordinary, they were trying to keep a city going with what they had to work with,” Orr said.

Detroit’s crisis, he said, dates back decades.

“What stands out to me is 40 years of dropping demographics, of reducing revenues — you don’t get the magnitude of neighborhood blight we have overnight — of no one having a plan or solution for that, of inviting, quite frankly, some class of residents to leave. And they did. They literally went across 8 Mile and started building buildings in Southfield. Without a vision for what you want your city to be three, five, 10, 20, 30 years out, the totality of those circumstances drove us here.”

That last highlighted bit is something you won’t hear from a lot of proponents of an Emergency Manager for Detroit. They simply point to “corruption” and “ineptitude” and “poor leadership”, wanting to place the blame on the black Democratic leadership over the years. It’s an easy peg to hang their hat on because it allows them to deny the reality of how Detroit got to where it is today. It’s a two-dimensional world where the rich that fled to the suburbs played no role, where the globalization of our manufacturing industries played no role and where everything can be blamed on a handful of black leaders.

So, good for Kevyn Orr for putting that out there. It’s as important to recognize that as it is to admit Detroit’s problems go beyond getting a bit of money back from the state for revenue sharing they should have received.

Mayor Dave Bing, who officially kicks of his reelection campaign today, was there to say he and Orr are singing from the same hymnal:

“My administration has prepared the runway for the overhaul that the EM appears to be planning,” Bing said. “It’s encouraging to know that he and I are on the same page. He’s highlighting on and focusing on the same initiatives that my administration has already begun to make progress on, and that’s public safety, transportation, lighting, blight and recreation.”

One of the main differences that Orr has that Bing does not, is a set of financial tools that city administrators do not have. The ability to renegotiate or even toss out contracts is something most mayors of failing cities would love to have but simply do not. In my conversations with Flint Mayor Dayne Walling, he’s said as much.

Meanwhile, the NAACP has filed a lawsuit against the state claiming that Public Act 436 — the latest version of Michigan’s Emergency Manager Law — violates the voting rights of African Americans in Detroit.

“It’s fundamentally about our right to vote, and our right, as constitutionally guaranteed, to select and elect our own publicly elected officials,” said Detroit branch President Rev. Wendell Anthony.

The suit also claims the state applies the law selectively to communities of color, since white communities in similar states of financial distress have avoided emergency managers.

“Too many people have died for this cause,” attorney Nabih Ayad said of voting. “And for them to go backwards now on this issue, it’s unbelievable. It’s deplorable.”

Governor Snyder’s office released a statement saying, in part, “The communities or schools currently with an emergency manager or going through any part of state’s EM process are because of financial facts and crises, certainly not because the make-up of their populations.” While that may be technically true, the reality is that it certainly IS having a disparate impact on African Americans in Michigan and some more white areas seem to be escaping the imposition of an Emergency Manager despite their financial problems. That said, the NAACP’s lawsuit is likely to go about as far as the previous lawsuits like it in other cities have: nowhere. You can read their complaint HERE (pdf).

Orr says it will take 6 weeks for a full review to take place and to determine if the city can avoid bankruptcy. In the meantime, he’ll be meeting with vendors and labor unions to see if they can come to agreements outside of a bankruptcy proceeding. One thing we know for sure, banks will get paid first. Everyone else will wait in line because that’s written into PA 436 which says the operating plan cities under Emergency Managers develop must include the following provisions:

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.

Yet somehow they’ll blame the teachers…

The Michigan township of Buena Vista, in the news recently for its racist Township Clerk, is back in the news today with the announcement that the school district has closed its doors over a month before the end of the school year. Why? Turns out the school district had taken $580,000 in state funding for a program for incarcerated youths that it no longer runs. With an outstanding bill of $400,000, the state cut off its funding and it now has no money.

The district’s 27 teachers had agreed to work without pay for a week while the district sorted out its mess but, this morning, the schools were closed:

Students and parents in the Buena Vista School District are waking up to discover that the district has shut its doors.

In financial distress and unable to pay its employees, the Buena Vista School District is closed Tuesday, May 7, a letter on the district website states.

The notice tells parents that a community meeting will take place at 6 p.m. Tuesday at the Central Office, 705 Towerline.

“We have worked diligently to attempt to avoid this situation since it first appeared as an immediate possibility to us this week and continue to work with officials at the State of Michigan in an attempt to mitigate this possibility,” the letter reads.

“The District is, therefore, taking the first steps toward confirming a financial emergency under Michigan Public Act 436 of 2012, and will continue to Work with State officials and the leadership of the District’s bargaining units to provide educational continuity to the children of the Buena Vista School District.”

Although the teachers had voted to work without pay for a week, the Michigan Education Association said it was ready to take legal action to force the district to pay the teachers, presumably because they had absolutely nothing to do with the financial emergency the district faces.

This is just a glimpse of things to come, as MEA Executive Director Gretchen Dziadosz says:

Gretchen Dziadosz, executive director of the Michigan Education Association — the state’s largest teachers union, of which the Buena Vista union is an affiliate — said during the conference call that teachers are worried about how they’re going to pay their bills and feed their children.

“We at MEA are fearful this is only the beginning,” Dziadosz said. That’s because a growing number of districts are facing financial struggles, she said.

The Buena Vista district is one of about 50 in the state that are dealing with a deficit.

This will ultimately be somehow blamed on the teachers if the past is a prelude to the future. Demonizing teachers in order to strip them of pay and benefits is the modus operandi of the anti-union, anti-public school zealots in Michigan and across the country. The next stop in the DeVos plan is to privatize as many schools as possible, preferably to for-profit corporations.

Further defunding of schools is still on the docket, too. Today, Teachers Appreciation Day, is the day a House committee meets to decide whether to slash another $770+ million from the School Aid Fund to pay for road repair. Click HERE to see how you can take action.

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.

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]

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.

And so it is done

[Caricature by DonkeyHotey from photos by Anne C. Savage for Eclectablog, not for reuse.]

This afternoon, Michigan Governor Rick Snyder appointed Washington, D.C. lawyer Kevyn Orr to be the Emergency Financial Manager of Detroit.

The Emergency Financial Assistance Loan Board has to make the formal appointment of an emergency financial manager and they meet later today.

With that, nearly half of all Michigan African Americans will live without local democratically-elected representation.

When the new Emergency Manager Law PA 436, aka “The Local Financial Stability and Choice Act”, goes into effect later this month, Orr will become the Emergency Manager giving him lattitude outside the realm of finances.

Lucky for him he’s a lawyer. I suspect that’s going to come in very handy in the coming months.