Michigan Emergency Financial Manager Round-up – Reclaiming our power edition


Taking back control

In the wake of the suspension of Public Act 4, Michigan no longer has “Emergency Managers”. We now have, once again, “Emergency FINANCIAL Managers”, men and women with reduced power and a singular focus on financial matters. Several school districts and municipalities around the state have wasted no time in reasserting their power as elected officials.

Last night, for example, the City of Pontiac voted to reclaim their city from Louis Schimmel:

A showdown is brewing in Pontiac over who controls city government after the city council voted Monday night to reclaim the power it lost when an emergency manager was appointed to run the financially-struggling community.

By a 6-0 vote with one absence, the council demanded that “authority over all city finances and financial decision-making should be restored,” to the mayor and council, according to the resolution.

That power had belonged to Louis Schimmel, an emergency manager appointed by Gov. Rick Snyder in September 2011 to address budget deficits.

“He has no authority,” Councilman Donald Watkins said of Schimmel after the vote. “We have not hired Mr. Schimmel.”

The Mayor of Pontiac, Leon Jukowski, does NOT agree with the council’s action.

Pontiac Mayor Leon Jukowski, who was stripped of his mayoral powers but has been working as a paid advisor to Schimmel, said he plans to veto the resolution, though he expects it to be overridden.

“They don’t recognize the authority of the attorney general,” Jukowski said. “I’m speechless at the stupidity of what happened here.”

In Highland Park, school board member and anti-EM/EFM lawyer Robert Davis is suing the state to remove Emergency Financial Managers Joyce Parker (Highland Park) and Roy Roberts (Detroit):

Robert Davis, a school board member in Highland Park, filed a request today with the state attorney general to remove the emergency financial managers running Highland Park Schools and the Detroit Public Schools.

Davis, who has had some success in the past suing public bodies for violating legal procedures, claims that the governor skipped several steps when he appointed the officials on Wednesday.

Davis expects Schuette to deny his argument because Schuette’s office provides legal representation for emergency financial managers. If the denial occurs, Davis said he will take his case to Wayne County Circuit Court. His case would be the third since Wednesday in a power struggle over the Detroit schools.

I’ll confess it’s a bit hard to take Davis entirely seriously. Recall that Davis is facing a 16-count federal indictment on fraud charges.

John Covington, the head of the Education Achievement Authority of Michigan, a collection of Michigan’s most desperate and failing schools, is vowing to push on with his initiatives, despite a vote by the Detroit Public Schools to pull out of the EAA.

The leader of the reform district scheduled to operate 15 schools in Detroit in the fall released a statement today saying that he intends to move forward with overseeing those schools.

John Covington, chancellor of the Education Achievement Authority of Michigan, said he wants to assure parents that the Detroit school board cannot stop the EAA from operating.

“We have received a number of calls from parents this morning voicing concern and uncertainty about the start of school Sept. 4 as a result of a vote taken last night by the Detroit Board of Education,” Covington said. “It is unfortunate that the board took that vote because clearly it has no legal authority to interfere in any way with the opening of the EAA schools.”

His statement comes after the Detroit school board on Thursday night voted to terminate the interlocal agreement between the Detroit Public Schools and Eastern Michigan University that created the EAA. The board also voted to cancel the transfer of 15 DPS schools – and about 11,000 students – to the EAA, which was created to educate students in the lowest-performing 5% of schools across the state.

In Flint, an investigation has been started over the 11th hour actions of former EM Michael Brown who put in place an incredibly large number of actions right before he was kicked out of his position with the suspension of PA 4:

Selling Genesee Towers for $1 to be demolished. Eliminating three citizen advisory groups. Ordering a proposed new property tax on the November ballot.

They’re three of more than 60 actions signed by former emergency manager Michael Brown without prior public notice in his final days in office, and now the Flint City Council is taking steps to investigate why they were done.

The council voted 7-0 tonight to hold an investigative hearing to learn why Brown executed the orders before he left office Wednesday, the day a voter referendum of Public Act 4 was certified for the ballot, effectively suspending the emergency manager law and rendering Brown ineligible for the seat.

Public Act 4 grants emergency managers broad powers to operate city government, including the authority to transfer a community’s assets and order a millage election.

“These were done in the 11th hour,” said City Councilman Bernard Lawler, who called for the hearing. “There is public assets and resources being transferred for private use.

Sixty! Wow! You can read more on the history of some of the deals Brown put in place HERE.

The Flint city council is also taking steps to thwart the imposition of a new EFM, Ed Kurtz.

The council also took steps against the appointment of the city’s new emergency financial manager, Ed Kurtz, who led Flint through it’s first state takeover in 2002-04. The state appointed Kurtz Wednesday under Michigan’s previous emergency financial manager law, Public Act 72, after the new law was suspended pending the November vote.

Kurtz then appointed Brown as his city administrator.

Meanwhile, Governor Snyder’s administration plunges forward with even more EFMs. This time it’s Allen Park facing the imposition of a local dictator, albeit one with somewhat less power than he or she would have had two weeks ago:

A financial review team has recommended that Allen Park get an emergency manager.

The 12-page report, submitted to the governor this week states that “a local government financial emergency exists within the City of Allen Park, and that no satisfactory plan exists to resolve that emergency.”

Allen Park Mayor William Matakas said Friday he opposes the recommendation.

“I’m obviously not very happy,” he said.

A six-member financial review team visited Allen Park during the past four weeks to assess the financial condition of the city. A previous preliminary review found that the city had high debt, an over-budget administration and excess police expenses during the previous fiscal year.

That review also said the city failed to file an adequate deficit-elimination plan with the state.

Matakas is hopeful that the state will allow them to file a deficit-elimination plan and avoid the takeover.

There’s a significant point to be made in all of this, particularly as it pertains to the state’s position that they had no choice and were forced to impose EMs/EFMs: these bureaucrats have only destructive tools in their arsenal. In failing cities and school districts that are deep in debt, there is no tool at their disposal for building or REbuilding. There is no way to invest in the future or to create new programs that could enhance revenue streams and make the schools and municipalities solvent again.

All an Emergency Financial Manager or an Emergency Manager can do is CUT. ELIMINATE. SELL OFF. LIQUIDATE. REDUCE. DESTROY.

The reasons for the crises these schools and cities face are varied but, in large part, they are due to the implosion of the manufacturing base that was at the center of everything they do. Cutting and destroying won’t replace that. Elimination and liquidation won’t build them back up and restore them to wholeness.

The repeal of Public Act 4 is essential because it will force the state of Michigan to confront this reality head on. Instead of approaching the plight of our cities and schools from a “cut only” destructive stance, faced with widespread bankruptcies, the state will be forced to begin the difficult process of REBUILDING. STRENGTHENING. CONSTRUCTING. INVESTING.

Only when this path is undertaken will our cities and schools stand a chance at being put whole again. You can’t build things up with tools of destruction and it’s high time the Snyder administration figures that out.