A CASE STUDY; PART ONE
By Russ Bellant
(Ed. note: Mr. Bellant submitted this report — all four sections published here — to the Michigan Senate Education Committee during its hearing on Senate Bills Feb. 23, 2011. The House has since passed their equivalent of the bills, and the Senate, despite having Mr. Bellant’s report, was poised to pass their bills March 9.)
This work is dedicated to:
Dr. Irene Norde, head of DPS curriculum, who was subpoenaed and testified in court under oath about the truth concerning Robert Bobb’s activities and was thereafter singled out for termination. Dr. Norde has since been selected by her peers as President-Elect of the Michigan Council of Teachers of Mathematics. MCTM includes teachers and administrators from pre-K to College.
Walter Esaw, the DPS executive budget director who tried to show Bobb fiscal realities and a real deficit reduction plan and lost his job as a result.
PART ONE: The Other Side of Robert Bobb
The well-crafted image of Robert Bobb in Detroit is compelling. He is an anti-corruption crime buster dedicated to redirecting resources to the education of our children. He is a trustworthy figure fighting a self-perpetuating system of corption that is trying to block change for the education of our children. As a tireless, dedicated, incorruptable agent of the Governor, he is like the Marshall of the old West, coming into town in cowboy boots to right wrongs and then will move on to other challenges.
Little of this image, however, is true.
Since Mr. Bobb has become Emergency Financial Manager (EFM) at Detroit Public Schools, he has repeatedly made and left on the record recklessly false claims, has abused his contracting authority and has been in continuous violation of state laws and possibly federal law. He let it be known to DPS employees that their jobs are on the line if they cooperate with the former General Superintendent or the elected Board of Education. Some contracts are let to family and friends of Mr. Bobb and his top appointees, many of whom are living high on the hog at the expense of DPS.
By telling the underreported side of Robert Bobb and his network that is exploiting Detroit Public Schools, this report is also looking at the failure of the EFM model under Public Act 72, which legally created the EFM in 1990. The law assumes a well-intentioned and attentive Governor with the ultimate responsibility for EFM accountability. There is no recourse when that oversight fails.
In order to understand the context in which this takeover is understood in Detroit, this report begins with a brief look at the 1999 state takeover of Detroit Public Schools. The failures of the first takeover created the conditions for it to happen again under the EFM law.
The First State Takeover
On March 26,1999, Public Act 10 was approved in Lansing to give all the powers of an elected Board of Education and the Superintendent combined in one person, a CEO. Spelled out in the list of enumerated powers was authority over bonds and capital projects, as well as all other District funds. The elected Board model that had existed since 1842 was disestablished.
This Public Act initiated a massive abuse of District finances created by a one-man system with no board to oversee contracts or operations. It was a model of unaccountability.
When the 1999 takeover was implemented” DPS had modestly increasing student enrollment (see Appendix A). The District had a $100 million positive fund balance (see Appendix B) and academic scores in the broad mid -range of districts in the state. There was no performance justification for the takeover. The conventional wisdom is that the actual reason for the takeover was to take control of $1.2 billion remaining from the $1.5 billion bond approved by voters in l994.It was a golden egg that tempted too many in Lansing and Detroit.
The abuses of that bond under the CEO are legend: three high schools were built at $130 to $140 million each that were overpriced and in the case of Cass Tech, had ongoing building systems problems. A contractor estimated that the new Renaissance High School could have been built for $72 million, not $130 million that was its actual price tag.Euly childhood centers were built for $20 million that should have been built for $5 million.
Additionally, the $100 million surplus disappeared. In April, 2004, only two months before the end of the fiscal year, then-CEO Kenneth Bumley announced a deficit projection of $200 million. Governor Jennifer Granholm did not declare the state takeover a failure or impose discipline on Burnley. Instead she approved the sale of $210 million in deficit bonds, giving Burnley another pot of money to spend while saddling the future elected Board with $2 1 million a year in debt for the next I 5 yeaxs. Hence DPS is paying 53 1 5 million for the
$210 million state-approved loan, or 5Ao/o in loan costs.
Burnley commenced the closing of 27 schools and the layoff of thousands of employees, creating a panic among parents that caused the immediate loss of over 9,000 students. The enrollment loss in the next two years was 19,697 students, exceeding the loss of the previous four years by several thousand.
Those consequences could have been ameliorated by prudent planning early in the fiscal year. The DPS Coalition of Unions, for instance, gave Burnley a plan in December 2003, five months into the fiscal year, that would have saved the District $150 million, but Burnley remained silent on the deficit, repeatedly refusing to acknowledge the coming deficit or even receipt of the savings plan.
By waiting until ten months into the fiscal year, Burnley stated that he needed to perform radical surgery on DPS in order to save a lot of money in the remaining two months. Even some on the appointed board, such as businessman Bill Brooks, felt that he let the situation get out of control and that Burnley should b€ fired. Then-Mayor Kwame Kilpatrick squelched that talk.
The takeover system was supposed to improve DPS, according to the 1999 justifications for Public Act 10. The law even set up a School District Accountability Board to review its operations. It was a high-powered group, composed of the State Budget Director, State Treasurer, the State Superintendent of Public Instruction and two appointees of the Governor. They failed to catch the failure.
In one quick season, the wisdom of a one-man system of unaccountability and the notion of mayoral control were both discredited. On the Proposal E 2004 referendtrm, voters decided by a 2 to 1 margin to not support permanent Mayoral control of the school system, even though the pro-Mayor forces outspent their opponents 20 to I on the ballot issue.
The State of Michigan, Governor Granholm, and those who supported the failed
CEO/Mayor system never published a study of the six-and-a-half year CEO project. No audits were done, no indictments were drawn up, no in-depth media probes were reported. Everyone letit die quietly, privately conceding that it failed. They passed the legacy debt burden and the dropping enrollment crisis to the newly elected Board of Education.
For the next three years the elected Board struggled with the debt, closed lots of schools and was, especially in 2008, in continuous dialogue with the Michigan Department of Education over the deficit elimination plan. At the end of 2008, the State Superintendent of Public Instruction, Mike Flanagan, declared that a financial emergency existed at DPS. Granholm then selected Robert Bobb to be the Emergency Financial Manager with little apparent review of his background.
Enter Robert Bobb
Governor Granholm imposed a second State takeover. While the 1999 takeover came through the front door with explicit legislative authority, Granholm avoided seeking direct legislative approval. She used the emergency financial statute to give power to Robert Bobb to not only take over finances, which the law allows, but she approved use of that power to unlawfully control academics and thus all spending of the District. She thus effected a total State takeover under her direct authority without legislative or voter approval. This gave her direct but behind-the-scenes control over Bobb’s actions, as Bobb’s contract says that he can be fired by the Governor at any time without cause.
When making this appointment, Granholm and Bobb promised a cooperative relationship with the Board over academic authority. As Bobb prepared to come to Detroit he and Granholm clearly promised that the Board would retain academic authority. Once on the scene, however, those commitinents were broken. Hence there was even less accountability under the Granholm arrangement than there was during the Burnley era. There is no oversight body with the legal authority to review or evaluate Bobb’s conduct.
Until the Board of Education took Bobb to court, he did not share information with the Board or the General Superintendent, whom he referred to in public as the Acting Superintendent. He has cut the Board’s small staff to only two people and the Superintendent had only one person reporting to her until Bobb fired her. While the law does not give him the power over the academic plan of the District, Bobb has used the threat of job loss to effectively stop anyone from helping the Board carry out its lawful duties, with the encouragement of the Govemor Granholm.