DPS Loans To State Education Authority Smell Mighty Foul

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200492911-001Maybe there isn’t anything illegal about a reported $6 million in “secret” loans from one broke school district, the Detroit Public Schools, to the statewide Education Achievement Authority.

Maybe DPS emergency manager Roy Roberts didn’t break any laws by borrowing the money through a state finance authority.

And maybe mayoral candidate Mike Duggan, who serves as secretary of the EAA board, really didn’t know anything about the loans until he learned about them from a constituent, which he claims.

But there’s still plenty wrong about a deal in which a cash-strapped DPS, itself in the throes of a financial emergency that the overmatched Roberts is doing his best to wallpaper over, coughs up so much money to keep the state’s shaky, experimental school district afloat.

The Detroit News: Administrators at the Education Achievement Authority took $6 million in loans from the cash-strapped Detroit school district without approval from EAA board members, according to the secretary of the recovery district’s board.

Mike Duggan told The Detroit News on Thursday he learned of the secret loans from a constituent Wednesday night, but he never heard of the loans at monthly EAA board meetings, which he says he regularly attended.

“The board has never approved a loan from DPS. I’m pretty confident the board was never advised of it, either,” said Duggan, who is running for mayor of Detroit.

The loans came to light this week in documents obtained by state Rep. Ellen Cogen Lipton through a Freedom of Information Act request.

The EAA is a newly formed statewide school district created by Gov. Rick Snyder to take over the state’s lowest performing schools. All 15 EAA schools are former Detroit Public Schools.

“I think it’s very troubling, and it raises questions about transparency. The finances of DPS and EAA need to be kept separate; a lot of board members feel that way,” Duggan said.

As Rep. Ellen Lipton, D-Huntington Woodfs, rightly asks about these loans: “How does that further stabilize an already compromised school district?” DPS even gave the state district school buildings that were newly renovated with bond money voters had earmarked for Detroit education.

Chastity Pratt-Dawsey Reveals DPS really loans $12 million to the EAA

In a Deadline Detroit interview, state Sen. Bert Johnson, D-Highland Park, called the EAA a “failed enterprise” and said it’s time to scrap the alternate district. “The EAA has no ability to legally draw in public dollars,” explains Johnson. “It’s why the state and governor started them under the premise they’d use philanthropic funds to push their program.

“They don’t qualify for state funds since they aren’t in the school code. That’s what they’re trying to change, but right now the EAA isn’t eligible. Also, since the truth about EAA has hit the fan, some of the philanthropic organizations have backed off. So now the state has been forced to pony up money in the form of loans so that this district could stay afloat.”

Will the hustle only grow? Given that state legislators narrowly voted in March to expand the EAA to cover schools outside of Detroit, how much more of a burden will the EAA be on Detroit’s finances? Would other districts that are sucked in to this experiment be expected to pay for the EAA’s shortfalls, too? Will Detroit be forced to cover even more poorly thought-out “reform” measures as the EAA grows?

And the concerns about oversight that many citizens have raised clearly aren’t empty worries. After all, how’s it possible for a loan this large slip by Duggan and the rest of the EAA board? And how much due diligence is the board really putting in in 45-minute meetings that, to many, amount to little more than rubber-stamp sessions?

Duggan says he’s “pretty confident” the board was never advised of the loan, but the utter lack of transparency at the EAA makes it hard for taxpayers to be sure.

Secret multi-million dollar loans adding to the burden of the cash-poor Detroit district; outright lies from Roberts about educational improvement at DPS; an EAA chancellor with a dismal record of achievement — the state sold Snyder’s plan for education reform on the grounds that it would be financially efficient and educationally effective for Detroit school kids. Instead, we get questionable financial decisions, continued classroom mediocrity and publicly opaque operations.

Read this article in its entirety on Deadline Detroit by Darrell Dawsey

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