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Reporter’s Notebook: State needs to be more transparent about the schools it’s running

Government records revealed under the Freedom of Information Act.
Lindsey Smith
Michigan Radio

In order for parents to make the best decisions for their children, they need to know what’s going on. So do taxpayers and voters.

In my years of writing about school districts all over the state, I’ve learned everyone wants to brag about the successes. No one is in a hurry to admit when things aren’t working for students.

I don’t cringe as much if this happens with an elected school board. Vote the bums out, right?

But the state’s taxpayers, parents, and students deserve better from unelected state officials who take responsibility for a school district’s survival. Here’s my beef.

The Emergency Loan Board is a public body. It should act like one

Here's the thing about the Emergency Loan Board (ELB).

It has incredible power to keep schools and municipalities out of bankruptcy court. It can lend tens of millions of taxpayer dollars – repeatedly – to schools that are going broke. It even has subpoena power.

Yet there’s very little transparency.

Its three members all head state departments. Each handpicked by the governor.

Credit State of Michigan
State of Michigan
ELB members (L-R) Department of Technology, Management and Budget Director David Behen; Department of Licensing and Regulatory Affairs Director Mike Zimmer; and state Treasurer Nick Khouri.

The board has no webpage. Its meetings in Lansing are open to the public, but there is no schedule. Meetings are sporadic.

Meeting minutes aren’t available online, a common practice for public bodies. So you can’t just go somewhere to see what the board has been up to lately.

Meeting notices are sent via email. But there are no agenda or documents attached. If Michigan’s Department of Treasury doesn’t want you to find out ahead of time what it's going to approve, you won’t know.

Any decision the board makes must be unanimous, according to state law. Is that why it functions mostly as a rubber-stamp board?

The decisions the board makes are “vetted” and reviewed by Treasury staff, according to Treasury Department spokesman Terry Stanton.

I get it: Staff are supposed to help decision-makers; get them information and come up with options. But the public deserves to know the information decision-makers use to come to their conclusions. They deserve to know what options were considered. We’re not just talking about loads of taxpayer money; we’re talking about people’s futures. In some cases, we’re talking about a school district’s survival.  

But it’s pretty clear to any common observer that’s not how the Emergency Loan Board operates. The decisions this public body makes about emergency loans to schools during public meetings, are pre-determined.

Take Benton Harbor Area Schools as an example. In late March, Benton Harbor’s School Board applied for what would be its third emergency loan in four years. The superintendent said the district needed the loan in order to afford to finish the school year.

But the Emergency Loan Board never deliberated in an open meeting whether it should approve the loan. Staffers made that decision, out of public view.

When the board does approve lending taxpayer money to financially unstable school districts, members of the ELB don’t have really any comments or questions.

ELB board members had little, if anything, to say or ask about emergency loans it gave to Benton Harbor Area Schools in September 2012 and again in December 2013.

Nothing to say about lending Pontiac schools $10 million in April 2014. At the same meeting, they didn't have much to say before approving a third emergency loan for Muskegon Heights schools.

The board approved a loan to the now-dissolved Buena Vista School District in July 2013 with no discussion or questions.

The School District of the City of Inkster got more than $12 million in June 2013, a month before the district dissolved. The board did not discuss that possibility though, documents show. 

I told Department of Treasury spokesman Terry Stanton it seemed like all the decisions about loans were made ahead of time by staffers "in the dark."

“Well, I don’t want to sound clandestine,” Stanton said, “but there are a lot of processes that are, in your term, ‘in the dark’ if they’re not conducted in an open meeting.”

"I mean obviously a public body has to have an open meeting. The ELB is a public body. But the staff that's doing the review of an application isn't per se a public body. I mean it's not done in an open meeting. So if it's not done in an open meeting, is it in the dark?" Stanton said.

Yes – it is in the dark. And when you’re dealing with that much money for school districts that are clearly not able to get their poop in a group, the deliberations should be done in the open.

Stop misleading reporters (who then mislead the public) about Highland Park schools

Last week, the state-appointed emergency manager of Highland Park schools, Don Weatherspoon, announced in a conference call to reporters that there would be no high school next year.

A reporter from WWJ radio asked how this decision would impact the district’s deficit.

“The deficit remains with the old district,” Weatherspoon replied.

True. But not the entire truth. Yes, the old district, the one that went broke and got an emergency manager, still has a deficit in its general fund.

But this statement is misleading because the new district, the charter school system that the state has put in place of the old district, is also running a deficit.

If you’re an unsuspecting reporter without the background knowledge, Weatherspoon and Treasury are totally fine with letting you think the new system they created to pay down the old district’s debt isn’t creating a new financial mess. They don’t want to highlight that, so they leave it out unless you ask even more directly. Not cool guys, not cool.

There is another thing Weatherspoon and Treasury unfairly downplayed about last week’s news.

He did not mention to reporters, even though he was asked directly, that the contract with the charter school management company that’s running the district was cut short by a year.

Take a listen. This is the third time Weatherspoon was asked during that call about what specifically changed with the contract.

This is a big deal.

On the one hand, Weatherspoon and Treasury are trying to tell everyone to remain calm. Don’t panic and pull your kids out of Highland Park schools.

But on the other hand, they’re shortening a contract with the company in place, paying the company less and losing a high school.

After next school year, we don't know who's going to be running Highland Park schools.

This means that after next school year, we don’t know who’s going to be running Highland Park schools.

After June 2016, everything is apparently up in the air. Again. Yes, the company says, it wants to stay. But if you’re a parent in that district, wouldn’t you want to know that the company is only actually signed on through next school year?

I would.

But parents can’t get information. At this point reporters are mostly at the mercy of Treasury to get information. But that state agency refuses to provide it.

The new Highland Park district has a “public” school board, appointed by Weatherspoon. It has “public” meetings. It had a special board meeting the day of the announcement about the high school, to approve the changes to the contract with the management company.

But it would be real hard to argue that public board was diligent in letting the public know about that special meeting.

Sure, they may have posted notice, as required by state law, on some door in some building in the district. But it’s not like reporters are just cruising around looking for special meeting notices on the regular. And it’s not like parents who have jobs or commitments during the middle of the day can just head to the school board meeting at noon.

The beef here is this: Public officials made decisions at a public meeting a week ago. But in order to get details about the decision from the emergency manager and Treasury, reporters had to agree to keep all this information from the public until 7 p.m. that day – hours after that public meeting ended.

Not only that, we had to agree not to call anyone to get reaction about the decision until 7 p.m.

Even more ridiculous, public officials refuse to provide a copy of the contract. It’s been a week since it was approved in a public meeting.

(In response to a FOIA request filed earlier this week, The Leona Group, the company managing the district, provided a copy of the contract revisions this afternoon.)

None of this is new to me.

I watched the same situation play out in Muskegon Heights a little over a year ago.

The emergency manager at the time (Don Weatherspoon’s younger brother Gregory Weatherspoon) and his appointed school board kept insisting the new district had no deficit – even though they took the highly unusual step of asking Michigan’s Department of Education to front the district cash so it could pay teachers. Twice.

Behind the scenes, Gregory Weatherspoon and a team of lawyers were working on a way to sever the agreement with the management company, not that this was shared with the public.

Gregory Weatherspoon and his school board wouldn’t talk about what was happening. Treasury stonewalled me.

So, Michigan Radio filed to get information under the Freedom of Information Act to figure out what was going on and who was making the decisions.

It took more than $2,000 and a legal threat to get them to comply. When the documents finally arrived more than three months later, much of the material was redacted.

In the end, the Emergency Loan Board offered Muskegon Heights schools another $1.4 million emergency loan. The loan basically covered the operating deficit at the new district and paid the management company to agree to leave. As predicted, the ELB had no real discussion or questions about the arrangement.

State taxpayers essentially bailed out the charter system. Without the loan, it’s not clear the system could’ve afforded to finish the school year without a bunch of payless paydays.

Muskegon Heights school will pay back state taxpayers over the next 29 years, assuming everything in Muskegon Heights works out. But the state’s taxpayers are the ones taking the risk.

Is transparency too much to ask of the state?

So who’s accountable if the plans for these struggling school districts the state is taking control of fail? Some staffer or lawyer behind the scenes?

I’m not commenting on whether or not the state should make these emergency loans to schools that need them. I’m also not saying making up elaborate schemes to create new districts to save some essence of an old local school district is a bad idea.

Taxpayers can’t hold faceless Treasury staffers calling the shots for the ELB accountable. 

Parents can’t vote the emergency manager out of office.

Sure, there’s a provision in the emergency manager law that allows local elected leaders to kick a manager to the curb after 18 months. But so far, it seems Treasury can just get around that provision by appointing a new emergency manager – and the 18-month clock starts over. This is not some paranoid fantasy. That’s exactly what happened in Detroit Public Schools in 2014.

I remember covering Gov. Rick Snyder’s campaign in 2010. If elected, Snyder said he would make sure state government was open, fair and accountable.

Don’t voters and taxpayers in Michigan deserve a government agency that’s transparent about the decisions it’s making with their money?

Don’t parents deserve to know the full truth in a timely manner, so they can make the best decisions about their children’s education?

Lindsey Smith discusses school finances and issues of transparency on "Stateside with Cynthia Canty"

Lindsey Smith is a Peabody Award-winning journalist currently leading the station's Amplify Team. She previously served as Michigan Public's Morning News Editor, Investigative Reporter and West Michigan Reporter.