Hopeful but wary.
That was the position expressed by the Detroit Public Schools Board of Education at a special meeting held earlier this week to discuss the possibility of conducting a forensic audit of the district’s finances.
Board members have long called for such an audit—but with no budget and virtually no power, they’ve been unable to launch an in-depth probe to root out corruption.
The hope comes from a meeting Board President Herman Davis had Tuesday with the district’s newest emergency manager, retired U.S. Judge Stephen Rhodes, who also presided over Detroit’s bankruptcy proceedings.
“During that meeting,” read a statement released by the district, “Judge Rhodes offered to introduce President Davis to an individual who may be willing to provide the Board with pro bono forensic accounting services. This connection has yet to be made, and no agreements have been reached."
As for the wariness, that springs from a number of sources.
First, the board prefers that the audit be performed by someone of their choosing. But the elected board members – a majority of whom have opposed the imposition of an emergency manager as anti-democratic – have been marginalized by a string of emergency managers appointed by the governor.
With no budget, they lack the funds to do any hiring on their own.
For civil-liberties proponents, the inability of elected officials to provide any independent oversight of appointed EMs with vast unchecked powers is seen as one of the most glaring flaws in the controversial law that allows the state to take control of financially struggling school districts, cities and counties.
Detroit Public Schools has been under state control since 2009. Since then, the district’s debt has grown by more than $500 million. Dealing with that debt is part of the debate under way in Lansing as legislation aimed at restructuring the district is being considered.
In terms of a forensic audit – even one limited in scope, as is currently being proposed – there’s no shortage of recent evidence illuminating the need for an independent examination of the district’s financial dealings.
On Monday, U.S. Attorney Barbara L. McQuade announced that criminal charges were being filed against 69-year-old Carolyn Starkey-Darden, a former Detroit Public Schools Director of Grant Development. The federal government alleges that, between 2005 and 2012, Starkey-Darden “obtained at least $1,275,000 from DPS through a scheme in which she submitted fraudulent invoices for payment to DPS for tutorial services that were never rendered to DPS students,” according to a Justice Department release.
In March, McQuade announced that criminal charges were filed against 12 current or former Detroit Public Schools principals, an assistant superintendent and vendor Norman Shy, 74, of Franklin, who are accused of running a bribery and kickback scheme from 2002 and through 2015. So far, 12 of the 14 people charged, including Shy, have pleaded guilty.
Last year, then-Emergency Manager Darnell Earley eliminated the Office of Inspector General, an office that, according to a Detroit Free Press story, “battled waste and corruption and helped bring in nearly $19 million to DPS over the past six years.” Rhodes revived the office in April after taking over control of the district.
Expressing concerns that the offer from Rhodes might be little more than a public relations ploy by Rhodes, the board formed a committee to provide oversight and ensure the integrity of the audit – if it in fact occurs.
There’s no shortage of issues worthy of investigation. As far back as 2009, when then-Gov. Jennifer Granholm appointed Robert Bobb to be the district’s first financial overseer, the elected board and other critics have raised concerns about actions taken by the state’s appointees. Heavy reliance on high-paid outside consultants has been one issue.
One of Bobb’s most controversial hires, Barbara Byrd-Bennett, was suspected by the FBI of having illegally steered a $40 million contract to one of her former employers in exchange for a kickback, according to published reports. Though not charged in that case, Bennett pleaded guilty last year to a felony charge of wire fraud for her role in a multimillion-dollar scheme involving no-bid contracts and kickbacks while running Chicago’s public school system.
This week, a number of DPS board members suggested that areas of focus of the potential forensic audit could include contracts exceeding $10,000, delivery of special education services and the financial relationship between DPS and the Education Achievement Authority, a controversial special district created in 2011 at the behest of Gov. Rick Snyder with the assistance of then-DPS Emergency Manager Roy Roberts.
Despite the fact that the state is clearly responsible for everything that has gone on financially in DPS since 2009, Republicans in the state legislature have shown no interest in making sure that the appointees in charge of running the district are subjected to scrutiny. Earlier this month, 18 Republicans on the House Appropriations Committee killed a proposed amendment from Democrats seeking authorization for a district-wide audit conducted by the Department of Justice.
Which means that Rhodes and his connections to an auditor possibly willing to do the job for free are, at this point, the elected school board’s best shot at uncovering corruption.
Curt Guyette is an investigative reporter for the ACLU of Michigan. He can be reached at 313-578-6834 or cguyette@aclumich.org.
"Earlier this month, 18 Republicans on the House Appropriations Committee killed a proposed amendment from Democrats seeking authorization for a district-wide audit conducted by the Department of Justice."
