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Report blasts finances, leaders of DPS
Warnings went unheeded, deficits were hidden, it says
BY CHASTITY PRATT DAWSEY and PEGGY WALSH-SARNECKI • FREE PRESS EDUCATION WRITERS • June 27, 2008

Detroit Public Schools had hidden deficits in its operating budget for at least the last four years, helping create the $400-million hole it must dig itself out of, according to a draft report by a panel of outside school finance experts and obtained by the Free Press.


The district also had only "pockets of competence" among its financial staff, hasn't followed basic accounting procedures and the current administration has done little to address those problems, according to the document, prepared by Washington-based Council of the Great City Schools.

The Detroit School Board is to vote tonight on a budget and deficit-elimination plan that would address the shortfall, but the report notes there is "little long-term planning" to guide the process, according to the draft report.

The reviewers who visited DPS in March and April found conflicting information being reported to the state and a history of overstaffing teachers for the past four years.

Breakdowns in communication among management now "impede the resolutions of problems," reviewers said.

Functions as basic as job descriptions and expectations are lacking, and the district has a "culture of mistrust," low morale and high anxiety, the report says.

Michael Casserly, executive director for CGCS, said the looming deficit was the most pressing issue among the findings. He was reluctant to comment, saying the draft is "very preliminary" and could take weeks to complete.

The management problems are "profound" and decades old, requiring years of work, he said.

"I see the superintendent as doing everything that she can to address the problems as fast as she knows about them," Casserly said. "What we're doing at the moment is trying to get her the information she needs so she is aware of what's broken and what's not."

Superintendent Connie Calloway invited CGCS to review finances, facilities and information technology operations. She credited the experts with discovering that hundreds of teachers on payroll were not within the budget.

About 611 teachers were on payroll but were not within the budget, creating a deficit of $50 million, the report states.

The report did note that as of March, when the team visited, current top leadership "had not responded to warnings of a pending financial situation, developed a plan or taken action."

Steve Wasko, spokesman for the school district, said the report will provide information that DPS officials will review and refute, if necessary.

"These reports will be vital tools as we work to put processes and systems in place where they were either lacking or nonexistent," he said.

Richard Hinds, a retired former chief financial officer of the Miami-Dade County Public Schools who was on the review team, said it found DPS's major problem to be the debt that was compounding on an annual basis.

Hinds said Calloway "inherited some things, but she contributed to some things, too. She authorized a more liberal staffing policy this year and that really caused the deficit."

The problem boils down to not being able to control costs, said Hinds, who has been on about 50 review teams. The chief financial officer and senior staff did not seem to grasp the depth of the problem, he said.

"They were there long enough. They should have picked up on this," Hinds said. "The problem I've found in Detroit Public Schools is not the rank and file, but the senior management. That's where the void was.

"I'm fairly certain the superintendent was not aware of this deteriorating situation."

In recent weeks, Calloway has come under fire from board members for not responding to prior warnings about the need to lay off teachers in the middle of the school year in response to declining enrollment.

On the other hand, the district's true financial picture has been masked for years by short-term borrowing and moving money from one fund to another, the CGCS found.

The CGCS reviewers also are to look at the district's procurement and transportation operations after completing the current report.

Tom White, executive director of Michigan School Business Officials, called DPS's financial situation critical.

"At this point, at the very least, you should be calling people together and have a come to Jesus meeting and say, 'Folks, this is the proverbial fork in the road,' " White said. "One of them is the complete demise of the school district and one is to slog through a lot of hardship."

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Sen. Irma Clark-Coleman, D-Detroit, called it a step toward a state takeover of the city’s schools, as happened in 1999. During that time, the school board was replaced with a mayor-appointed board and chief executive officer Kenneth Burnley was hired with authority to make all decisions without board approval.

State control lasted through 2005, after which control reverted to a local elected board.

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If DPS is privatized, won't it be "sold" to one of Kwame's cronies?

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Partisan, yes..but was any of what he said untrue?