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| (Clockwise from top left) Larry Long, Paula Johnson, Dr. Bill Spriggs, Jean-Vierre Adams |
The Michigan Citizen
DETROIT � Three top Detroit Public School (DPS) administrators have resigned in the wake of revelations that the state may fine the district nearly $28 million due to its illegal use of 11 �Last Chance� contract schools, and that the district made possibly criminal payments of at least $46 million to risk management vendors.
A divided school board has continued business with four Last Chance schools, set up to school drop-outs.
Hildred Pepper, Jr., chief of procurement and contracting, submitted his resignation Aug. 22, according to school board member Paula Johnson, who chairs the procurement and contracting committee.
The resignations of chief facilities manager Darrell Rodgers and General Counsel Jean-Vierre Adams were announced at last month�s board meeting.
Pepper and Rodgers could not be reached for their comments on why they resigned, and Vierre-Adams did not return a call for comment. District spokesman Lekan Oguntoyinbo said the district does not comment on personnel matters.
Rodgers and facilities vice-chair Mark Schrupp, who has taken his place, were the chief architects of the school closings plan. The district�s current $1.2 billion budget calls for the closings of 34 buildings this year and between three and 10 for each of the next three fiscal years.
The closings will allegedly save the district $10.8 million this year, which will be wiped out by a cost of $20 million to close them.
The closings are part of a state-mandated deficit elimination plan, but the board has taken no action beyond a resolution to challenge that plan.
State threatens district
State Schools Superintendent Mike Flanagan cited Vierre Adams in a July 18 letter to Supt. Connie Calloway, saying that Adams told the state in a 2006 e-mail that �the District has always followed the requirements of [state law] 1231 and contracts directly with teachers who provide services for our children. There are no agreements with third parties to provide teacher services.�
However, a year later, Vierre Adams finally provided the state with copies of contract waivers between the district and the Detroit Federation of Teachers for the Last Chance schools, showing that the teachers were not employees of the district, but independent contractors.
The state also said most of the schools never submitted proper paperwork showing enrollment and attendance figures, and questioned whether they were providing any services, among other matters. The contract schools received 80 percent of the state per pupil allotment of $7,459.
Flanagan said the district faces a penalty of $5.9 million for its transgression, and on Aug. 1 told Calloway that DPS also faces the loss of up to 20 percent of its federal Title I allotment, or close to $22 million, if it does not correct the contract schools situation.
Detroit�s federal Title I allotment, awarded to poverty-stricken districts, totaled $136.2 million last year, and is conditioned on the provision of equal services to all schools.
However, on Calloway�s recommendation, the board on Aug. 14 awarded new contracts to four of the schools, Riverside Preparatory, Tredco-Patch-More School Initiative, the Detroit Association of Black Organizations, and the Detroit Behavioral Institute. Board President Jimmy Womack initiated that special call meeting.
DPS school board candidate Sandra Hines, who works at Courtis Elementary School, is running against board vice-president and finance committee chair Joyce Hayes-Giles. �Why would you vote for giving illegal schools DPS money, and closing legal schools like Mackenzie High School and Miller School?� asked Hines. �And why would the board vote for new contracts with the risk management firms under investigation?�
Board continues business with risk management vendors
Over the objections of board members Marie Thornton, Jonathan Kinloch, and Paula Johnson, the board on Aug. 16 voted to hire 26 employees of Long Insurance, LLC for three months, and awarded a $314,188 contract to New Bridge Multi-Media, Inc.
The two companies are among seven cited in an investigation by the Grand Rapids law firm of Miller Johnson of $46 million in questionable wire transfer payments.
Since the completion of the investigation, the board voted to turn the matter over to the Wayne County Prosecutor�s office and the FBI for possible criminal charges.
�I believe today�s action taken by the Detroit Board of Education may prevent the FBI from reducing public corruption within the DPS system and further erodes public confidence in our education institution,� said Thornton in a release.
Calloway recommended the payments to the Long Insurance employees, claiming the district faced an emergency situation where workers compensation checks would not be processed otherwise.
However, the Miller Johnson investigation said that Employer�s Comp Advocate, the only company of the seven that it exonerated, �does all of the check processing and payments for the various claims in workers compensation, including medical, rehabilitation, indemnity and redemption.�
The risk management vendors, Long Insurance, LLC and the global Marsh & McLennan Company, as well as Stephen Hill, the district�s chief player in the deals, to light beginning last August.
A five-page executive summary of the Miller Johnson investigation targets Hill, the former Executive Director of Risk Management from 2001 to 2005, and acting director �on loan� from the global firm Marsh & McLennan from June 2006 to Feb. 2007.
It says that the district paid Long Insurance, owned by Larry Long, an alleged friend of Hill, $17.9 million from July 18, 2003 through Jan. 1, 2007 in �exorbitant consulting fees for simply serving as the conduit to provide these employees to the district.�
Global, white-owned companies got $14 million
Marsh and McLennan was hired by the District as an insurance broker and risk management consultant from 2001 to 2004 under the school reform board, and paid $1.2 million.
However, says the summary, �From July 18, 2003 through Dec. 15, 2006, the District paid $12,196,380.72 by wire transfer to Marsh.� That included $450,000 approved by Hill although he was working for Marsh at the time.
The district also paid the Arthur J. Gallagher Company, one of the largest risk management companies in the U.S. $2.6 million in June and September of 2005 for consulting fees on the Emergency Management Information System. Hill worked at Gallagher from Sept. 2005 through May, 2006, according to the report. Long Insurance received a cut of the payments as the Minority Business Enterprise (MBE) in the joint venture.
Black-owned companies cited
The report also cites wire transfers to smaller companies. New Bridge Multi-Media, owned by Yolanda Stott-Glover, received $3.9 million from 2004 through 2006. The Spectrum Financial Group, owned by Robin Dysart, who the report says was a friend of Hill�s, received $651,467 from Jan. 2004 through Aug. 2006. It says that Hill even ran her business while she was sick with cancer.
Finally, Associates for Learning and E-Care Solutions, owned by Marilyn White, Sherry Washington, Gwendolyn Washington, and Sally Bond, received $3.3 million in payments for a �DPS WeCare� wellness program that the report cited as �virtually non-existent.�
In a letter to board members, Sherry Washington, whose art gallery also sold $1.6 million in artwork to the district, disputed the results of the investigation, saying she and her principals were never interviewed or asked for records proving that they provided services.
Washington called the report and subsequent media coverage a �biased and direct, racist and sexist assault against our company, the principals of our company, and other vendors.� She detailed 13 elements of the We Care Healthy Lifestyles Program, which she said was implemented in 20 schools, maintained records and issued regular reports.
Washington contributed small amounts to the campaign funds of Jimmy Womack and Joyce Hayes-Giles, but no other vendor in the investigation was identified in board campaign finance reports.
Other vendors were not able to be reached for comment. Long has said in published reports that he can document his work.
Procurement and Contracting committee chair Paula Johnson said she expected that more extensive revelations implicating other officials will come to light in the future, including details in a 113-page report issued by Miller Johnson but not given to board members. Johnson was the board member who changed her initial vote on the school closings, after the board originally voted them down 6-5.
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