Whoops: DPS misses deadline to get $6.5 million from state

Detroit Public Schools' deputy executive director of finance resigned on Thursday after it was revealed the district failed to submit paperwork that would have granted it $6.5 million to help pay off its debt to the state.

In an email sent to school board members on Monday, Detroit Public Schools Community District Superintendent Nikolai Vitti revealed the flub:

Board Members,

The state of Michigan reimburses districts for lost debt mileage funds, as part of Public Act 86. In order to qualify for these funds, school districts must submit required documentation to the state by August 15th.

I learned today that the required documentation for Detroit Public Schools was not received by the state. Apparently, the forms were provided to the former CFO in the spring but not completed.

At this point, Detroit Public Schools is not eligible for the $6.5 million-dollar reimbursement from the state. After speaking with state officials, the available funds have already been disbursed to other qualifying entities. However, we will continue to petition the state to receive the reimbursement.

NV 

In an email to Vitti on Tuesday, board member LaMar Lemmons demanded a written explanation. In a follow-up email, Vitti explained that the paperwork essentially got lost in the shuffle during his transition as superintendent:

please note that, ultimately, the responsibility to submit the paperwork fell on then-CFO Marios Demetriou and two Executive Directors in Finance, Delores Brown and specifically Michael Bridges. In the transition between Mrs. Meriweather and I in early June, Mrs. Meriweather was informed through the Michigan superintendent list serve that the reimbursement form was due. Then CFO Demetriou informed us that he would handle and submit the paperwork. Then CFO was reminded that it was due through a Michigan chief officer list serve. He requested that Ms. Brown and Mr. Bridges have our outside financial advisors (PFM) complete the paperwork and return it to him. Mr. Bridges had the form completed by PFM and stated that he provided it to the then CFO. However, there is no record of Mr. Bridges providing the information to then CFO Demetriou for signature nor does the outgoing CFO recall the final stages of this process. In the transition between Mr. Demetriou/Senior Staff and Mr. Saunders/Mr. Vidito, there was no mention or records regarding the need to submit the reimbursement paperwork. 

Nevertheless, with CFO Demetriou already out, it appears Bridges was left to fall on the sword, as it were.

Detroit's public schools debt ballooned under years of state-appointed emergency management, declining enrollment, and school closures. In 2016, Gov. Rick Snyder approved a $617 million bailout of the district, which broke it off into a "shell" DPS district tasked solely with paying off its debt and a new debt-free Detroit Public Schools Community District tasked with actually educating Detroit's students. Detroit taxpayers, will, ultimately, pay the state back for that.

Vitti says the missed reimbursement does not have a direct impact on DPSCD’s finances or day-to-day operations. Missing out on the $6.5 million is, however, expected to impact the schedule of the district's repayment plan. A DPSCD spokeswoman says the old district had been on pace to pay off the debt ahead of schedule, but now it may have to pay it off on time.

The district has also said it will work with the state to see if it can still qualify for $6.5 million reimbursement.