June 19, 2009


Detroit diverts DPS cash for bills

City collects taxes for schools but delays payments illegally

BY ZACHARY GORCHOW and CHASTITY PRATT DAWSEY
FREE PRESS STAFF WRITERS Detroit's financial condition has grown so dire that for several months it has used tax revenues intended for the even more cash-strapped Detroit Public Schools to make the city's payroll and meet other financial obligations.
Once the city receives an influx of revenue, such as revenue sharing from the state, it reimburses DPS. But that violates state law because DPS is not paid on time.
DPS did not receive payments in November, April and May. It asked the state for advances of more than $300 million over the past fiscal year to help it meet its obligations.
Eric Scorsone, director of Michigan State University's state and local government program, said the severity of the city's cash situation means the city could be at risk of a state takeover.
"You have to believe it's within months of payless paydays, of furloughs," he said.
Detroit officials notified the Michigan Department of Treasury last week of the situation.
"In the three weeks I have been CFO, I recognized this error and am identifying a process to increase efficiency and ensure the City of Detroit meets its financial responsibilities," Norman White, the city's chief financial officer, said in a statement to the Free Press.

The city has a deficit of $280 million. DPS has a $430-million deficit of its own. • RELATED ARTICLE: DPS deficit hits $430 million • RELATED ARTICLE: Late repay signals city in crisis






For all of you that's been praising Ken Cockrel and Joe Harris as such stand up guys, this happened while they were in charge. In fact, the Friday before the election payroll checks were bouncing in the morning. It was blamed on a computer glitch. Chances are they diverted money that was supposed to go DPS. Taking money from school kids, they're bigger pieces of shit than the school board members.