DPS fires chief finance officer; decision on Calloway may come Monday

DETROIT -- The Detroit Public Schools board early today voted 6-5 to terminate the contract for the district's chief financial officer, Joan McCray, while Superintendent Connie Calloway's fate was delayed until Monday.

Just after 1:30 a.m., the school board discussed a resolution to terminate Calloway for cause, saying she failed in her responsibilities, exhibited poor judgment, failed to ensure fiscal integrity in the district and continued to show unprofessional behavior.

After discussion, board members agreed they would consider the resolution at a special meeting Monday.

Board member Tyrone Winfrey said he has been disappointed in the events that led up to the threatened takeover.

"I am totally embarrassed and dismayed we allowed this district to go back to the state," he said, referring to the 1999 state takeover of the district.

Board member Marie Thornton read the resolution to consider the termination, which called for Calloway to be placed on immediate administrative leave with pay. She could then contest the determination, per her contract.

Board President Carla Scott reminded board members that the state and federal government, in a communication to the district by a state official, advocated for stability in the top staff.

In ignoring that directive, "we are basically saying 'take us over' " Scott said.

Board member Jimmy Womack said "the board has been completely disrespected at every level" by Calloway. He said there's no stability with the continued vicious attacks Calloway has levied against board members.

Calloway argued that she continued to fight for the district with the state, and advocated for the district to control its own destiny.

Earlier the board also voted 5-5, with one member abstaining, not to retain district spokesman Steve Wasko. The tie meant his contract was discontinued.

Board members have said they blame Calloway and McCray for exacerbating the district's mounting financial problems, prompting the state to step in.

Calloway, who makes $280,000 a year and is eligible for bonuses, is 17 months into a five-year contract. McCray's contract was up for renewal at the end of the month, said board member Winfrey. McCray's salary was unavailable Tuesday night.

While board members met in closed session, Calloway told reporters simply that "the board will make its decision. I've worked hard since I've been here."

Board attorneys have said the district would not be on the hook to pay out the remainder of Calloway's contract if the board fired her for cause in the first three years. However, if the matter went to court and a court ruled no reasonable cause existed, she would have to be paid through June 30, 2010.

During the open meeting, board members blasted Calloway for topics ranging from odor problems in schools to the incomplete information sent to the state before the takeover announcement.

Board member Ida Short said she learned belatedly that the district did not send required information to the state as part of a consent agreement that would have averted a takeover.

"The superintendent is the only employee we have," Short said. "We hold her responsible for everything that takes place in the district."

The possible action marks a dramatic turnaround from last year, when the majority of the board supported Calloway and welcomed McCray. Both came to Detroit in the last school year from a 5,700-student Missouri district.

But tensions erupted over the last several months after revelations about Detroit schools' precarious finances. During that time, the district administration went from declaring a fund surplus to announcing the district faced a whopping $408 million deficit. The district struggled to pay vendors and sought advance state aid payments from the state to make payroll.

The board also socked Calloway with two reprimands in recent months for what it considered to be poor job performance and unprofessional behavior toward board members. And just last week, board member Annie Carter said she was seeking a third legal opinion on whether Calloway could be fired for cause.

Board members increased their criticism of McCray after the announcement of the massive deficit, which forced the board in June to make $522 million in cuts, including hundreds of layoffs. After cuts, the deficit for fiscal year 2008 was $124 million, board members have said. The money woes prompted the state's top education official to declare the district has a financial emergency, triggering a process to have a state-appointed team review the district's finances.

In October, that team outlined a set of deadlines and new reporting requirements, called a consent agreement, that the district would have to follow to avert a takeover of the district's finances.

While the board agreed and State Superintendent Mike Flanagan approved the document last week, Flanagan did an about-face Monday and announced that an emergency fiscal manager would be appointed because the district violated the agreement. Among other criticisms, Flanagan said it failed to submit a full and timely deficit elimination plan, as required by the state.

School board members vowed Tuesday to fight the state's plan to take over the district's finances -- a tactic that could significantly delay the takeover. The board voted to request a hearing before Flanagan to appeal the decision.

The state previously took over the Detroit district in 1999.

A state takeover is not in the best interest of the district and its students, board President Carla Scott said earlier Tuesday. "The last time the state took over, they left us in worse shape economically and financially," she said.

Michigan's takeover law has been used in one other district, Inkster Public Schools, and in the municipalities of Flint, Hamtramck, Highland Park and the village of Three Oaks in Berrien County. The Local Government Fiscal Responsibility Act, passed in 1990, allows the state to appoint an emergency financial manager for publicly funded bodies operating in the red.

State officials moved quickly, but takeovers were delayed 18 months in Highland Park and four months in Flint by court battles, said Fred Headen of the state Department of Treasury.

W. Howard Morris, who was the emergency financial manager for the Inkster Public Schools from 2002-05, said that district fought the takeover. But the judge refused to grant an injunction to keep him from starting his job.

"I was in court the first three months I was there," Morris said. "They tried to say the actions I was taking weren't within the law, and the circuit court ruled in my favor and the state's favor."

Detroit News Staff Writers Karen Bouffard, Mark Hornbeck and Doug Guthrie contributed.