The old Detroit school district has lost out on $6.5 million in money to whittle down its old debt after officials failed to turn in paperwork on time.
Nikolai Vitti, Detroit Public Schools Community District superintendent, sent an email to board members this week saying Detroit Public Schools, the old district, failed to submit documentation to be reimbursed.
The state reimburses the districts for debt loss under Public Act 86 if they met the Aug. 15 deadline.
“At this point, Detroit Public Schools is not eligible for the $6.5 million-dollar reimbursement from the state,” Vitti told board members in an email Monday. “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.”
Vitti said the documents were provided to the former CFO Marios Demetriou in the spring but were not completed or received by the state.
The error riled at least one board member.
LaMar Lemmons, in an email to Vitti on Tuesday, said: “This is a major faux pas and impactful error! I require a written explanation as to how this happen.”
Vitti assured Lemmons that “disciplinary action will be taken.”
But on Thursday, it “looks at this point we won’t have a chance to recover,” Lemmons said. “We do have an appeal in to ask for an extension.”
Vitti pointed out in an email to board members on Thursday 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.”
Demetriou, Vitti told the board, “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.”
Vitti goes on in the email to say that there was no record of Bridges providing the information to Demetriou for a signature “nor does the outgoing CFO recall the final stages of this process.”
“I did express my concern this is $6.5 million that could pay to help the state,” Lemmons said. “It impacts our ability to bond in the future. With all fairness, there was confusion and the person who was supposed to do it thought someone else was.”
Bridges, deputy executive director of finance, resigned on Thursday, Vitti told board members.
Attempts to reach Bridges, Demetriou and Brown by telephone and email were unsuccessful Thursday night.
Detroit's old school district — Detroit Public Schools — which was run by state-installed emergency managers from 2009-16, struggled with declining student enrollment, budget deficits, school closures, low state assessment scores and teacher shortages.
In 2016, Gov. Rick Snyder approved a $617 million bailout for the district to help pay off $467 million in operating debt and provide $150 million in start-up funding for Detroit Public Schools Community District, the new, debt-free district.
Vitti said loss of the money does not have a direct impact on the new district’s finances or day-to-day operations, but was intended for the repayment of the long-term DPS legacy debt.
“With that said, this is unacceptable,” he told board members. “Disciplinary action will be taken and we will continue to proactively work with the Treasury to obtain the reimbursement.”