State says EAA owes DPS $14.8M for rent, other costs

Shawn D. Lewis
The Detroit News

The Education Achievement Authority owes Detroit Public Schools $14.8 million in unpaid rent for the use of former DPS classroom buildings, plus information technology and safety services for fiscal years 2015 and 2016, according to the state Department of Treasury.


The state-run recovery district’s chancellor, Veronica Conforme, asked then-Emergency Manager Darnell Earley for relief from the debt earlier this year, according to an email between state and DPS officials provided to The Detroit News.

“In February, the EAA (Veronica) approached Darnell at DPS with a request for relief from the aforementioned debt through an amendment to the lease agreement which would forgive all of the EAA rent debt,” Treasury official Thomas Saxton wrote in April to officials in Gov. Rick Snyder’s office and new DPS Emergency Manager Steven Rhodes. “I advised Darnell not to sign it. I have spoken to Veronica once about this and it has come up in conversation(s) with Steven Rhodes. Darnell did not sign the amendment before he left and now Veronica has requested Judge Rhodes to sign it.

“While we understand forgiving this debt would clear up the EAA’s books, it would be detrimental to DPS,” Saxton wrote.

According to Saxton’s email, the EAA owed about $5.5 million in unpaid rent as of June 30, 2015, and proposed a plan to repay that amount by spring of this year. But, Saxton wrote in the April 4 email, “To date, only $1 million has been received.”

He added: “An additional $6.5 million in rent is budgeted for FY 16, which would typically be paid by August ’16. As of now, none of the FY 16 rent has been paid.”

Saxton also wrote that the EAA owed DPS $1.5 million for IT services and $400,000 for safety services at the end of fiscal year 2015. “The same amounts are budgeted in FY 16 and have not yet been paid,” he wrote in the April email.

In an emailed statement issued Monday by the EAA, Conforme said the EAA will pay the full amount owed for IT and police service and is negotiating with DPS on the rent payments.

“We have partnered on a payment plan for the Information Technology and Detroit Public Schools Police Department services that the EAA receives,” she said. “Payments are already underway and will be paid in full.”

In his email, Saxton wrote that DPS agreed in 2013 to lease 15 school buildings to EAA for $1 a year, plus $910 for each student enrolled. In the most recent school year, according to state data, the EAA had 5,748 students.

The EAA, a state-run district established by Snyder to fix the state’s lowest performing schools, opened in fall 2012 with 15 schools transferred from DPS, which has been run by a series of state-appointed emergency managers since 2009.

As part of a $617 million rescue plan approved in June by state lawmakers, the state is paying off hundreds of millions in DPS debt and establishing a new, debt-free Detroit district that will welcome students to 97 schools next month.

Students leave Mumford High School in this photo from November 12, 2009.

“With the passing of HB 5384, the per pupil debt for DPS and EAA belongs to the ‘old co,’ Conforme said in her statement. “Now Detroit Public Schools Community District and the EAA can have more equitable funding for our students in 2016-17. We continue working with DPS leadership under the direction of the Department of Treasury and the Governor’s office in regards to payment on previous lease agreements.”

DPS did not directly respond to questions from The News about how much was owed and for what purposes, but spokeswoman Chrystal Wilson said in a statement: “The Detroit Public Schools Community District is currently negotiating payment for the current services that it provides to the Education Achievement Authority of Michigan. These include tech support, telephone and security services for the 2016-2017 school year.”

The Department of Treasury did not immediately respond Monday to requests for comment from The News.

Robert Davis, a former Highland Park school board member who has filed numerous suits against school districts and other public entities, said he obtained the email through a Freedom of Information Act request with DPS to learn more about the district’s finances. Davis, who has a child who attends DPS, said he was “highly upset” when he found out about the millions owed to the district.

“Thankfully, Judge Rhodes has been transparent and was willing to provide information without the necessity of going to court,” Davis said. “I hope Judge Rhodes uses his influence and legal intellect to aggressively pursue the EAA and hold them accountable for the debt they owe to DPS.”