State trying to resolve $6.5M mistake for DPSCD

Jennifer Chambers
The Detroit News

Michigan’s Department of Treasury remained in talks on Monday with the Detroit Public Schools Community District over reimbursement of a $6.5 million personal property tax debt claim.

State Treasury spokesman Ron Leix said his office is discussing the matter with the district, which lost out on the money to reduce its old debt after officials failed to turn in paperwork on time.

“The state Treasury Department is in conversations with the school district to see if there’s a possible solution,” Leix said in an email.

Asked if he could identify the options available to the district or the state to resolve the matter, Leix said: “We’re still exploring the options.”

The state reimburses the districts for debt loss under Public Act 86, but Detroit Public Schools, the old district, failed to meet an Aug. 15 deadline.

The loss of the money does not have a direct impact on the new district’s finances or day-to-day operations, but it was intended for the repayment of the long-term DPS legacy debt, school officials said.

DPSCD superintendent Nikolai Vitti has said the mistake “is unacceptable” and that disciplinary action will be taken.

“Even before the news started about the reimbursement, we were working with the Treasury to resolve the issue and receive the payment,” Vitti told The News on Monday. “That work continues.”

Vitti sent an email to board members last month saying the old district failed to submit documentation to be reimbursed.

Detroit's old school district — 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 the documents were provided to former CFO Marios Demetriou in the spring but were not completed or received by the state.

Vitti said in the email to board members 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 said 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.”

On Monday Demetriou said he planned to attend a school board meeting Tuesday to defend himself against any blame and make it clear he left the district on June 30, well before the deadline, and was not the person responsible for ensuring the paperwork made it to Lansing in time.

Demetriou said the document in question is typically filed in early August.

“There is no evidence it ever came (back) to me. I don’t even know how someone who is gone for six weeks is blamed for this,” he said.