Going to court

Detroit school board readies for legal fight to stop school closings

PHOTO: Alan Petersime
Detroit's new school board is gearing up to fight state-mandated school closings

Detroit’s new school board isn’t planning on letting state officials shut down city schools without a fight.

Even as the state School Reform Office is still conducting the 30-45 day review that will determine which of the 38 struggling Michigan schools identified for closure will ultimately be forced to close their doors, the Detroit school board is holding a special meeting tonight to consider legal action.

An agenda for the meeting, which is scheduled for 5 p.m. at the Fisher Building, shows the board plans to “vote around litigation.”

Of the 38 schools on the closure list, 25 are in the city of Detroit, including 16 that are part of the Detroit Public Schools Community District. Also on the list are eight schools that are part of the state-run Education Achievement Authority, which will revert back to the main Detroit district this summer. All of the schools were put on the list because they have been in the bottom 5 percent of state rankings for three or more years.

The board took over the district last month after years of control by state-appointed emergency managers.

Board members say Detroit schools should get a fresh start — and not face penalties for decisions made when the state ran the district.

“The schools in question absolutely have to improve their performance and achievement level. There’s no debate about that,” said Sonya Mays, who is the new board’s treasurer. “This is all centered around the process and this question of ‘Does the district actually have a clean financial and operational start to control its own destiny?’”

State officials last summer created the Detroit Public Schools Community District as a new district that would not have the massive debts that hobbled the predecessor district, the Detroit Public Schools. The new district absorbed all of the old district’s schools and staff but is officially a new legal entity.

That’s expected to be one of the arguments the board will make when it files suit to stop closures. While the state is required by law to close all schools in the city of Detroit that have been in the bottom 5 percent of state rankings for three years, a legal opinion obtained by the district last summer asserted that creating the new district restarted the clock.

Attorney General Bill Schuette issued a different finding in September. He asserted that the law does require the state to close the low-performing Detroit schools regardless of their status in a new district.

As a state agency, the School Reform Office was required to follow Schuette’s opinion, said Steven Rhodes, the former federal bankruptcy judge who was leading the Detroit district last year when it first sought legal guidance on the issue.

But that doesn’t mean Schuette’s opinion will win in court, Rhodes said: “In a court of law, the attorney general’s opinion is entitled to no particular weight or deference. The judge is going to determine what the law is.”

At a meeting last month, Mays said she made a motion to ask the district’s general counsel to write a legal opinion mapping out the board’s options.

She said she expected the board to review that opinion tonight. The board could vote tonight to formally take legal action.

Rhodes predicted that if the board does file suit, it will prevail.

“I think that a court looking at this will rule in the same way that Miller Canfield gave its opinion and so I think the result of the litigation will be that the (School Reform Office) cannot close any Detroit schools for three years.”

The legal memorandum from the Miller Canfield law firm that could be the basis of a lawsuit can be read here:

Teachers stiffed

Detroit charter school teachers get tough news: Their school was in debt so they won’t get paid

PHOTO: Erin Einhorn
Matchbook Learning CEO Sajan George notified teachers at the now-closed Michigan Technical Academy that they won't get their summer paychecks.

Furious teachers at a recently shuttered Detroit charter school were notified Wednesday that they won’t be paid thousands of dollars they earned during the last school year.

Teachers at the Michigan Technical Academy had contracts that required the school to pay them through the summer for work they did during the school year. But the school’s management company, Matchbook Learning, alerted teachers in an email Wednesday that the money would instead go to pay off the school’s debts.

“Last Friday, Matchbook Learning became aware that the holders of MTA’s outstanding bond debt are refusing to allow use of funds for any summer payroll and instead, are requiring that any available funds be used toward payment of the bond debt,” Matchbook’s CEO Sajan George told teachers in the email. “We are disappointed and deeply saddened by this development because this means funds will not be there for July or August payroll.”

The school, which Chalkbeat wrote about last fall, closed its doors forever last month when Central Michigan University revoked the school’s charter citing academic and financial difficulties.

The school was one seven Detroit area charter schools that closed this year including five that had been overseen by Central Michigan.

Matchbook Learning, which had been running the school since 2015, had a contract with the school’s board that expired on June 30, George wrote in the email to teachers.

“Matchbook Learning never received and does not expect to receive any funds from the MTA Board, CMU or the bondholders to fund payment of any July or August payroll — meaning Matchbook Learning is not in a position to make payment to you,” George wrote. “Unfortunately, the closing of MTA has had a severe effect on everyone involved. We thank you for your time at MTA, sympathize and empathize with your position, and wish you the best in your future endeavors.”

George told Chalkbeat that his New Jersey-based school management organization, a non-profit, hasn’t been paid by the school’s board since February due to lack of funds. Matchbook is owed what he characterized as “a couple hundred thousand dollars.”

He said he knew Matchbook wouldn’t be paid for the last few months of the school year but that the organization stayed until the last day of class in June.

“If we left, the employees wouldn’t get paid and the school would shut down,” George said.

He said Matchbook asked the school board to approve payments that would enable the teachers to get paid in July and August. The board knew it would receive payments from the state in July and August and authorized a portion of that money to go toward paying teachers. But the bondholders are priority creditors, meaning they get paid first. The bondholders have refused to allow money to go to the teachers, George said. 

“Ultimately it wasn’t in our control,” he said.

The school borrowed about $16 million for building improvements when it first opened and only about $1 million had been paid off when the school closed last month, George said. Had the school stayed open, it would have continued to receive money from the state that could have been used to make payments on the debt. Without money coming in, the creditors moved to collect as much as they could. 

Angry teachers say they’re contacting lawyers in hopes of trying to collect what they’re owed.

“That’s money that we’ve all worked for,” said Maeve Rochon, a kindergarten teacher who said she’s owed around $5,000. “That’s for time we spent in those kids’ lives, doing our jobs. We all stuck it out to the end and now you’re telling us the money we worked for, we’re not going to get?”

Janelle Brzezinski, a spokeswoman for the Governor John Engler Center for Charter Schools at Central Michigan University, said there’s not much the university can do to help the teachers.

“Some creditors of Michigan Technical Academy have ordered an acceleration of payments due on Academy loans,” Brzezinski wrote in an e-mailed statement. “The acceleration of payments means that the Academy received no funds from the scheduled July 20, 2017 state school aid payment sent by the state of Michigan. The Academy board and the Center had been working with the Michigan Department of Education and Michigan Department of Treasury officials to ensure continued flow of state aid through July and August to allow the Academy to meet payroll and other outstanding obligations. Unfortunately, the decision of the creditors to accelerate payments under the Academy loans means that there will not be sufficient funds for the Academy to process the July 31, 2017 scheduled payroll and there may not be sufficient funds to meet the August payrolls.”

Brzezinski encouraged teachers to contact Matchbook or the Wage and Hour Division of the Michigan Department of Licensing and Regulatory Affairs.

home sweet home

‘Finally! Something useful’ or a dangerous mistake? Detroiters respond to city’s housing deal for teachers

PHOTO: Detroit Land Bank Authority
This home on Harvard Road was up for auction the week after Detroit announced a half-off-on-city-owned housing deal for teachers.

Friday’s announcement that all Detroit school employees — whether they work for district, charter, or parochial schools — will get a 50 percent discount on houses auctioned through the Detroit Land Bank Authority stirred a lot of discussion.

Some of our commenters on Facebook had high hopes for the deal:

But one commenter wondered if it’s the city of Detroit that’s actually getting the best deal, not the employees — or other people seeking to buy homes in the city:

And others argued that people who already live in Detroit won’t benefit from this deal:

Still, some readers appear to be ready to move — and have even picked homes to bid on (though not necessarily from the Land Bank Authority)!