Schooling on Fiscal Accountability

March 17, 2016. Share on Twitter

It is difficult to imagine issues more critical to a municipality’s fiscal future than the safety of its drinking water or the perceived quality of its public school system: each weighs heavily on assessed property values. Congress, holding more hearings today on Flint–even as the U.S. House Budget Committee yesterday reported a budget resolution to make further reductions in Clean Water, Safe Drinking Water, and public education funding–is likely to resume its blame game: in this instance against both Michigan Governor Rick Snyder and the Environmental Protection Agency. There appears little chance that the famed luck of the Irish will actually cast a green spell on the Congress to lead to a constructive federal role to actually help Flint’s children. 

Keeping A City’s Schools Open. The Michigan House Appropriations Committee yesterday reported a measure to provide nearly $50 million in emergency funding requested by Gov. Rick Snyder to the Detroit Public Schools (DPS)—and in favor of in favor of House Bill 5385, state legislation to expand the scope of Detroit Financial Review Commission to include the fiscal management of DPS (Under the U.S. bankruptcy court’s approved plan of debt adjustment which cleared the way for Detroit to exit the largest municipal bankruptcy in U.S. history, the plan provided for a financial review commission to provide fiscal oversight of Detroit.) funds critical to keep the city’s schools open through the remainder of the academic year—and ; a vote in the full House could come as soon as today. It appears that the key testimony by retired U.S. Bankruptcy Judge Steven Rhodes, the DPS transition manager named by Gov. Snyder, made the difference: Judge Rhodes testified last week that DPS would run out of money by April 8th absent an emergency appropriation; Judge Rhodes warned that DPS had no alternative plan and would have to close the city’s schools absent state action—and time is critical: the state legislature is slated to take its own two-week Spring vacation beginning on March 24th. According to the non-partisan and superb Citizens Research Council of Michigan, DPS’ operating deficits ballooned over the last four years from $83 million four years ago to a projected $335 million at the end of this year—a precipitous path to fiscal failure which last week led S&P to put the system on credit watch with negative implications. More seriously, under Michigan law, a school district which does not comply with the required minimum hours of pupil instruction forfeits its state aid on a prorated basis: thus DPS is in a potential double jeopardy situation. DPS began the current school year with legacy debts totaling nearly $440 million, but that debt is increasing at an accelerating pace because of DPS’ growing reliance on short-term notes to help with its dwindling cash flow.

The Flint Blame Game. Daniel Howes, the superb editorial writer for the Detroit News, yesterday wrote an insightful column which ought to help us prep for today’s round two of U.S. House hearings, writing in his column “No, Snyder can’t play Flint water blame game:”

Don’t expect Gov. Rick Snyder to channel Tuesday’s “we-did-nothing-wrong” crew when he testifies Thursday before the House Oversight and Government Reform Committee in Washington.

Nor will he point fingers and shift blame because there is plenty to go around, because none of it does anything to help the long-suffering residents of Flint, and because trying to pass the buck would be laughable considering the facts.

The evidence of the state of Michigan’s culpability in the Flint water crisis is too overwhelming to ignore. Instead, the governor once again will apologize to Flint residents for the cascade of mistakes, missed signals and miscommunication that tainted their drinking water with lead — and apologize to the American people for an epic governmental failure.

What good the contrition will do at this point, however, remains to be seen. Empowered by investigations, civil lawsuits and tens of thousands of pages of local, state and federal records, sides are clearly drawn for a good ol’ partisan bashfest, despite perfunctory acknowledgment that all levels of government failed Flint.

They did. But that isn’t dissuading committee Republicans from disproportionately targeting the Environmental Protection Agency for condemnation, or Democrats from calling for Snyder’s resignation, trashing the competence of his administration and denouncing the Michigan emergency manager law that the labor-left loves to hate.

If nothing else, Tuesday’s marathon hearing offered an object lesson in the kind of blame-shifting Snyder and EPA Administrator Gina McCarthy would be crazy to repeat Thursday before the same committee. The entire mess, from Lansing and Flint to Chicago and Washington, is a crystalline example of why so many American voters on the right and left are angry at government, angry at its institutions and angry at the cold, legalistic bureaucrats who run them and routinely shirk accountability.

Even when faced with written evidence produced by their own hands, the likes of the EPA’s ousted Region 5 Administrator, Susan Hedman, could not admit the agency “did anything wrong” in Flint. In the battle between embarrassment and arrogance, arrogance wins in the federal government.

Even when a former Flint emergency manager, Darnell Earley, indisputably occupied the all-powerful office when the city switched its water supply to the corrosive Flint River water, he shifts blame. Really? This from the guy vested with arguably more unilateral power than the governor himself, courtesy of the Public Act 436 Emergency Manager Law.

Even when documents show state officials acknowledged concerns of lead-tainted water, its possible connections to a Legionnaires’ disease outbreak blamed for killing nine and sickening 87 people and traded emails with concerned EPA officials, Snyder has defended the fact that whole mess has claimed just two resignations and one firing.

If the hearings this week can answer two questions still unsatisfactorily answered they will be worth every phrase of partisan grandstanding and ignominy: first, who made the final decision not to treat the corrosive water from the Flint River, contrary to federal regulations? And, second, when did the governor learn of high lead levels in the city’s water supply?

The answer to the second question is as important as the first. Administration documents show that officials close to Snyder — including then-Chief of Staff Dennis Muchmore, several on the governor’s legal staff and ranking officials inside the state Department of Environmental Quality — knew of the lead concerns in the water and potential ties to an outbreak of Legionnaires’ well before Snyder publicly confirmed lead contamination in October 2015.

No one told him sooner, even in an off-hand way, of concerns they had been sharing with each other for more than a year? That will be a hard sell to skeptical members of Congress. They operate in a political environment where failing to know uncomfortably hard facts is just as damning as knowing them and failing to act.

If Snyder’s answers diverge from the narrative so far established by administration documents and news media reporting, or if committee investigators produce new evidence that contradicts that narrative, this mess will move into a whole new phase with existential implications for the governor, his administration and the remainder of his term.

That’s why Snyder was set to spend most of Wednesday at the Washington offices of DLA Piper LLP, the global law firm where former Michigan Gov. Jim Blanchard is partner and chair emeritus of its government affairs practice group. There, firm lawyers, as well as Chief of Staff Jarrod Agen and others, would ask tough, probing, even hostile questions to prepare the governor for his testimony.

Six three-ring binders, each almost six inches thick, contained Snyder’s briefing materials, according to a source familiar with the situation. The governor also met on Capitol Hill with the committee chairman, Rep. Jason Chaffetz, R-Utah, and its ranking member, Rep. Elijah Cummings, D-Maryland, in advance of the hearing.

Preparation has its limits. The lesson of these kinds of hearings, almost too many to count for CEOs of Michigan-based companies like General Motors Co. and Ford Motor Co., is that lawmakers set the tone, write the rules and shape the narrative — in many cases irrespective of whatever witnesses say.

Snyder requested the chance to testify, in part to avoid the bad optics of receiving a congressional subpoena to do so. In addition to offering more apologies, he is expected to call the government’s Lead and Copper rule governing water quality “dumb and dangerous” and recommend changes. He’ll also offer lessons learned.

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