}

Tuesday, October 10, 2017

MONEY TO BURN?: Michigan Treasury Intercepts Grand Traverse Academy State Aid Payments Beginning November 2017; $97,000 Diverted Each Month To Repay Delinquent $2.4 Million Traverse City State Bank Loan

“If we don’t pay the state aid to Traverse City State Bank, they’re allowed to intercept our state aid coming in from the state and take it until the (debt) is satisfied,” said board treasurer Samer Bourdkani. “Basically, our immediate priority is to make sure we can secure this and get this going.” 

Traverse City Record-Eagle
August 6, 2017

On August 26th, 2017, ten days before the start of the new school year, the Grand Traverse Academy defaulted on the $2,341,536.74 it owed Traverse City State Bank — and now faces an intercept of roughly $97,000 per month from its Michigan school aid payments beginning in November.

The Traverse City charter school had been pursuing a refinancing of the debt with R. W. Baird, with underwriting from PNC Bank.
  
Although a spokesperson for the Michigan Treasury Department exclusively confirmed the following to me in an August 28 email: (“Grand Traverse Academy hired a financial advisor who worked with the academy and PNC Bank to develop a customized solution for their School Aid Note. To date, no money has been provided to Grand Traverse Academy. We expect final credit approval, paperwork and processing in two to three weeks.”), it appears the deal never closed.

Which is strange, considering that on September 29, 2017, Grand Traverse Academy Superintendent Susan Dameron sent an email confirming the firing of three employees, while intimating a deal had been consummated: 

“We are pleased to report that these positive changes were recognized by the Michigan Finance Authority, which enabled us to refinance our outstanding state aid anticipation note through their partnership with a local bank. A condition of the loan agreement was that we retain a certain amount in our fund balance, or cash reserves, each month.” 

No, not unless “refinance our outstanding state aid anticipation note through their partnership with a local bank” is corporate bullshit for “our money’s been garnished”...and it's not.

Dameron must have dozed off during the Grand Traverse Academy's September 22, 2017 Annual Meeting when accountant Steve Peacock stated, in the final minutes of that session, stated that beginning in November, the Academy faced “a State Aid intercept of $97,000 plus interest” for the State Aid Note Loan issued in August 2016

Outlook improves? 

So where are the documents? What documents, you ask?

Here's an excerpt from the Grand Traverse Academy's charter contract with Lake Superior State University:

Section 2.04. Academy Board Requests for Direct Intercept of State School Aid Payments. If the Academy Board directs that a portion of its State School Aid Payments be forwarded by the Fiscal Agent to a third party account for the payment of Academy debts and liabilities, the Academy shall submit to the Vice President of Finance for the University and to the University Charter School Office: (1) a copy of the Academy Board’s resolution authorizing the direct intercept of the State School Aid Payments; and (ii) a copy of a State School Aid Payment Agreement and Direction document that is in a form acceptable to the Fiscal Agent.

Oh, that: a board resolution authorizing the intercept.

This morning, I sent a Freedom of Information Act request to Lake Superior State University.

I'll bring additional details as soon as they become available.

Of course, the GTA board could always made them public.

Feh!

(Based on a $2.4 million outstanding debt, and payments of roughly $97,000 a month, it will likely take at least 27 months to retire the Traverse City State Bank debt.)

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