I JUST WANT TO BORROW ENOUGH MONEY TO GET OUT OF DEBT! Michigan Treasury Security Report Reveals Grand Traverse Academy Borrowed Millions To Pay Off Traverse City State Bank; $1.5 Million Balloon Payment Looming In August 2018

THE FOLLOWING STATEMENT IS UNTRUE: “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

HERE'S THE TRUTH: THE GRAND TRAVERSE ACADEMY BOARD HAS TO APPROVE A RESOLUTION FOR AN INTERCEPT AND SEND A FORMAL REQUEST TO 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.

 At a June 30, 2017 “special meeting”, the Grand Traverse Academy’s board of directors approved a “Resolution Authorizing A Line Of Credit For School Operations”, ostensibly to cover cash flow shortages in the Academy’s General Fund. 

Four board members approved the Resolution (Samer Bourdkani, Mike Drilling, Lea Piché and Lesley Werth; Mike Rogers was absent), which authorized the Academy to obtain a line of credit from a “private financial institution to secure funds for school operations”. 

The loan amount was capped at $2,335,000, but the money was not used for cash flow shortages.

Instead, the Grand Traverse Academy’s board earmarked the new loan to fulfill its outstanding $2,341,536.74 obligation to Traverse City State Bank. 

The Michigan Finance Authority requires SAN loans funded by the Michigan Treasury be repaid not later than 372 days from from date the note was issued, and has for years. The statute authorizing state aid notes also requires funding from any other source (like municipal bond underwriting and placement firms) also be term-limited to 12 months. 

In addition, the loan in question, a $2.3 million SAN loan underwritten by Traverse City State Bank, was authorized by the Grand Traverse Academy board during an August 30, 2016 special board meeting. 

An August 9, 2016 Cash Flow Projection, created by Mark Noss for the fiscal year ending June 30, 2016, aggressively predicted a 1,250 student count during the 2016/2017 school year. 

To make matters worse, Grand Traverse Academy superintendent Susan Dameron publicly stated in the last few months that she expected up to 1,200 students to enroll in the 2017-2018 school year.  

A more conservative estimate set the population at 1,160, roughly the Grand Traverse Academy's tally from the official Michigan Spring 2017 school count. 

But only a little more than 1,100 students actually enrolled. 

Michigan will provide the Grand Traverse Academy a foundation allowance of $7,631 per student in FY 2018. 

With 65 fewer students, that means the district will get roughly $496,015 less than it originally budgeted for this school year. 

That loss of students compounded the Traverse City charter school’s cash flow problems. 

Coming tomorrow, a full report how the Grand Traverse Academy borrowed millions to repay millions to Traverse City State Bank...and will end up owing millions!

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.)

OFF A CLIFF: Sharp Enrollment Drop At Grand Traverse Academy Belies Superintendent's Rosy Projection

“There’s been a lot of confusion about whether we’re going to be opened or closed next year,” Dameron said. “We’re open and ready to go. We’re rockin’ and rollin’. … We’re feeling so good about our financial picture right now and the direction that we’re headed in.”

Unless that direction was down—which it is.

Although Grand Traverse Academy superintendent Susan Dameron told the Record-Eagle in late August that she expected up to 1,200 students at the Traverse City charter school this fall, preliminary count numbers reveal that number was wildly overpromised.

It's 1,104 students, a drop of 6.2 percent from the Michigan Department of Education's Spring 2017 audited figure of 1,177.

And you don't have to be a genius to notice the school's enrollment peaked at 1,231 in Spring 2014, just prior to Steven Ingersoll's April 9, 2014 criminal tax fraud indictment.

A coincidence?

Who knows.

But here's one thing I do know: a 6.2 percent drop in student population means nearly $600,000 in lost state aid revenue, as reflected in the board's September 22 General Appropriations resolution, revised downward from an earlier budget approved on July 13.

*CRICKETS CHIRP* Michael Moore Reacts To Harvey Weinstein Revelations...NOT!

“No matter what you throw at him, it hasn’t worked,” Moore said in the statement. “No matter what is revealed, he remains standing. Facts, reality, brains cannot defeat him. Even when he commits a self-inflicted wound, he gets up the next morning and keeps going and tweeting. That all ends with this movie.”

Was that the long-awaited reaction from Moore on the lurid sex allegations that have lead to the downfall of film producer Harvey Weinstein?

Nope.

That comment was part of Moore's reaction in May 2017 to the deal he made with Harvey Weinstein and his brother, Bob. The Weinstein brothers personally acquired the worldwide rights to Moore’s surprise documentary “Fahrenheit ‪11/9,” currently in production. The Weinsteins bought the film through their Fellowship Adventure Group.

According to a statement issued in May announcing the deal, “Fahrenheit ‪11/9” will feature “the mix of outrage and mischievous humor that has made Moore the most successful documentary filmmaker in the world. 

“The filming has been done under a strict cloak of secrecy and is expected to be key in dissolving Trump’s ‘teflon’ shield and, in turn, his presidency.”

The Weinstein brothers previously released Moore’s “Fahrenheit ‪9/11” in 2004 with more than $200 million in worldwide grosses. The Fellowship Adventure Group together with Lionsgate distributed “Fahrenheit ‪9/11.”

In February 2011, Moore sued the Weinsteins, claiming the brothers agreed to split profits from the film 50-50 but then diverted at least $2.7 million in profits from the documentary to avoid paying him.

Moore claimed he conducted an audit of the 2004 film, which grossed $222 million worldwide, and “discovered substantial irregularities in the accounting” that resulted in a “gross underpayment to [Moore],” the lawsuit alleged. 

Those alleged irregularities included a secret deduction of $2.5 million in revenue that the Weinsteins claimed was paid to acquire an interest owned in the film by a predecessor company called Icon Entertainment International; a 7.5% “override” fee on advertising costs in the amount of $1.2 million, “despite the fact that [the Weinsteins] did not incur the advertising costs and the [deal] did not permit [them] to deduct these costs”; as well as additional improper deductions of fees paid to distribution consultants, accountants, residuals, foreign taxes and travel expenses, including what Moore says are the “grossly excessive and unreasonable” costs of hiring a private jet to carry a single passenger to Europe. 

The case was settled out of court, just days before the scheduled March 28, 2012 trial was scheduled to begin in Los Angeles Superior Court. Terms were not disclosed.

The Weinstein Company issued a statement on the settlement: “Bob and Harvey Weinstein’s Fellowship Adventure Group and Michael Moore have amicably settled the lawsuit involving an accounting dispute on Fahrenheit 9/11, and they look forward to the prospect of working together on future projects.”

I guess it's a lot easier to mock Donald Trump's Puerto Rican paper towel toss than it is to bite the hand the feeds you.

Tick tock, baby!

(Lena Dunham on Line 2.)

THE SKUNK AT THE GARDEN PARTY: Charter School Branding...Or Crisis Communications?

The Michigan Association of Public School Academies (MAPSA) recently made public a Charter Branding Toolkit, described as “a resource for school leaders, authorizers, board members, and management company representatives to evaluate the messaging of the brand in the public and in the media in order to increase a more positive feeling about charter schools.”

While the document includes what you'd expect, it recognizes the “Michigan charter school movement has been hit with mainstream discontent. From contentious politics to fraud scandals and early school closure, charters have had their fair share of negative media attention.” 

So where's the crisis communications plan, something that might have helped the Grand Traverse Academy competently deal with the Steven Ingersoll scandal, shown below in an excerpt from the MAPSA Branding manual.

“Move on by changing the dialogue.”

Tried, but didn't work for the board.

But Steven Ingersoll didn't let grass grow under his feet back in 2013.

Less than 30 days after Ingersoll (1) told the Academy Board he was under federal investigation, (2) admitted he could not pay the estimated $3.5 million dollars owed to the school, and (3) asked to have the debt characterized as a loan, he made a $500.00 contribution to “Bill Schuette for Michigan”!

Do I think that contribution made the difference in Schuette's office declining (so far) to investigate or prosecute Ingersoll's multi-million dollar misappropriation from the Grand Traverse Academy?

No, I don't.

However, if Schuette ends up winning the August 7, 2018 Republican primary, I'm sure the winning Democrat will have fun asking the Attorney General why he ignored that complaint.

To that end, I resubmitted my complaint today to head of the Michigan Attorney General's Criminal Division—something I plan on doing every week until I get an answer.