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Topic: Truth squad- Snyder as a FOUL
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untanglingwebs
El Supremo

Jonathan Oosting | joosting@mlive.com
Feb 18, 2014




For those wanting to dig deeper into the numbers, the House Fiscal Agency has a new report out exploring the math:

"Conclusion: There are a number of valid ways to measure changes in K-12 funding. It is true that the state has provided increased funding over the last 4, 7, and 10 years; but it is also true that overall funding available for districts’ net operational funding has actually declined over the last 4- and 7-year periods and increased at a rate of less than 0.5% per year over the last decade. The only measure by which average district K-12 funding per pupil has kept up with inflation is in total state sources."

http://www.house.michigan.gov/hfa/PDF/SchoolAid/School_Aid_Funding_Memo_Feb11.pdf
Post Wed Oct 01, 2014 6:57 pm 
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untanglingwebs
El Supremo

MoreThanHappy
Feb 5, 2014




'The Nation' doesn't agree with this spin. Oosting's article basically says that what happened didn't happen.

"Of more than $1 billion in cuts to school budgets last year, Snyder is restoring less than half—and not to per capita expenditure on pupils but for incentive programs. Schools that perform best will get the most money; those that “fail” could be eliminated. In other words, those with the most troubled students or least experienced teachers or children who speak little English or with high percentages of learning disabilities—those are the schools most likely to be assigned less assistance, less investment, less hope."


http://www.thenation.com/article/166293/ugly-truth-behind-michigans-budget-surplus#The Ugly Truth Behind Michigan's Budget Surplus | The Nationhttp://www.thenation.com/article/166293/ugly-truth-behind-michigans-budget-surplus#Gov. Rick Snyder's ruthless austerity measures have made the state a bleak place to live, work and go to school. Michigan is a model of fiscal recuperation.
Post Wed Oct 01, 2014 7:02 pm 
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untanglingwebs
El Supremo

Denise Reid shared a photo to the group MARK SCHAUER FOR GOVERNOR OF MICHIGAN 2014.

9 hrs ·
.

https://www.facebook.com/KidsNotCEOs/photos/a.661373243918997.1073741828.651973018192353/771662606223393/?type=1&theater


Look up your district at www.KidsNotCEOs.com
Post Tue Oct 14, 2014 12:29 am 
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untanglingwebs
El Supremo

Wayland Townbroadcast

Monday Moan: The mystery of the frumpy retired teacher ad


Submitted by editor on Sun, 10/12/2014 - 20:53

Jeff Salisbury8

by Jeff Salisbury

Remember Gov. Rick Snyder's next door neighbor at his Gun Lake vacation home, a retired teacher who did the TV ad insisting he'd never ever cut per-pupil aid to schools?

Now there's another retired teacher — Pam Williams is her name and she's also his friend and she's just as convinced her friend Rick would never ever cut per-pupil aid either. She's the one on the right (in photo below) who's rather frumpy looking and sounding just as tired and worn out as her choice in clothing.

Oh, and by the way, the woman on the left is the same woman... PAMELA WILLIAMS from Birmingham... vice chair of the Oakland County Republican Party. Her bio reads: "Pamela also is a precinct delegate and on the Executive Committee for the Oakland County Republican Party and the 9th District. She serves as Scholarship Chair for the Republican Women's Federation of Michigan and is a grassroots campaigner having volunteered for numerous local, state and congressional candidates." This commercial was produced by the Snyder campaign.

Ms. Williams is certainly an atypical classroom teacher. She was a special education teacher and later a special education administrator for Romeo Community Schools well before Mr. Snyder took office. Since 2012 she's been a GOP official serving as vice chair of the Oakland County Republican County.

In Ms. Williams’ former district at Romeo, per-pupil funding looks like this the past six years:

• School year 2009-10… 7,692, under Gov. Jennifer Granholm.

• 2010-11… 7,676, Granholm

• 2011-12… 7,376 under Gov. Snyder

• 2012-13… 7,376 Snyder

• 2013-14… 7,429 Snyder

• 2014-15… 7,479 Snyder

If Ms. Williams bothered to do this research, unless she was completely partisan, she'd know that her former district has lost hundreds of cumulative dollars per pupil x 4000-plus students... a huge number. She's either simply ignorant (owing to a lack of research) or she's complicit in attempting to insult those past and present public school educators and administrators who know better than she does.

Go ahead, everybody — Take the test!

Every parent, every state legislator, every school board member, every superintendent and all administrators need to have a mandatory sit-down and do an entire practice test, one for math and one for language arts.

You have no idea how daunting these things are going to be until you actually do them. Link is below-- http://sbac.portal.airast.org/Practice-Test/ — you will have to do some clicking when you get there.

My brother teaches American History (in New Mexico) and their school is in PARCC (The Partnership for Assessment of Readiness for College and Careers of which New Mexico is a member.) His social studies department just did the sample PARCC test for Grade 11 ELA test this week.

He reports that his ELL (English Language Learners) kids are toast. His special education kids are toast. His district leadership expects their test scores to plummet 25% from the previous high stakes test.

This is going to hurt a lot of kids… while enriching lots of corporate coffers. By the way, the national test vendor for PARCC is Pearson — the sole bidder! The test vendor for SBAC (Smarter Balanced Assessment Consortium, of which Michigan is a member) was Wireless Generation (owned by Rupert Murdoch's Newscorp).
Post Wed Oct 15, 2014 7:10 am 
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untanglingwebs
El Supremo

http://www.eclectablog.com/2014/10/more-cronyism-in-the-snyder-administration-bill-schuette-gave-his-former-law-firm-nearly-2-million-in-statebusiness.htl

BREAKING: More cronyism in the Snyder administration: Bill Schuette has given his former law firm nearly $2 million in state business

By Eclectablog on October 13, 2014 in Michigan Republicans, Rick Snyder




The Snyder administration is well known for rewarding its friends and business partners with lucrative, sometimes unchallenged government contracts. Something that has gone largely unnoticed are the contracts that Bill Schuette’s Attorney General’s office awarded to his former employer Warner Norcross & Judd LLP which amount to nearly $2 million since he took office.

Schuette joined Warner Norcross & Judd in 2009 after concluding his term on the Michigan Court of Appeals. Two years later, he was elected Attorney General.

In 2009, Warner Norcross & Judd had no contracts with the Attorney General’s office. In 2010, they had $24,000 in business with the office of the AG and, in 2011, the year Schuette took office, their contracts doubled to $48,999. However, it was in 2012 when Warner Norcross & Judd truly began to hit paydirt and to benefit from their connection to Bill Schuette. That year, their contracts with the AG’s office ballooned to $599,997. Last year, in FY 2013, their contracts with the AG’s office were worth $574,998. Finally, for the most current fiscal year, 2014, Warner Norcross & Judd has $677,998 worth of contract’s with the AG’s office.

So, since Bill Schuette took office in 2011, Warner Norcross & Judd has scored $1,901,992 worth of business with the office of the Attorney General. Not only that, in 2013 Warner Norcross & Judd got another advocate in the AG’s office when Schuette appointed one of his former colleagues at the law firm to be the state Solicitor General.

It’s good to be know the king.

All of this business came at a cost, of course. In 2012, the law firm gave $34,000.00 to Schuette’s upcoming reelection campaign and Schuette rents premier Washington Square office space in downtown Lansing from them for a mere $419 a month.

Time and again we see that individuals in Rick Snyder’s administration use their positions to reward their friends, families, and business associates. That practice clearly extends to Bill Schuette’s office of Attorney General and his former employer Warner Norcross and Judd to the tune of nearly $2 million.


If you get value from breaking news stories at Eclectablog like this one, please consider making a donation during our 4th Quarter Fundraiser which starts today. For more information on how you can help sustain Eclectablog, please click HERE.

[Image credit: Aaron J. Baylis | Wikimedia Commons]
Post Wed Oct 15, 2014 8:04 am 
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untanglingwebs
El Supremo

Aramark threatens Progress Michigan for linking them to maggots, apparently OK with heroin smuggling & sex with inmates

By Eclectablog on October 10, 2014 in Corporatism, Privatization, Rick Snyder




Progress Michigan announced this week that they would be running a television ad called “Maggots” highlighting the Snyder administration Aramark scandal. Their press release indicated that their press conference featured “small tanks filled with live maggots.”

Aramark isn’t very happy about this and sent them a “cease and desist” letter the same day of the press conference:


October 9, 2014

It has come to Aramark’s attention that the Progress Michigan Political Action fund (“Progress Michigan”) intends to launch a new television advertisement and road campaign today that allegedyly “seeks to educate the public about Gov. Rick Snyder’s mishandling of the state’s Aramark contract.” The media advisory you released yesterday states that you intend to represent the maggots that were discovered in Aramarkrun [sic] cafeterias, and a print out of the ad language will be made available.” The video advertisement, accompanying statements, publications (including yesterday’s advisory statement) and event visuals will contain material falsehoods and/or distortions about Aramark’s performance under the contract with the Michigan Department of Corrections (“MDOC”).

The purpose of this letter is to demand that you and anyone connected to Progress Michigan immediately cease and desist from communicating, publishing, airing or causing others to air any false statements or distortions relating to Aramark’s performance under the contract with the MDOC.

As you know, the MDOC and the State of Michigan have specifically refuted and dispelled previous false reports connecting Aramark to the presence of “maggots” at any MDOC facilities. In fact, in an August 2014 press release, the MDOC specifically stated: “We investigated recent allegations connecting Aramark’s services to inmate illnesses and pests. We determined none of these incidents were caused by Aramark. Despite heavy scrutiny and challenges, Aramark has served more than 20 million meals through July with great efficiency.”.

Based on the media advisory that your organization released yesterday, Progress Michigan intends to nonetheless publish and air a statement to the public indicating or suggesting that Aramark was responsible for the presences of “maggots”. Any such statement or suggestion, in the face of the MDOC’s press release, would constitute a knowing publication of a materially false statement intended to injure Aramark. Please be aware that if Progress Michigan proceeds with advertisements containing false statement, Aramark reserves the right to take appropriate action.

Very truly yours,
Stephen R. Reynolds
Executive Vice President and General Counsel

What they say is true: the Snyder administration investigated the situation with the for-profit contractor that they privatized prison food services to amid great controversy, took a look around, and – surprise, surprise – found that Aramark wasn’t responsible for the maggots. Here’s the full statement:


Although Aramark is responsible for its share of problems, they are not responsible for every issue that has been raised in recent months. We investigated recent allegations connecting Aramark’s services to inmate illnesses and pests. We determined none of these incidents were caused by Aramark. Despite heavy scrutiny and challenges, Aramark has served more than 20 million meals through July with great efficiency. We are pleased with the new process for tracking Aramark’s performance going forward and will work closely with the company to make sure this partnership is a success.

The MDOC appears to be taking full credit for maggots in their prison kitchens, even though those kitchens are being run by Aramark. This is quite unlike the situation in Ohio where corrections officials didn’t fall on their swords and gave some of the credit for the maggots to Aramark.:


Union leaders and legislative aides were watching workers power-wash the kitchen of the Ohio Reformatory for Women yesterday afternoon when maggots floated out from beneath steel floor plates.

Prisons Director Gary Mohr then told The Dispatch that his agency accepts shared responsibility with meal contractor Aramark Correctional Services for conditions that have spawned maggots at the Marysville prison.

It’s never good when you’re being assigned partial credit for maggot spawning.

Still, when these sorts of situations are cropping up around the country, you’ll forgive those of us looking in ffom the outside for being a bit skeptical when the agency that has had to spend so much time defending its decision to outsource jobs to a for-profit corporation is the very same agency that is responsible for doing the investigation surrounding the maggots. Especially when they find that everything is just fine.

Progress Michigan’s executive director Lonnie Scott issued this statement regarding Aramark’s letter:


Within minutes of launching our new ad, we received a letter from the top levels of Aramark telling us to ‘Cease & Desist’. We don’t shy away from telling the hard truth, especially when public safety is at risk. We’ve got free speech, not to mention facts, on our side. The facts are clear: This Aramark boondoggle is Gov. Snyder’s fault and we need to hold him accountable.

The thing I couldn’t help but notice about the Reynolds’ letter is that is completely focused on maggots.

It says nothing about Aramark employees caught smuggling in contraband like cocaine and heroin.

It says nothing about Aramark kitchens running out of food and illegal food substitutions that resulted in the first $98,000 fine that was later quietly cancelled without notice by the Snyder administration.

It says nothing about inmates caught having inappropriate sexual contact with inmates. (One employee wrote “a 65-page love letter she wrote to an inmate with whom she was allegedly having an affair.”)

It says nothing about the Aramark employee who tried to hire one prisoner to kill another prisoner.

But Gov. Snyder’s folks have given the “all clear” on the whole maggot thing so I guess we’re all supposed to just turn away because there’s nothing to see here.

I have news for Aramark: this story is a long way from being over.
Post Wed Oct 15, 2014 8:11 am 
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untanglingwebs
El Supremo

I think you all should be able to share this my friends. http://www.eclectablog.com/2014/10/breaking-more-corruption-in-the-snyder-administration-26-4-million-in-no-bid-contracts-awarded-to-campaign-donor.html

BREAKING: More corruption in the Snyder administration: $26.4 million in no-bid contracts...


The Michigan Democratic Party released bombshell news today that the Snyder administration awarded $26.4 million in no-bid contracts to a high-dollar donor to...


eclectablog.com
Post Tue Oct 21, 2014 10:01 am 
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untanglingwebs
El Supremo

BREAKING: More corruption in the Snyder administration: $26.4 million in no-bid contracts awarded to campaign donor (UPDATED)

By Eclectablog on October 20, 2014 in GOPocrisy, Mark Schauer, Michigan Democratic Party, Michigan Republicans, Republican-Fail, Rick Snyder

The Michigan Democratic Party released bombshell news today that the Snyder administration awarded $26.4 million in no-bid contracts to a high-dollar donor to the Snyder reelection campaign.

On June 9, 2014, the owners of J&B Medical Supply, which supplies diapers and other incontinence products to Department of Community Health, hosted a lavish fundraiser for Rick Snyder in Bloomfield Hills which was attended by about 150 contributors, and featured crystal stemware, professional lighting design and custom-made Rick for Michigan candy and water bottles. They raised $73,800 for Governor Snyder’s reelection campaign.

Here’s video from the fundraiser just to give you an idea of just how swanky this soiree was:

The very next day following the fundraiser, J&B Medical Supply had an existing state contract extended to the tune of nearly $400,000. This appears to be a violation of the 2005 Michigan Management and Budget Act which requires competitive bidding on state contracts.

Prior to this, in February of 2013, the Snyder administration awarded a new no-bid contract to J&B Medical Supply which added $8,679,958.02 to an existing contract’s price. Later, in November 2013, the company was awarded another no-bid contract which added another $17,359,916.04 to the price.

All told, the Snyder administration has awarded 18 months worth of no-bid contracts to J&B Medical Supply, for a total of $26.4 million.

Since 2010, members of the Shaya family which owns J & B Medical, along with their employees, have given at least $65,676.19 in contributions to Rick Snyder’s reelection campaign. This is in addition to the fundraiser they held for him earlier this year.

Michigan Democratic Party Chair Lon Johnson issued this statement about the revelations:


These documents again raise questions regarding whether “pay to play” is standard operating procedure in Rick Snyder’s administration. The governor needs to come clean and explain why he gave special favors to his campaign donors one day after they hosted a glitzy fundraiser for him. The people of Michigan deserve answers from Governor Snyder.

Democratic candidate for Governor Mark Schauer issued a statement, as well:


These new documents raise very serious questions about who Rick Snyder’s administration is really working for. Why has a contract that was competitively bid in 2008 ballooned by more than $26 million without subsequent competitive bids on Snyder’s watch? And more specifically, why did the Snyder administration increase the J&B contract by over $390,000 one day after the company’s executives hosted a lavish fundraiser for Snyder’s re-election campaign?

Michigan deserves a governor who is committed to providing honest and open government to taxpayers. Instead, Snyder has repeatedly demonstrated that he puts his family and friends first. Whether he was giving 80 and 90 percent raises to his top administration officials, or doubling his cousin’s furniture contract to $41 million, it’s clear Rick Snyder’s policies work for the wealthy and big corporations, but not the rest of Michigan.

This is just further evidence that things are quite good for Michigan businesses but only if they are well-connected to the Snyder administration. I’m sure we’ll once again hear from Governor Snyder who will attempt to sweep this unethical behavior that betrays his pledge of transparency under the rug and that he will call it “a distraction”. Gov. Snyder should never have said “Governments need to make decisions based on competitive bidding and value for taxpayer money” if he had no intention of doing it.

UPDATE: J&B Medical Supplies also benefited handsomely from two Republican bills signed into law in June of 2012 which expanded the use of telemedicine. J&B Medical Supplies offers a full line of telemedicine products and equipment. At the time, Governor Snyder said, “Telemedicine offers an incredible opportunity to easily provide health care to Michigan’s elderly, disabled and rural communities. I applaud the Legislature’s initiative to use technology to save lives.”

[Caricature by DonkeyHotey from photos by Anne C. Savage for Eclectablog]
Post Tue Oct 21, 2014 10:05 am 
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untanglingwebs
El Supremo

Pam Faris

2 hrs ·
.

When I read this endorsement I was shocked to see the honesty by which they laid out Snyder's shortcomings and then endorse him based on his leadership skills? Who are they kidding. If he was able to show leadership he would have had the roads fixed. He would have been able to take care of student testing in our schools. He would have dealt with the Aramark fiasco.
His 'leadership' is taking us down the wrong road and that road is a pothole ridden mess.


The Detroit Free Press endorsement shows our system of government is broken


Yesterday, the most widely read newspaper in Michigan wrote this about Rick Snyder: “The...


michiganradio.org|By Jack Lessenberry
..
Post Mon Oct 27, 2014 8:47 pm 
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untanglingwebs
El Supremo

The Detroit Free Press endorsement shows our system of government is broken
Mon October 27, 2014
By Jack Lessenberry

Yesterday, the most widely read newspaper in Michigan wrote this about Rick Snyder:


“The governor’s record of protecting Michigan’s natural assets is pretty sorry, and represents a misguided attempt to placate free-market forces at any cost.”

The Detroit Free Press added:


“When it comes to education, Snyder just doesn’t seem to get it,” and added “Michigan, during Snyder’s tenure, has become a less tolerant state, with more restrictions on reproductive rights and fewer labor protections.”

They said that the governor’s “self-fashioned profile as a champion of transparency has become a joke,” and that Snyder resists taking principled stances, something that the newspaper said “spoke volumes about his character.”

Harsh words. But now here’s the shocking part: The newspaper then endorsed Snyder’s reelection!

They did this because they said in spite of all that, the governor had shown leadership skills, and felt Democrat Mark Schauer had failed to show he could lead anywhere.


What the paper is saying, whether it realizes it or not, is that our system just isn't working.


What’s most stunning about that is not who the newspaper is supporting. Anyone reading their full endorsement article might be more inclined to apply for asylum in Canada than vote at all. What the paper is saying, whether it realizes it or not, is that our system just isn’t working. Not for you; not for me. Not for our state.

And that may just be the biggest story of all. Nor am I talking about just our race for governor. Citizens I talk with seem to feel an increasing sense of helplessness to do anything about it.

Voters who want the roads fixed, for example, elect politicians who vow to fix the roads. Then they don’t do it.

According to our classic American myth, what’s supposed to happen then is that Mr. or Ms. Smith rallies their neighbors and gets sent to Washington, or in this case Lansing, to fix things.

That may have happened once upon a time, but today Mr. Smith couldn’t do it without impoverishing his neighbors. Ellen Cogen Lipton, a state representative who lives in my neighborhood, ran in a primary for state Senator this year.

She raised and spent more than a quarter of a million dollars and finished third.

Eight years ago, Congressman Sandy Levin’s son spent nearly a million dollars to run for a state Senate seat. He too lost.




So, how can normal, decent, non-wealthy people run for office without selling their souls to special interests? Increasingly they can't, and don't.


So, how can normal, decent, non-wealthy people run for office without selling their souls to special interests?

Increasingly they can’t, and don’t.

Nor is this only our state’s problem.

Fifty miles to the south, the Toledo Blade editorial board assessed Ohio’s race for governor and told the citizens it could not in good conscience recommend voting for either candidate.

Term limits are clearly part of the problem. Bob Latta, a very conservative Ohio congressman, told me when he was in the Ohio Legislature one bureaucrat told him he didn’t care much what Latta thought because “you’ll be gone in a couple years.”

Eight days from now, we’ll have a national election in which a majority of those eligible to vote won’t even bother.

History has many examples of societies where citizens felt helpless before a system they felt powerless to change.

Usually, what eventually happens isn’t pretty.

Jack Lessenberry is Michigan Radio’s political analyst. Views expressed in the essays by Lessenberry are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.
Post Mon Oct 27, 2014 8:52 pm 
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untanglingwebs
El Supremo

Snyders outearned Schauers in '13, but paid less tax


Paul Egan, Detroit Free Press Lansing Bureau 10:24 a.m. EDT October 26, 2014


LANSING – Gov. Rick Snyder earned about $81,000 more in 2013 than his Democratic opponent Mark Schauer and Schauer's spouse, Christine — but the governor paid about $28,000 less in federal taxes, records show.

Snyder earned just under $400,000 in 2013, paid just under $35,000 in federal taxes, and gave $73,304 to charity, according to his federal tax return filed jointly with his wife, Sue, and released to the Free Press last week.

Schauer and his wife reported total income of just over $313,000 in their 2013 federal income tax return, also released to the Free Press last week. They paid taxes of $62,435 and reported giving just under $5,000 to charity.

Tax preparer Faye Ball, owner of the Taxlady in Wyandotte and a member of the National Association of Enrolled Agents, said there isn't a huge difference in the two couples' adjusted gross incomes — but it's the source of the incomes that result in a significant difference in taxes paid.

"The Snyders are well-invested, earning a substantial portion of their overall income from interest and dividends," Ball said. "Their ... extensive real estate holdings allow for deductions that actually exceed their income in 2013."

The Schauers "have more traditional sources of income," and the tax liability that goes with it, she said.


With a gross income of $394,611, Snyder itemized just under $423,000 in deductions, leaving him with zero taxable income. The $34,448 in federal taxes he paid was mostly an alternative minimum tax, which is imposed to make sure wealthy individuals with large deductions still pay some federal income tax. Snyder had an effective tax rate of just under 9%.

Schauer listed deductions of just under $26,000 and had a taxable income of just over $273,000. Based on a gross income of $313,456, Schauer paid an effective tax rate of about 20%.

Snyder, a certified public accountant, was a millionaire venture capitalist before he ran for governor in 2010. Most of his income — $275,541 — came in the form of dividends from investments, which are taxed at a lower rate than wage income. First lady Sue Snyder doesn't have a paid job.

The Schauers reported just under $114,000 in wage income, and just over $200,000 in business income.

The wage income combined Christine Schauer's income as Calhoun County treasurer with pay Schauer received from the Michigan Laborers-Employers Cooperation and Education Trust Funds (LECET), Schauer spokeswoman Cathy Bacile Cunningham said. The business income is from Mark Schauer's consulting work, which included work for the Michigan Laborers and the Blue Green Alliance, a coalition of labor and environmental groups that promotes a green economy, she said.

Schauer has said he left the BlueGreen Alliance before announcing his bid for governor in May. Cunningham said he also left LECET before his announcement, but he still does consulting work for the Michigan Laborers.

Snyder and Schauer did not release all schedules and statements of their federal tax returns. Each released a 1040 form and Schedule A, which lists itemized deductions.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.



Snyder 2013 Tax Return by Detroit Free Press
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Post Tue Oct 28, 2014 7:25 am 
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untanglingwebs
El Supremo

Michigan Governor's Non-Profit Uses Inflated Job Numbers ...


www.forbes.com/.../michigan-governors-non-profit-uses-inflated-job...

Jul 02, 2014 · In Michigan, there is a non-profit called SPARK and it was co-founded by Michigan’s Governor Snyder. SPARK’s annual report claims that they helped ...
Post Tue Oct 28, 2014 8:18 am 
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untanglingwebs
El Supremo

Governor Snyder's Former Non-Profit Venture Capital Firm Refuses To Release Audited Financial Statements


Kai PetainenKai Petainen
Contributor

7/02/2014 @ 5:08PM 1,921 views

Michigan Governor's Non-Profit Uses Inflated Job Numbers While Seeking Public Money

Comment Now Follow Comments




In Michigan, there is a non-profit called SPARK and it was co-founded by Michigan’s Governor Snyder. SPARK’s annual report claims that they helped 13,024 new jobs, $1.5 billion in investment and 547 new companies; but, an official report provided to the Governor of Michigan from the ex-CEO of SPARK lists only 711 jobs, $229 million in investment and 149 companies. The non-profit SPARK continues to seek public tax-payer money, as it provides data on inflated job numbers.

What Is SPARK And Why Is It An Issue?

Why is SPARK relevant on a national scale? Co-founded by Michigan’s Governor, it’s a non-profit venture capital organization that uses public money from state, county and local levels of government. It takes the money and then reportedly claims to create/help a lot of jobs, drive investment and help/create new companies. Other non-profits, venture capital firms and government entities should notice what SPARK does, in case they too want to participate in ‘economic development’ for their state.

As SPARK is a non-profit in Ann Arbor, Michigan then it takes tax-payer money to fund their operation. An Act was passed in Washtenaw County and the main beneficiary of that Act is SPARK. According to the Washtenaw County Check Book, from January to May of 2014, SPARK has taken 76% of the Act’s money. SPARK is a 501c3 and a 501c6 and it manages some venture capital funds – a micro-loan fund, a seed money fund and an angel fund. As they manage the venture capital funds, it’s an example of a non-profit venture capital operation. Although Michigan’s Governor Snyder is not listed as one of the current executives, it was co-founded by the Governor, and the Governor has referenced SPARK multiple times and Michigan tax-payers keep funding the operation. Some members of the Michigan Economic Development Corporation (MEDC) are former employees of SPARK and the MEDC reports to the Governor. The CEO of the MEDC happens to be the ex-CEO of SPARK.

According to SPARK’s annual report, they helped create 547 new companies, 13,024 new jobs and $1.5 billion in investments. But a different story is given in an official report to the Governor of Michigan, as that report shows 711 jobs, $229 million in investment and 149 companies. To bring matters to a local level, SPARK claims to have taken $75,000 from the City of Ann Arbor and to have converted that to a project success of 14 companies, 785 jobs and $21 million in investments.

SPARK previously caught the interest of the local public, as the non-profit wasn’t providing their audited financial statements to the public. SPARK’s 990 tax forms stated that they would release financial statements to the public upon request, but it wasn’t until I pushed the issue, that SPARK released their audited financial statements to the public. [I detailed this issue in this article]

To illustrate how SPARK uses the 13,024 job metric to promote their non-profit, a May 29th, 2014 news item at McKinley states:


“Since 2006, SPARK has accelerated business growth in the Ann Arbor area resulting in $1.5 Billion in new investment and 13,024 jobs.

For another recent example of how job numbers are listed in the press, in a May 20th article at the Ann Arbor News (MLive) by Jeremy Allen titled “Ann Arbor SPARK highlights $148M in investments, addition of 1,500 jobs”, the article states:


“Ann Arbor SPARK said that its 2013 work contributed to bringing $148 million in new investments and the creation and retention of more than 1,500 from 45 different projects throughout the year.

The work, SPARK CEO Paul Krutko said, included assisting 274 startups and incubating 83 new companies, as well as marketing the region, meeting with growing businesses, and providing business acceleration resources to startups.

He said he’s proud of the work that SPARK has been able to perform for the region since it began in 2006. According to SPARK’s records, the company has helped create 13,024 new jobs and add $1.5 billion in new investment commitments since it began.

It should be noted that a high-ranked member of MLive is at SPARK itself,


“Laurel Champion, MLive Media Group’s, General Manager for Southeast Michigan, is on the Ann Arbor SPARK board of directors.

About The Official Jobs Report

What report contradicts the numbers that SPARK provides? The numbers are coming straight from an official report that was required in MCL 125.2088n of the Michigan Strategic Fund Act and the 21st Century Jobs Trust Fund legislation. The report was given from Michael Finney, the ex-CEO of SPARK and the CEO of the MEDC, to the co-founder of SPARK (the Governor of Michigan). It is dated March 31, 2014, so it is a new report that covers the time period from September 2006 to September 2013. SPARK’s annual report also starts from 2006, so it is an apple to apple comparison with respect to time. This is a high level official report that was given from one high level person to another high-level person, and both of them were affiliated with SPARK in some manner. Also, according to members of City Council in Ann Arbor, the data given to the official report was provided by SPARK to the MEDC – SPARK gave the data to the official report and to their own annual report. Others can view the numbers that I see. It involves some adding, but people can verify my numbers. The link to the report is here:
http://www.michiganbusiness.org/cm/Files/Reports_to_MI_Legislature_Page_Docs/FY13-21st-Century-Jobs-Trust-Fund-Report.pdf

Highlights From The Official Report

SPARK’s annual report claims that they helped create 13,024 new jobs, $1.5 billion in investment and 547 new companies; however, the official report lists 711 jobs, $229 million in investment and 149 companies.

If we take the 711 jobs and compare them to the 13,024 job claim, then that represents a 5% success rate for job creation.

Of the 4,450 projected jobs in the Preseed II and Preseed III funds, only 304 jobs were created. This represents a success rate of only 7% for job creation.

Of the 4,450 projected jobs in the Preseed II and Preseed III funds, only 195 jobs were created in Michigan. This represents a success rate of only 4% in terms of new jobs for Michigan. It also shows, that of the jobs created, only 64% of those were in Michigan.

The report shows 88 licensing agreements, but it also indicates that only 1 of these is with a Michigan-based company. This represents a Michigan-based licensing success rate of only 1%.



Details From The Official Report


Ann Arbor SPARK got a grant on Oct. 16th, 2006 for $8,000,000 (Page 4). It was reportedly leveraged to $132,694,383 and it created 29 licensing agreements and 16 companies. However, it only created 130.6 net full-time jobs and none of the licensing agreements were with Michigan-based Companies. There is a ‘Projected new job growth’ of 645 employees, but that number is not confirmed and it is taken from the projected job numbers. The job numbers are taken from the:


“Original proposals submitted to the Michigan Economic Development Corporation (MEDC) by the entities that received funds.

In other words, of the 645 projected jobs, only 20% were actually created and the proposed job numbers were inflated.

Ann Arbor SPARK’s Pre-Seed Capital Fund II got a grant on July 2nd, 2009 for $6,800,000 (Page 14). It was reportedly leveraged to $40,486,960 and it created 17 licensing agreements and 21 new companies. There was a ‘Projected new job growth’ of 2,162 employees. As mentioned earlier, keep in mind that this projected job growth was not confirmed, but was taken from the original proposal submitted to the MEDC. On pages 14 to 16, it shows how 121 current jobs were created and 72 of those were still in Michigan. Of the estimated projected jobs to be created; only 5.6% were actually created. And of the jobs that were created, 59.5% of them were still in Michigan. To put it in another perspective, of the jobs that were forecasted, only 3.3% were created and stayed in Michigan. None of the licensing agreements were with Michigan companies.

Ann Arbor SPARK’s Pre-Seed Capital Fund III got a grant on Oct. 7th, 2011 for $10,170,000 (Page 14). It was reportedly leveraged to $21,521,992 and it created 0 licensing agreements and 25 new companies. This had a ‘Projected new job growth’ of 2,288 employees. Also, this projected job growth was not confirmed, but was taken from the original proposal submitted to the MEDC. On pages 14 to 16, it shows how 183 current jobs were created, and 122.5 of those were in Michigan. That means that of the projected jobs to be created; only 8.0% were actually created. And of the jobs that were created, 66.9% of them stayed in Michigan. To put it in another perspective, of the jobs that were forecasted, only 5.4% were created and stayed in Michigan.

According to the official document, Ann Arbor SPARK helped 64 companies with $2,780,150 in microloans. But, to avoid double-counting the firms I removed those that received funding from SPARK via the Pre-Seed funds as well. So although 64 companies were helped by SPARK, only 54 companies would count. In total, 102 jobs were created. It should be noted that many of the microloans in the state report were placed with companies in Ann Arbor.

Ann Arbor SPARK’s, Michigan Angel Fund got a grant on July 27, 2011 for $600,000 (Page 17). It was reportedly leveraged to $820,000 and it created 33 licensing agreements, 11 new companies, 0 new jobs. Oddly, although 11 companies were created, no new jobs were created. Of the 33 licensing agreements, 0 were placed with Michigan-based companies and the report notes a projected new job growth of 0.

The Ann Arbor SPARK Accelerate Michigan Innovation Competition got a grant on July 27, 2011 for $1,050,000 (Page 17). It was reportedly leveraged to $30,380,000 and it created 9 licensing agreements, 2 new companies, and 94 new jobs. Of the 9 licensing agreements, only 1 license was in a Michigan-based company.

SPARK claims that they created 13,024 new jobs, $1.5 billion in investment and 547 companies, but the official state report shows 711 jobs, $229 million in investment and 149 companies.

SPARK Responds

I reached out to SPARK and the MEDC for a comment and neither one has responded directly. However on June 16th, Paul Krutko, the CEO of SPARK addressed this topic to City Council in Ann Arbor Michigan. Prior to his comments, I made a public comment at City Council and that comment can be viewed here.

Krutko responded to my investigation as,


“a member of the public who has made some assertions about a report

I should note that my assertions have been based on research and an official jobs report. I am a quant and I look at data and how it reflects public companies and public non-profits. If the official job report, a job report that is required by an Act is incorrect, then the appropriate officials should be notified. This investigation has been difficult as I’ve faced numerous ‘Hoffa’ comments and at least one job-threat. But, it’s an important issue, as non-profit-venture capital entities should be held accountable when they are seeking public money. And it is especially troubling if those non-profits are giving inflated numbers to tax-payers. To me, this is an issue about ethics and it’s about doing ‘what is right’.

In SPARK’s latest financial audit, they state that all investments at SPARK were located in Washtenaw County companies. It should also be noted that in the latest audit, a detailed breakdown of the micro-loans that SPARK provided is excluded. This particular breakdown in the micro-loans was provided in the audit from the previous year, so the exclusion of the micro-loan detail is troubling. The latest audit makes no mention as to why the micro-loan detail was excluded. The latest audit stated:


“The Organization’s investments are all in start-up companies located in Washtenaw County.

At City Council, Krutko defended the audit, but he also confirmed that investments are located outside of Washtenaw County. His statement appeared to contradict the audit’s statement that all investments are within Washtenaw County.

Krutko stated to Ann Arbor City Council:


“Two of my colleagues were up in Livingston County tonight, and Livingston County has approved an increase in funding to SPARK because of the activities that we do up there

The report reflects the activities what we do with the state of Michigan under a contract with the state of Michigan for activities throughout the entire state of Michigan

The audit covers all of the investments that we make with the state

If the assertion becomes that we are hiding something from you or misrepresenting information, we’re not. Our audit just came back, the highest opinion that you can get for an audit. It is clean.

With respect to the official report, Krutko stated that the official report to the Governor does not include the business development in Ann Arbor. However, his statement is puzzling to me, as the official state report covers micro-loans that were given to companies within Ann Arbor by SPARK. In reference to the official report and how it may exclude some jobs, Krutko stated:


“There isn’t any data about our business development activities in Ann Arbor in there because that’s not germane to what the state was reporting.

With respect to the idea that SPARK is using projected job numbers instead of actual job numbers as it seeks public funding, Krutko confirmed this idea in his public comments to city council:


“We provide to you what the company tells us they’re going to do in Ann Arbor on the basis of them moving forward with the project — that is their capital investment and what they say they’re going to do in terms of jobs



Comments From City Council Members

On Saturday, June 14th, Ann Arbor held a debate between 4 mayoral candidates in front of the local Democratic Party. Each candidate is currently a council member in Ann Arbor and they are all Democrats. With regard to this issue, I was able to get a question into the debate through a moderator. I should note that the Local Development Finance Authority (LDFA) will give a few million to SPARK each year (if a vote passes) and Council Member Petersen happens to sit not only city council, but on the LDFA as well. An audio form of the question and the responses is available on this link at the Ann Arbor Chronicle. Here is the question I asked (read by a moderator) and some key highlights from their responses.

Moderator (reading a question provided by Kai Petainen): “SPARK’s annual report claims it created 13,000 jobs, $1.5 billion in investment, and 547 companies. But the actual report shows a slightly different story where there are only 685 jobs, $229 million in investment and 149 companies. You’re all Democrats, but SPARK was co-founded by our current Governor, Snyder. Why do you continue to support it, when the data in the reports don’t match each other?” [Note, I had originally listed 685 jobs, but a recount indicated 711 jobs]

Council Member Sally Petersen: “I trust those numbers can be, and would be, and will be reconciled. City council questioned whether we should remove $75,000 contract with SPARK and I was very much against removing that contract. SPARK has grown jobs. No doubt, SPARK is doing their job. We actually asked them to be accountable for numbers they reported to us. Turns out, 752 jobs is what we got for the $75,000 that we spent last year and they were able to actually account for those with us.”

Council Member Petersen, who has an MBA from Harvard, states that 752 jobs were created in 2013. Petersen’s claim that 752 jobs were created is inaccurate, as those were projected jobs and not actual jobs that were created. This error is especially alarming as she is City Council’s representative at the LDFA/SPARK and one would assume that she would have seen the actual data. At the same debate, she stated that she had not read the official jobs report. A few days after the debate, Petersen requested a jobs audit of the SPARK/LDFA jobs. The report that Petersen cites is located here, but the report also indicates that it uses projected numbers and not actual job numbers. The report states:


“The Ann Arbor SPARK Business Development team records a project success when a company publicly declares its intent to create jobs or make capital investments over a period of time. “Announced jobs and investment” are recorded as a one time success.

Council Member Taylor: “There is no question that the numbers that we receive from any of the entities with which we contract, ought to be held to a rigorous standard. I understand that some folks think that the numbers we’ve received are inaccurate. I would suspect that the folks who created the numbers have a counter argument. I would prefer myself be eager to hear a full articulation of both.”

Council Member Sabra Briere: “If the numbers don’t match reality, that becomes an issue for us and we need to check on that. But one of the challenges we face is the creation of jobs. Does a business settle in Ann Arbor and hire more people without SPARK? We don’t know. Does a business grow bigger because of SPARK? SPARK can’t prove it does. SPARK is not hiring people. And we can’t say “that’s it, we’ve done it”. We can prove this because SPARK did this and that happened. Everything is an incentive in a sense of training, in a sense to new businesses, and those new businesses tell us how much SPARK means to them, but it’s not a clear box where you can say so many jobs were created and we’re challenging them to do that.”

Council Member Stephen Kunselman: “This is one that I’ve really learned to start thinking otherwise from my support of SPARK and the LDFA. And the reason is, has nothing necessarily to do with Republican or Democratic policies; what it has to do a lot is the state educational fund is being raided to provide state funding to economic development. They say they put the money back, but then why is our public educational system in such dire straits? They’re using those monies. They [the public education system in Ann Arbor] just cut many millions out of their budget. We are cutting the custodians, yet they’re taking money from educational funds to fund LDFA and SPARK. I think SPARK is somewhat corporate welfare, we have these impressions of capitalist cronyism, and I think we need to start thinking otherwise.”

Council Member Kunselman touched upon the claim that SPARK is getting money, money that would normally be allocated to public schools, and how the public schools are experiencing cut-backs as they have less money. This issue is explored further in the article, “Treasury Officials Confirm Local Economic Development Entities Divert Public School Funding “, by P.D. Lesko at the Ann Arbor Independent. The topic is also covered at the Ann Arbor Chronicle by Dave Askins, in the article, “Ann Arbor LDFA Looks to Extend Its Life “.

What’s Next For SPARK?

At the last Ann Arbor City Council meeting, the topic of funding SPARK with tax-payer money was addressed. Instead of voting on it, or postponing the topic, the council members made a rare move by tabling the topic. Within Ann Arbor politics, tabling is not a common procedure. The council meeting was far from ordinary as SPARK was given the opportunity to speak at the end of the meeting – this too was unique, as organizations rarely try to defend themselves at the end of a meeting. City Council has asked SPARK to reconcile the job numbers and to report back to council members. Although the amount provided by the city to SPARK may not seem big, a loss of this particular money could provide a signal or a ‘red flag’ to other entities that support SPARK. Non-profits, venture capital firms and government agencies in other states may want to take notice.

Council Member Lumm has noted that the issue with SPARK deals with due diligence and respect to tax-payer money. Lumm stated:


“I do share the concerns raised about SPARK’s reporting. It’s an important thing to be good stewards of public funds. As with any use of tax-payer money it is reasonable to expect in return solid metrics, reporting, accountability for results and that’s from anyone receiving public funds, including SPARK. This is about doing our due diligence on behalf of the taxpayers.

To make it even more blunt, and out of respect for public money, Council Member Kailasapathy, a CPA in Ann Arbor, has asked for an independent audit:


“I would like to see an independent audit to verify these claims. I am tired of getting flashy marketing material with these kinds of claims. It is time to actually verify them.

Update. July 12, 2014

Council member Petersen has provided this explanation from SPARK on the discrepancy in the numbers.


“There isn’t a discrepancy between the numbers. The 711 jobs are not included in the 13,024 jobs that SPARK reported in its annual report. The 711 jobs are those tied to SPARK BUSINESS ACCELERATOR PROGRAMS that are funded by MEDC’s 21st Century Jobs Fund. The 13,024 jobs are those tied to SPARK BUSINESS DEVELOPMENT PROGRAMS that are not funded by MEDC and are not included in this MEDC report.

Since SPARK has provided this explanation, it’s worth noting what the SPARK tax forms say with regard to the accelerator portion of the business. It forms the bulk of their business.

As per the tax forms, this entire section is listed under ‘Business Accelerator’. Business accelerator (as per tax forms), is the development, training, consulting, networking and investment of companies.


“The SPARK Business Accelerator speeds up the development of start-ups in the region with a variety of valuable services designed to shorten the time required to attract capital, customers, or other resources. Ann Arbor SPARK offers entrepreneurial education and training, consulting services, incubator space, in addition to a variety of events designed to provide networking and learning opportunities. Ann Arbor SPARK also manages various investment and microloan funds which support innovative, start-up companies in the Ann Arbor region in order to accelerate company development. Investments and Microloans made in 2010 account for over $4 million of the $6.7 million of program service revenue.
Post Tue Oct 28, 2014 8:24 am 
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untanglingwebs
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11/09/2013 @ 12:57PM 4,657 views

Governor Snyder's Former Non-Profit Venture Capital Firm Refuses To Release Audited Financial Statements

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Ann Arbor Michigan is home to a ‘business incubator’ known as SPARK. SPARK makes a lot of money from investment management. It might surprise some, but SPARK is also a non-profit, and it is one of the largest in the country (of that particular non-profit type). How hard was it to get the audited financial statements? Here is my story.

As SPARK was a non-profit, it caught my attention one day when I noticed that the local news rarely referred to it as a venture capital firm. SPARK was almost always called an ‘incubator’ in the local news. [Disclosure -- a person at the Ann Arbor News also worked at SPARK]. But to me, this appeared to be some sort of non-profit venture capital incubator. I wasn’t used to hearing about venture capital non-profit organizations.

I knew something about SPARK. I teach at the Ross School of Business about stocks and portfolios (and ethics), and students are quite familiar with the venture capital firms in Michigan. According to FactSet, they describe SPARK as:


“Founded in 2005, Ann Arbor Spark Business Accelerator is a business development firm and venture capital investor located in Ann Arbor, Michigan. The firm is the investment arm of Ann Arbor Spark, a non-profit economic development organization.

So, this was interesting to me. Because, here was a venture capital investor that was also a non-profit and the news rarely spoke of these ‘non-profit venture capital firms’.

It also wasn’t hard to see via FactSet, that SPARK was active in 117 deals and it had exited 15 deals. It also managed 4 funds: The Michigan Pre-Seed Capital Fund, the Michigan Pre-Seed Capital Fund II, The Michigan Pre-Seed Capital Fund III and the Michigan Angel Fund LLC. It had a Limited Partner Commitment with the Michigan Economic Development Corporation and their Michigan Pre-Seed Capital Fund. SPARK also had a fund of funds investment with ‘Invest Detroit (Venture Capital).

I had heard complaints from people that the financial statements at SPARK were hard to come by. As I worked in a public non-profit educational environment, I found that hard to believe. I was used to transparency and ethics and good governance. Surely, it would be easy to get the financial statements?

My attention onto SPARK also grew through Pure Michigan. Early on in the year, the Pure Michigan campaign received some heat, as folks noticed that it was less about tourism and more about business and politics. The Pure Michigan Tourism campaign was more like a Pure Michigan Political campaign, as Snyder’s marketing arm for Michigan was promoting ‘The Right to Work’ in the Wall Street Journal. Pure Michigan is run by the Michigan Economic Development Corporation (MEDC), and SPARK (the non-profit) manages the Michigan Pre-Seed Capital Fund. That fund is from the MEDC. SPARK itself was co-founded by Governor Snyder.

Earlier this year, the MEDC was being criticized for inflating job numbers. Keep in mind that some folks from SPARK had moved over to work at the MEDC and SPARK was managing money for the MEDC. And local folks in Ann Arbor were concerned that SPARK was inflating job numbers as well. To complicate matters more, Governor Snyder was getting a lot of heat for a non-profit NERD fund that he had created. This NERD fund allowed folks to donate money and not release their names. So Snyder was attached to a questionable non-profit (the NERD fund) and the MEDC was supposedly inflating these job numbers. But, before the NERD fund ever came to being – there was SPARK. SPARK was also a non-profit (started by Snyder), and it was also a firm whereby locals were questioning the job numbers that SPARK was providing.

On the website, FindTheBest, they had a listing for SPARK. It stated that SPARK was a Venture Capital firm. That listing has since been removed. Before it was removed, I asked FindTheBest to explain how they determined that SPARK was a venture capital firm. They explained that data comes to them from three sources: Public databases, primary sources (manufacturer websites) and expert sources. Who removed it from the database? SPARK might have removed themselves from their database. SPARK told me:


“The website link you provided below indicates we are a VC firm and we are contacting them to provide an accurate description of the capital programs and services we provide

According to FindTheBest:


“Ann Arbor SPARK might have also deleted it themselves.

SPARK disappeared from the records.

And so I went looking for the 990 forms. I walked to the SPARK building in Ann Arbor and asked for the 990 forms. At the front desk I was asked, “Who are you”? Instead of politely giving me the forms without question, they wanted to know who I was. I told them that I’m a member of the public. The person at the front desk quickly found the 990 forms and gave them to me. But, they didn’t give me all the forms. You see, I knew that there was a SPARK Foundation at the same location, and when I asked for the SPARK forms, they did not give them the other forms automatically. I had to specifically ask for the SPARK Foundation forms. They finally gave me both sets of forms.

I noticed something interesting in the SPARK and SPARK Foundation 990 forms. They stated this:


“THE ORGANIZATION MAKES ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND FINANCIAL STATEMENTS AVAILABLE TO THE PUBLIC UPON REQUEST.

I tried asking SPARK for the financial documents. No luck. I tried asking other members of SPARK. No response. I found out that members of Ann Arbor’s city hall were located at SPARK. For example, Steve Powers is the City Manager of the City of Ann Arbor. Powers also sits on the Executive Committee at SPARK. Council members in Ann Arbor even tried asking for the financial statements. One council member, Sumi Kailasapathy was told by Powers,


“CM Kailasapathy, The SPARK audit is not available for public review. SPARK is not required to share its audit. SPARK has chosen to maintain the confidentiality of its financial information. As an executive committee member, I have reviewed the audit and have no concerns with SPARK’s financial integrity and management controls.

Even a council member couldn’t get the financial information! ”SPARK has chosen to maintain the confidentiality of its financial information.”!

Jane Lumm, another council member at Ann Arbor City Hall noted:


“We require audits of 501c3′s that receive city $

Since the Ann Arbor City Hall worked with SPARK and gave money to them, I decided to file a FOIA request for the documents at city hall. Surely city hall would check such things before giving money to a non-profit. That request was denied and I was told the documents didn’t exist.


“I am responding to your request under the Michigan Freedom of Information Act received October 14, 2013 for the audited financial statements for SPARK and SPARK foundation for 2009, 2010, 2011, 2012 and 2013. Your request is denied. Your request is denied to the extent that the records do not exist.



I knew from experience, that sometimes agencies will play a FOIA game. They want to wait on releasing the documents and so they’ll force the person to file an appeal. I chose to believe that Ann Arbor’s City Hall was being honest with me. The documents didn’t exist, and city hall was supporting a non-profit without checking the financial statements (because if they were checking the documents, then they would have existed at city hall). It was disturbing.

Finally, I got the financial documents. But, how did I do it? SPARK didn’t give me the documents. My local government didn’t give me the documents — they told me that they didn’t have them. I had to go to the Attorney General in Michigan for the documents. The Attorney General’s office gave them to me immediately.

I contacted the AG of Michigan and they responded:


“If an organization is registered with the Charitable Trust Section they are required to submit financial statements to us annually. The Charitable Trust Sections records are open to the public. Provide the legal name or EIN of the organization and we can review our records for the information requested.

And so I answered:


“I’m looking for the audited financial statements for:

ANN ARBOR SPARK
EIN # 38-2436899

ANN ARBOR SPARK FOUNDATION
EIN # 38-3416745

Note: According to the IRS 990 statements for both organizations, they state:

“The organization makes their governing documents, conflict of interest policy, and financial statements available to the public upon request’

As a result, I am asking ‘upon request’ for the audited financial statements. If I can’t get the financial statements (as noted in the IRS document statement listed above), I’d like some clarification as to why the IRS document appears to state otherwise.

Joseph Kylman, an auditor of the Charitable Trust Section of the Michigan Department of the Attorney General of Michigan responded:


“The 2012 audited financial statements of Ann Arbor Spark and Affiliates are attached.

I got the audited financial statements of SPARK. Not from SPARK. Not from the Ann Arbor City Hall. I had to go to the AG of Michigan.

As for the financial statements, you can see them here and here.

What do the documents say? That’s a different story… but here are some questions about this non-profit:
•If it’s an incubator of jobs, then why is the main expense ‘Investment Management Fees’? Isn’t that a venture capital firm? CLARIFICATION (Nov 13th): It is one of the main expenses and the audited financial statements concentrate a lot on the investment side of the business.
•Why was SPARK removed from the website?
•What justification did Powers/SPARK have for not sharing the financial information that the AG was willing to provide?

UPDATE (Nov. 13th): Powers has explained why they don’t need to share that information. Although the IRS documents say that they will provide the financial statements upon request to the public, Powers states this:


“Because Spark is governed by a self-perpetuating board, Michigan law requires only that Spark release financial statements to the directors themselves. Spark has always provided directors and executive committee members with copies of all audits. Spark has elected not to make its audited financial statements public and there is no legal requirement that it do so.

UPDATE: More Questions
•Why are most of the expenses listed as salaries, ‘misc’, ‘all other’, and ‘other fees’?
•Cleaning costs $194,291? Is SPARK a ‘dirty job’?
•SPARK paid $36 in taxes?
•According to Tom Crawford at city hall, 100% of the LDFA money to SPARK (about $1.5 million) is for local companies. If so, then why does the audited financial statement say this: ”$275,000 is available for companies location in the City of Ann Arbor via funding from the Ann Arbor/Ypsilanti Local Development Financing Authority (LDFA)”"? Where does the other $1.2 million go?
•SPARK manages the Michigan Angel Fund. “The Michigan Angel Fund (MAF) is a for-profit pooled professionally managed angel fund.” Does a for-profit fund belong at a non-profit firm?
•SPARK provides a limit of $250,000 for firms. Why do the documents show $300,000 for NextCat and a valuation of $250,000? Was $300,000 given but valued at only $250,000?
•According to SPARK: ”The Pre-Seed Fund does not take board seats or ask for observation rights”. Roger Newton is a director at SPARK, and a director at Angott Medical. SPARK gave money to Angott. As SPARK (Newton) gave money to Angott (Newton), is this a conflict of interest? Newton is also the CEO of Esperion Pharmaceuticals – a public company.
•Krutko (according to IRS documents), works 40 hours a week at ANN ARBOR SPARK and makes $243,550; as well as working another 40 hours a week at ANN ARBOR SPARK FOUNDATION where he makes $243,550. Forms seem to indicate that he works 80 hours per week and makes $487,100. Am I reading this incorrectly?

UPDATE (Nov. 13th): The SPARK 990 form indicates $243,550, the SPARK FOUNDATION 990 form indicates $243,550 but makes note that it is ‘Reportable compensation from related organizations’. It’s fascinating to note that Joseph Simms, William Mayer and Lukus Bonner are listed as the highest compensated employees on the SPARK form, but they are not listed on the SPARK Foundation form — although Krutko and others are listed on both forms.

UPDATE (Nov. 18th): Although the firms IRS 990 forms indicate that financial documents will be released to the public upon request, the Attorney General in Michigan has noted that the firm itself doesn’t have to do that according to Michigan Law. I must admit, this is confusing. This is what the AG told me:


“In reference to your question about audited financial statements, state law governing charities does not require them to open their books or release financial statements to the public upon request. However, as you know, any financial statements filed with the Attorney General’s Charitable Trust Section to comply with state charitable trust licensing requirements are made available to the public upon request.

Kai Petainen‘s views on the market and stocks are his alone, and do not reflect the views of the Ross School of Business or the University of Michigan. Kai teaches a class on quant screening, F334 — Applied Quant/Value Portfolio Management, at the Ross School of Business. Kai is a MFolio master at Marketocracy, and is featured in Matthew Schifrin’s book, “The Warren Buffet.




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Author


Kai Petainen Kai Petainen, Contributor 11 months ago

Excellent question. Thanks for your question. SPARK is one of the largest non-profits in the country. And it does non-profit venture capital work. So this is a rare article about non-profit venture capitalism in the USA. It’s also, like I said, one of the largest non-profits (of this type) in the country.

Don’t believe me?

On this page, we can create a search.
http://nccsdataweb.urban.org/PubApps/search.php

Since SPARK is a S01, search for S01 under ‘NTEE purpose/activity code”. Under ‘Sort or Order by’, select ‘Assets’. Click ‘submit’.
Check out the list! SPARK is the 4th largest in the country! And if you look at only those that are IRS sub-section 6, SPARK is the 3rd largest in the country!

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Srihari Yamanoor Srihari Yamanoor 11 months ago

From the questions you have asked in your own article, are you any longer surprised it was so hard to get the documents. Do you think any investigation will come out of this, officially, I mean? How much exposure are the good people of Michigan getting to your research and its findings?

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Rick Stevens Rick Stevens 11 months ago

Thank you Kai for this public service. I’ve been trying for years to get a look at where my tax money goes (I live in Washtenaw County and the County gives $s to SPARK). Been blocked at every turn to see the audits. Where there’s smoke there’s fire as you have shown.

And the Ann Arbor News — with their publisher on their board it was one puff piece after another on SPARK and a total refusal to look at the facts.

This is an even bigger story — it is, I am convinced, one that reaches up to the Governor who was responsible for the creation of this mess of smoke and mirrors. He build his campaign on the ‘success’ of SPARK but always hid what was really done.

Thanks again for digging into this.

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Post Tue Oct 28, 2014 8:29 am 
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untanglingwebs
El Supremo

Snyder Fails (Facebook)

“With the corruption and self-dealing in the Snyder administration if Richard Snyder has a second term, it will look like Richard Nixon’s and Michigan deserves better.”

Progress Michigan Files Hatch Act Complaint Against Gov. Rick Snyder - Progress Michigan


“The Hatch Act is designed to protect taxpayers from politicians who abuse their power to help out their political allies and donors and that’s exactly what Gov....


progressmichigan.org




Progress Michigan Files Hatch Act Complaint Against Gov. Rick Snyder - Progress Michigan

www.progressmichigan.org

“The Hatch Act is designed to protect taxpayers from politicians who abuse their power to help out their political allies and donors and that’s exactly what Gov. Snyder has done


Last edited by untanglingwebs on Tue Oct 28, 2014 11:39 pm; edited 1 time in total
Post Tue Oct 28, 2014 11:30 pm 
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