Detroit's bankruptcy may mean slashing pensions for tens of thousands of retired city workers and selling off the art collection at the Detroit Institute of Arts because we're told there's just not enough money to do otherwise. But the bankruptcy is also sending
millions of dollars to consultants and law firms and their 22-year-old analysts:
Wade P. Johnston got his bachelor’s degree in finance in 2012 from Michigan State University and is part of the team the consultants, Conway MacKenzie, have working to turn around city operations. The Birmingham firm billed the city $288,671 for the work of 11 staffers over two weeks in July, including more than $26,000 for Johnston alone.
The records give a rare look at the costs being picked up by the city and state, a breakdown city council members and other critics have argued has been hidden amid Detroit’s historic bankruptcy. Conway MacKenzie’s hourly rates range from $495 for the group’s senior managing director to $275 for Johnston, who started with the company in June as a senior associate, according to records. [...]
Conway’s rates are not the most expensive. The city’s bankruptcy firm Jones Day has charged up to $1,000 an hour, according to a July story in the Am Law Daily website.
The total cost of the bankruptcy and restructuring is expected to be more than $1 billion. Which ... yes, there will be costs associated with an attempted turnaround, of course. But it's more than a little obscene, when we're hearing all these claims that the city simply cannot afford the pensions of people who put in decades of work with the promise of a pension as deferred compensation, to see these kinds of fees going to the consulting firms that will decide by how much to cut those pensions. And while Wade P. Johnston may be competent and hard-working, he's also an apt emblem of a system in which there's always money for those at the top, and their claims to expertise are always taken at face value, while those not just at the bottom but in the middle are ruthlessly cut and seen as all but disposable.
The state is paying some of the costs of the consultants and lawyers, but if Detroit doesn't have the money for pensions, it doesn't have the money for $275 an hour, let alone $495 an hour, "senior associates" and "senior managing directors." The bankruptcy process is being directed by a state-appointed emergency manager, let the state pick up the whole tab (and maybe use its greater leverage to work on getting those costs down a little).
Sign our petition to Michigan Gov. Rick Snyder, urging the state to pay for these high-priced consultants.