A LESSON IN REVISIONIST HISTORY: Debts, Deficits…Let’s Call The Whole Thing Off!
“When I took over, we had inherited a massive amount of debt… and we’ve been cleaning it up ever since,” he says. “As of this month we officially graduated from the Treasury Department’s list, and we’re now officially out of deficit.”
Brian Lynch, February 17, 2023; 9&10 News
Within the last two weeks, local Traverse City media reported the Bay City Academy/North Central Academy had erased a “$5 million deficit”, and is now “debt-free”. (Mancelona’s North Central Academy and the Bay City Academy are run as the same district, and share a unified budget.)
Although Brian Lynch (playing the dual role of Superintendent and head of Mitten Educational Management, the district’s management company) himself used “debt” and “deficit” interchangeably, neither claim is true.
As I revealed exclusively on “Glistening, Quivering Underbelly” back on October 29, 2015, the Bay City Academy’s FYE June 30, 2015 financial report showed the charter school had a significant operating deficit, resulting in what was euphemistically referred to as a “cash flow shortage”.
As of June 30, 2015, the Academy’s General Fund had a deficit balance of $1,374,477. (Total revenues for the year were just short of $4.0 million dollars.)
The charter school did not proactively report its deficit to the Michigan Department of Education as required by statute, and was notified in writing on November 6, 2015 by the Department that it had violated Section 102 of the State School Act. Representatives of the Bay City Academy, including Brian Lynch, met with MDE staff on February 19, 2016 to discuss the district’s deficit fund balance, the first charter school brought to Lansing to explain how it went from the plus column to a $1.4 million deficit in one year.
However, within the last two fiscal years, the Bay City Academy has incurred nearly $1.5 million in seller-financed, land contract debt related to two real estate transactions — the April 2022 acquisition of 301 N. Farragut Street in Bay City (the “Farragut Schoolhouse”) and the June 2021 purchase of the North Central Academy’s Mancelona building.
In the report that aired on 9&10 News, Brian Lynch stated “we had to get really creative” because district didn’t “have a lot of money.”
So why was Lynch reluctant to discuss the two transactions, both briefly mentioned in the Bay City Academy’s publicly-available fiscal year end audits?
Beginning March 17, the answers.
