The New York Times waded into the Colorado Democratic U.S. Senate primary Thursday with a lengthy investigative piece detailing a flashy Denver Public Schools interest-swap refinance deal brokered in part by U.S. Senator Michael Bennet as superintendent. The Times story of a stacked transaction that produced windfall profits for the banks but catastrophe for the schools has given new life to questions raised by Bennet detractors about his relationship to big money. The Bennet campaign says the Times simply got the story wrong.
“I know the New York Times is always looking to break a big story, but in this case, they just got it wrong,” Bennet wrote to the Colorado Independent. “This story has been covered by local reporters who have provided more balanced, fair, and accurate coverage. The New York Times got caught up in a heated political primary where my opponent and his supporters have repeatedly tried to score points at the expense of kids and have once again disregarded the facts.”
Bennet campaign spokesman Trevor Kincaid told the Independent that Bennet offered to “open his books” on the DPS deal to the New York Times when they called but that the Times reporter said they had “all they needed” to write the story.
In the version reported by the Times, the deal reportedly solved immediate shortfalls for the system but is now generating enormous costs in interest and potential bank fees, making it a sort of outsize version of the disaster brought upon foreclosed homeowners by banks all across the nation.
That narrative dovetails with accusations made for months and intensified in the last weeks by Bennet primary opponent Andrew Romanoff, who has run ads– one titled “Greed”– that have portrayed Bennet as in bed with big money special interests and as a corporate raider who broke up companies and threw people out of work at the bidding of Phil Anschutz, a Colorado billionaire and major conservative politics donor.
The “Greed” ad in particular has been roundly criticized in the press as deceptive and un-moored to the facts.
But the DPS deal has been a topic of scrutiny for months. Bennet has said that as a result of the deal with JP Morgan Chase, DPS is paying less now than it would have had the deal never been accepted. Writing a comprehensive survey of the question for Colorado Education News, financial analyst David Milstead, a longtime finance writer for the Rocky Mountain News and the Wall Street Journal among other publications, essentially agreed with Bennet’s read on the pluses and minuses of the deal.
Milstead writes that the flashy deal solved shortfalls for the system that would have left teacher pensions millions bereft but that plunging global markets wrecked expectations of greater short term savings. DPS is now, however, saving millions after markets stabilized, effectively making the deal an even split.
DPS is now paying 6.1 percent on its obligations, an amount the Bennet campaign says is considerably less than it was paying previously in Pension Certificates of Participation charges and would be paying in interest on what would have been an unfunded pension liability.
Ex-DPS board member Jill Conrad said in a statement today that the school system “achieved three critical goals with this transaction: We funded the pension in order to allow us to merge with PERA [the state’s Public Employee retirement Association], by merging with PERA we achieved portability, and we added back $20M to schools (previous cuts had been over $80M).”
Still, the story has spurred journalists and campaign researches to delve again into Bennet’s campaign finances.
Former House Speaker Romanoff has rejected all PAC money in his campaign and has centered his bid for office on the need to address the corrupting influence of money on U.S. politics and governance. Bennet has been an easy target in some ways. He is a wealthy man who comes from the world of high finance.
JP Morgan Chase, the bank behind the DPS deal, has contributed to the Bennet campaign. According to information made available through the money-tracking Sunlight Foundation, Chase has donated $3,000 to the Bennet campaign. An innovative Sunlight Foundation tool called “Poligraft,” for example, also turns up the fact that Level 3 Communications has aggregated $19,550 to the Bennet campaign, which means contributions to the campaign have come from the organization’s employees, their family members, and the Level 3 political action committee.
Thomas Boasberg, now head of DPS and Chief Operating Officer at the time of the controversial Chase deal, was a mergers and acquisitions executive at Level 3. According to the New York Times, it was Boasberg and Bennet who spearheaded the DPS-Chase deal, leveraging their financial experience to sway the DPS board.
The Bennet campaign, however, said there is no connection between canpaign money and the DPS deal. Look again at the Denver Public School system, said Kincaid.
“Today, DPS is one of the few districts in the county actually hiring teachers, instead of laying them off,” Bennet wrote to the Independent. “Because of the decisions we made, we have provided a long-term, stable pension system for our teachers. And even more important, DPS has invested almost $20 million more into our classrooms as a result of the decisions we made.
“According to a report released just last week by independent auditors, DPS is in better financial shape than the rest of the state’s pension system. Put simply, we left the district’s pension in better shape than any other district in Colorado.”
Bennet answered questions raised by the Times story on the campaign trail Friday afternoon.
With writing and reporting by John Tomasic.