Consulting Firm Bills Bankrupt Detroit $275/hr For 22-Year-Old Entry Level Staffer
Detroit— City Hall’s estimated $1.4 million-a-month restructuring tab includes a consulting company billing $275 an hour for a 22-year-old financial analyst who graduated from college last year, according to records obtained by The Detroit News.
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.
Critics questioned the wisdom of spending $275 an hour for a 22-year-old.
“What experience would he have to base that hourly rate on?” said Michael Wells, Detroit Public Library retiree and former UAW Local 2200 president. “I hope these firms, that they don’t use this as an opportunity to enrich themselves. I don’t expect them to be altruistic, but I don’t expect them to pick on a carcass.”
But a spokesman for Emergency Manager Kevyn Orr’s office defended the spending, saying the hourly amounts were negotiated by the city as flat rates within job classifications to save money. And Conway MacKenzie has given the city a 25 percent discount off its bills, the spokesman, Bill Nowling, said.
“The city benefits because it pays one rate,” Nowling wrote in an email. “So, there are others with much more experience billing at the same rate within the classification.”
“Detroit has more than five decades of administrative neglect and deferred maintenance. The money being spent on the city’s restructuring professionals is an investment in improving city services.”
Conway MacKenzie’s contract allows it to bill up to $400,000 every two weeks for its work, which was first approved by Mayor Dave Bing and the Detroit City Council in January. The bill obtained by The News, covering July 8 through July 21, didn’t give a description of the work the employees did.
Officials from Conway MacKenzie wouldn’t comment, senior managing director Charles Moore said Monday. Johnston didn’t return calls for comment.
From The Detroit News: detroitnews.com
No wonder Detroit is fucked, Kevyn Orr approved this boondoggle!
Look at this drooling shill in the comments:
Ken Wojtowicz · Follow · Top Commenter · University of Detroit Mercy
Why do the best law firms, financial advisors and consultants demand, and gets such high fees for their services? The answer is simple. It’s the same reason that the Tigers pay Miguel Cabrera $21 million per year for his services. These folks bring to the table a skill set that is tops in their field…..and they deliver. The difference of going forward under the best of possible action plan vs. some mediocre shot in the dark can be millions….and even billions over time. Here is not where decision makers should be bargain shopping. Let the Union gurus and their financial wizards poke around elsewhere to find something worthy of their investigative prowess.