DSI Civic Restructuring Hires Ill. Gov's Running Mate

CHICAGO - Illinois Gov. Pat Quinn's running mate Paul Vallas is joining the municipal restructuring and consulting firm headed by Illinois Finance Authority board chairman and Quinn campaign contributor Bill Brandt.

Chicago-based DSI Civic Financial Restructuring LLC late Friday announced the addition of Vallas, a former Chicago budget director who went on to lead the Chicago Public School system as its chief executive officer from 1995 to 2001. The firm said Vallas will adhere to its policy of not working on in-state projects due to Brandt's position as board chairman of the state's largest conduit borrowing agency. Vallas joins the firm as a vice president.

Quinn's Republican challenger in the governor's race quickly made campaign fodder of the hiring, suggesting political payback was at play.

Vallas was hired to lend "his considerable government experience and expertise to the group's national distressed governments and municipal practice," the DSI statement read. Vallas resigned from the Chicago schools post in 2001 going on to take the helm of school districts in Philadelphia, New Orleans, and Bridgeport, Conn.

The firm is an affiliate of Development Specialists Inc., a consultant that operates offices in New York, Miami, Los Angeles, San Francisco, London, and other locations. DSI President Brandt launched the civic branch in 2011 with former Illinois budget director and chief operating officer John Filan.

"Paul brings to DSI Civic a tremendous skill set that uniquely compounds the skills and diverse background of our executives," Brandt said. "He is an accomplished industry veteran who can navigate successfully through the complex and complicated issues that face many distressed municipalities and school districts."

Former Mayor Richard Daley tapped Vallas to lead CPS after state lawmakers handed control of the district back to the city. He helped turn around CPS' finances and embarked on what evolved into a $5 billion capital campaign to rebuild schools. The district made some academic strides, though educators were critical of his leadership.

"I look forward to aiding this very distinguished team as they counsel school districts, diverse units of government and municipal leaders on how to address the difficult issues that governments are dealing with in this new era of constrained budgets," Vallas said.

Brandt is a friend of Quinn's dating back to high school. In December, Brandt contributed $100,000 to Quinn's re-election campaign, state campaign finance records show. Quinn, a Democrat, faces Republican Bruce Rauner in the November election.

Quinn tapped Vallas last November to serve as his running mate when incumbent lieutenant governor Sheila Simon decided to run for comptroller. Quinn was lieutenant governor when Gov. Rod Blagojevich was arrested on federal corruption charges and became governor when Blagojevich was ousted by the General Assembly in 2009.

Blagojevich first appointed Brandt to serve as chairman of the IFA and Quinn reappointed him to a second term.

Quinn and Rauner traded barbs over Vallas' hiring Monday as the news circulated. Rauner's campaign issued a statement, saying: "Over the last five years, Pat Quinn has given special deals and appointments to Brandt and Filan. Now, they're returning the favor in a Blagojevich-style move."

Quinn's campaign shot back, pointing to Rauner's investment business ties to imprisoned businessman Stuart Levine, which had been raised by Rauner's opponents during the Republican primary race. Levin was on the payroll of a firm Rauner's venture capital firm owned that sought investment business from the state teachers' pension fund. Levine sat the fund's board. Levine was later convicted of money laundering and fraud.

Quinn's statement also noted Vallas fiscal acumen. "Paul Vallas is one of the top financial and educational experts in the nation and has been working in this field for more than 20 years," Quinn's campaign said. "The firm sought out Paul Vallas because his national reputation and expertise. In this role he will focus on national work outside of Illinois."

Brandt brushed off the allegations that politics was at play, noting that the firm has lost out on the pursuit of business among Illinois governments due to his IFA ties. "This is about growing and expanding our business and seizing opportunities," he said. "Paul provides a wonderful opportunity. His experience goes right to the guts of the marketplace for our services." He cited specifically Vallas' experience as Chicago's revenue director.

Vallas started last week as the firm is preparing a proposal to compete for the job of providing the federal bankruptcy court with an independent assessment of Detroit's proposed plan of adjustment. Brandt declined to say what salary Vallas would earn but it is in the "six figures." Vallas is full-time but the firm will make accommodations as the campaign schedule escalates, Brandt said.

Quinn's campaign spokeswoman said if Quinn and Vallas win the race "as Lt. Governor he [Vallas] will serve full-time in that capacity alone." Brandt said he had not thought that far ahead as to whether state rules would preclude Vallas from continuing his work at the firm.

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