California, Michigan, and Illinois are not the only states with multiple towns heading for bankruptcy. Rhode Island was recently added to the list, as the school district had a budget shortfall of $40 million dollars this year. So, it is laying off all of its 1,926 teachers. How did this happen? Poor planning and a worsening local economy:
“Providence Rhode Island school district has a huge budget shortfall of $40 million. It does not know how many teachers it will need to layoff so instead, the city plans to fire all of them.
The school district plans to send out dismissal notices to every one of its 1,926 teachers, an unprecedented move that has union leaders up in arms.
In a letter sent to all teachers Tuesday, Supt. Tom Brady wrote that the Providence School Board on Thursday will vote on a resolution to dismiss every teacher, effective the last day of school.
In an e-mail sent to all teachers and School Department staff, Brady said, “We are forced to take this precautionary action by the March 1 deadline given the dire budget outline for the 2011-2012 school year in which we are projecting a near $40 million deficit for the district,” Brady wrote. “Since the full extent of the potential cuts to the school budget have yet to be determined, issuing a dismissal letter to all teachers was necessary to give the mayor, the School Board and the district maximum flexibility to consider every cost savings option, including reductions in staff.” State law requires that teachers be notified about potential changes to their employment status by March 1.
“To be clear about what this means,” Brady wrote, “this action gives the School Board the right to dismiss teachers as necessary, but not all teachers will actually be dismissed at the end of the school year.”
“This is beyond insane,” Providence Teachers Union President Steve Smith said Tuesday night. “Let’s create the most chaos and the highest level of anxiety in a district where teachers are already under unbelievable stress. Now I know how the United States State Department felt on Dec. 7 , 1941.” That was the day the Japanese government bombed Pearl Harbor.
Smith, who has forged a groundbreaking collaboration with Brady that has received national recognition, said he believes this move comes directly from Mayor Angel Taveras, not the School Department. In a conversation with Taveras earlier Tuesday, Smith said the mayor also hinted at school closings but didn’t elaborate.
Providence is facing a daunting budget crisis. The city had a $57-million deficit last year and expects a higher figure for the year ending June 30. In addition, the city, under then-Mayor David N. Cicilline, nearly depleted its reserves to cover day-to-day expenses. Taveras is currently awaiting completion of a report by an independent panel, which he commissioned to get a better handle on the city’s financial situation.
Sending out notices to all teachers is exactly the correct approach. Until contracts are negotiated, no one knows the exact number.
In reality, no teachers have to be let go. All the teachers have to do is agree to wage and benefit concessions that will save every job. They will not do that, so the mayor has no choice.
Hopefully the mayor will play similar hardball with police and fire unions as well. However, the best approach is for the city to declare bankruptcy and get it done with. Then the city could set, not negotiate, haircuts on benefits and salaries.
The problem is Rhode Island does not have a statute authorizing towns to use federal bankruptcy court.
Central Falls is another Rhode Island bankrupt city. The city’s financial problems are so profound that the only way to solve them is through a merger with Pawtucket or a regionalization of city services, the state-appointed receiver said in a report Thursday to the Carcieri administration.
“Central Falls, in my judgment, cannot remain a stand-alone community as it presently is, unless the state wants to subsidize this into the future,” said retired Superior Court judge Mark A. Pfeiffer, the man appointed by the state Department of Administration in July to run the city, with elected government officials in advisory roles, after those officials had earlier declared the city insolvent. …
At Central Falls high school, since the school year started Sept. 1, there has not been a single day when all of the 88 teachers at Central Falls High School have shown up for work.
On that first day, two teachers called in sick and a third took a personal day.
And there have been only five days — all in September — when administrators were able to replace all the missing teachers with substitutes.
Last week alone, there were at least 19 teachers out every day, 10 to 13 of whom called in sick each day.
The severity of the problem came to light last week when The Journal reported that more than half of the high school’s 840 students didn’t receive a grade in one or more classes for the first quarter.
The school’s leaders, Deputy Supt. Victor Capellan and co-principals Evelyn Cosme-Jones and Sonn Sam, said 453 students did not receive solid instruction in several classes, and therefore no grade could be given.
Since Nov. 12, there have been at least 20 teachers missing or absent at the high school each Friday. Starting Oct. 21, there were 14 to 19 teachers absent daily for seven straight days. And 453 of the 840 students at Central Falls High School didn’t receive enough instruction this fall to earn a grade in at least one class.
A former Rhode Island Supreme Court judge has been named as receiver for the tiny, financially distressed city of Central Falls, Rhode Island. Robert Flanders will replace Mark Pfeiffer, who has served as receiver since the city was taken under state government control last July. The exact date of the transition has not yet been decided, a Chafee spokesman said.
Central Falls, a city of 1.5 square miles with a population of 19,000 and an annual budget of $16.8 million, has an unfunded liability for its pension plans and retiree health care benefits totaling $80 million, Pfeiffer said in a report last month.
He warned the city might need to turn to a rarely used Chapter 9 municipal bankruptcy if major fiscal reforms are not implemented. Notwithstanding this comment, it is not clear whether the city is eligible to file for Chapter 9 as Rhode Island is one of about 25 states that do not have a statute authorizing its towns to use federal bankruptcy court.
In California, which has such a statute, several entities have filed for bankruptcy in the past two decades, including the city of Vallejo in 2008 and Orange County in 1994.
The first step in fixing any problem is admitting what the problem is. This problem is plain to see whether anyone admits it or not. Providence and Central Fall are bankrupt.
Wages and pension benefits have been promised that cannot be met. The only way out for those cities is bankruptcy.
For a second time I make my plea for governor Lincoln D. Chaffee, an independent, to ask the legislature to allow bankruptcies. It is the only hope for Central Falls and more importantly, Providence.”
Mike “Mish” Shedlock