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Bridgeport Schools Thrown Into Turmoil After City Decides To Declare Bankruptcy

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Despite its own solvency, the Bridgeport, Conn., school district has been thrown into turmoil because of its fiscal dependency on the city that this month became the first major municipality in the nation to declare bankruptcy in at least a dozen years.3

Bridgeport School Superintendent James A. Connelly has had to make personal reassurances to jittery ven0 dors just to keep the district supplied with such essentials as transporta0 tion and food, he said last week.$

Problems with vendors so far "are being resolved with the good will we've built up" over the years, he said.$

District officials are also pondering the possibility of legally separating the 19,700-student district from the bankruptcy protection sought June 6 in U.S. Bankruptcy Court by Mayor Mary Moran, Mr. Connelly said.$

The Mayor's decision to declare bankruptcy for the state's largest city was made without consulting Mr. Connelly or the school board, he said.0

"If I had my druthers, I'd rather not be a part of her [declaration of] bank0 ruptcy" Mr. Connelly said, adding that the district is "very solvent."

The city of Bridgeport faces a shortfall of $28 million to $32 mi lion in its $300-million budget for fiscal year 1992, said a city official who asked not to be identified. Of the school district's roughly $120-0 million budget, about $30 million comes from the city, including in-0 kind services, officials said.$

    Meanwhile, the state's attorney general last week disputed the city's declaration of bankruptcy by filing an objection in U.S. Bankruptcy Court.$ The attorney general, acting on be04half of both the state and the Bridgeport Financial Review Board, which has overseen the city's finances for more than two years, said that the city is not insolvent because it contin0 ues to pay its debts as they come due.3

    Bridgeport cannot declare bank0 ruptcy without the review board's permission, according to a statement from Attorney General Rich0 ard Blumenthal's office. On June 7, the board disapproved any bankuptcy filing for the second time this year, the statement said.$ =

    A hearing to decide whether the bankruptcy declaration holds is scheduled for July 16 in U.S. Bankruptcy Court in Bridgeport.$

    Until then, the declaration re mains in limbo and "other than ven dor concerns, it has no impact" on city and school services, the city offi cial said. Banks are honoring the city payroll, he said.$

    Building Projects on Hold(

    However, the bankruptcy action casts serious doubt on the city's fu ture ability to float bonds, a chief source of funding for public-sector capital projects.

    Standard & Poor's Corporation has dropped Bridgeport's bond rat ing to "ccc," a high-risk category, while Moody's Investor's Service has suspended rating the city's bonds, the city official said. If the bankruptcy declaration stands, the city official said, it could be 10 years or more before the city-- or the school district--could enter the bond market without bond insurance or a state guarantee on the debt, the latter of which he said was unlikely.

    In effect, the action means the in definite deferral of the school district's capital-projects plan. The district had intended to seek a $6-million bond in the coming year for much-needed building renovations and an addition to one school to accommodate a swell of students from recently closed paro chial schools, Mr. Connelly said.

    Capital projects already under way will continue, he said.

    Officials also anticipate that the city will renegotiate collective-bar gaining agreements, including those with teachers, if the bankrupt cy declaration holds.

    From seeking sources other than the city for gasoline to fuel the dis trict's fleet of special-education vans to coping with a "profound" effect on employee morale, Mr. Connelly said he has expended "an enormous mount of energy" just to keep the district running.

    And though the superintendent is thankful that school closes for the summer this week--fee-supported ummer school will not be affected-- he worries already about obtaining supplies from wary vendors for the coming school year. There may very well be "people who won't want to do business with us,'' he said.

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