Chelsea Placed in Receivership; School Opening Delayed

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Schools in Chelsea, Mass., were expected to open this week, after the state legislature approved a bill putting the financially devastated city into receivership.

School for the city's 3,600 students had been scheduled to open on Sept. 6, but classes were postponed after the city was unable to arrive at an acceptable budget and meet its payroll.

The crisis, which followed a missed payroll and a $960,000 state bailout in June, prompted Gov. William F. Weld to push for the receivership, under which a state-appointed official will have control over almost all of the city governments operations.

Boston University officials, who have been managing Chelsea's schools for the past two years, expressed optimism that the appointment of the receiver would end the financial uncertainty that has plagued their attempts to improve the city's schools. (See Education Week, June 19, 1991.)

"If this is the beginning of the resolution of Chelsea's ills--both financially and the lack of political will-we will all look back at some point and say it was a worthwhile week," said Ted Sharp, chairman of the B.L'. management team and assistant dean of the university's education school.

Plea For More Money

Mr. Sharp and Peter Greer, the interim superintendent of the Chelsea schools, said they expected that the receiver would give the school department a short-term budget to allow schools to open this week.

But the long-term financial picture for the school department remains in doubt. The legislation creating the receivership did not include any more money for Chelsea, which has a $9.5 million-deficit in its $46-million budget.

Seeking to make up a $4.3-million shortfall in the school department's budget, the university this summer laid off 87 teachers and restructured the school district by eliminating the junior high and reconfiguring the high-school program. But even with those changes, the management team was unable to bring its budget in line with the $11.6 million that the city planned to allocate to the schools, Mr. Greer said.

"I would have started the year on a wing and a prayer," he said, "hoping the state would give Chelsea more money."

Mr. Sharp said S.U. officials plan to have a "good, healthy discussion with the receiver"to argue for a school budget of about $15.7 million, which would enable the university to offer the early-learning programs for 3 and 4-year-olds that B.U. considers key to the success of the project.

"If we can't do that, I think it ceases to be a quality education-reform project," Mr. Sharp said, "and becomes a holding action."

Governor Weld has repeatedly praised B.u.'s intervention in the Chelsea schools as a beacon of hope for the troubled city. The Governor's support gives school officials hope that the receiver will allocate more money for the schools, Mr. Sharp said.

Uncertainty Over Contracts

The receiver, James Carlin, who was appointed by the Governor, was given the power to run virtually all aspects of the city government until at least 1994 and possibly until 1996. During that time, Chelsea will not have a mayor, and its beard of aldermen will function solely as advisers.

The legislation gives Mr. Carlin authority to issue bends, borrow from the state, change city contracts, and initiate bankruptcy proceedings.

Although he was not authorized to raise property taxes, Mr. Carlin will be able to order changes in collective-bargaining agreements.

Paul L. Devlin, president of the Massachusetts Federation of Teachers, said, however, that the language regarding collective-bargaining contracts was unclear and was being analyzed by the union's lawyers.

The legislation provoked an immediate court challenge by city aldermen, and Mr. Devlin said the issue of labor agreements also might have to be resolved in court.

Although many cities in Massachusetts are struggling to balance their budgets, Chelsea's problems are considered by many analysts to be essentially insurmountable. A state-appointed committee that studied the city's finances this summer concluded that it has a "structural deficit" that makes it impossible for the city to be self-sustaining.

"Chelsea is not a viable city," said Susanne Tompkins, research director for the Massachusetts Taxpayers Foundation and a panel member.

Eventually, the city likely will have to contract with another city for its services or be absorbed by another jurisdiction, Ms. Tompkins said.

The city has an inadequate tax base to provide the necessary services for its 27,000 residents, most of whom are poor, the committee found. Chelsea in recent years has been able to balance its budget only with the help of state aid, which over the past five years has amounted to about 44 percent of city revenue.

Even with what the committee called "extraordinary measures" from the state, including an $11-million cash advance this year on the city's local-aid money, Chelsea could not close its budget gap.

The panel's report faulted city leaders for failing to control expenses and for entering into expensive contracts with police and fire fighters.

Vol. 11, Issue 03, Page 2

Published in Print: September 18, 1991, as Chelsea Placed in Receivership; School Opening Delayed
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