Budget & Finance

Private Managers Stir Up St. Louis Schools

By Jeff Archer — September 03, 2003 6 min read
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William V. Roberti wasn’t hired to be popular.

In his first three months as the head of the private management team that now runs the St. Louis public schools, he’s made a host of controversial decisions. Among them: closing 16 schools, laying off some 1,400 employees, and outsourcing many district operations.

Only an outsider could make so many hard choices so quickly—or so reasoned the district school board when it contracted with Mr. Roberti’s employer, Alvarez & Marsal. The New York City- based firm specializes in radical surgery to revive businesses on the brink of financial collapse. As Mr. Roberti sums up its mission: “We’re brought in and given authority to act and do what needs to be done.”

The St. Louis school board hired the company to carry out a yearlong overhaul of noninstructional operations, such as the disbursement of school supplies. It appears to be the first time a corporateturnaround specialist has been put at the helm of a school district.

After the retooling, the board intends to hire a permanent schools chief to replace Mr. Roberti, who now holds the title of acting superintendent. Vincent C. Schoemehl, the school board member who led the search that picked the firm, said the hope is that a temporary leader will “not play favorites, and be immune to the politics.”

“You do the job, fix the schools, and then get out of town,” said Mr. Schoemehl, also a former mayor of St. Louis.

‘Behind Closed Doors’

The district is paying $4.8 million to Alvarez & Marsal, which has retained former New York City Schools Chancellor Rudolph F. Crew as an adviser on the project.

Like other efforts at private management in education, the strategy has provoked a storm of debate. Since June, the 40,000-student district has seen raucous school board meetings, lawsuits challenging the system’s new leadership, and calls by some residents to boycott the first day of school next week.

“It just seems like everything has been done behind closed doors, and then, bam! This is what it’s going to be,” said Mary Armstrong, the president of the American Federation of Teachers Local 420, the city’s largest teachers’ union. “They are a reputable firm, but this is their first time dealing with a public entity.”

Turnaround specialists began to fill a small niche in corporate America in the early 1980s and are now in the midst of a major growth spurt. They’re enlisted to restructure companies on the verge of bankruptcy, or worse. Other clients of Alvarez & Marsal come from the steel, health, and retail industries.

“The people we have are, by and large, quick studies,” co-founder Antonio C. Alvarez II said of his staff consultants. “They thrive in situations where the bullets are flying, and are calm about it.”

The decision to bring the firm to St. Louis followed a shakeup in the district’s top leadership. Cleveland Hammonds Jr., who had served as the superintendent for seven years, announced plans last winter to retire. And in an April election, a four-person slate of candidates backed by Mayor Francis G. Slay won control of the seven-member school board.

In seeking a successor to Mr. Hammonds, the new board majority said it wanted to tackle long-standing operational problems. Among other issues, teachers bemoaned a supply system that some said often didn’t get them textbooks until months after the school year began, said Darnetta Clinkscale, the school board president.

“Our goal is to get the system going in the right direction in this period, so we can attract a world- class superintendent,” she said.

Complicating the task has been a gaping hole in the system’s budget that the school board says it didn’t know about until after hiring the firm. Before retiring in June, Mr. Hammonds announced that $55 million in cuts were needed to address a massive financial shortfall. Alvarez & Marsal claims the gap was headed for $90 million, out of a $400 million annual budget.

“There was an immediate cash crisis that, if undealt with, meant the schools could have run out of money,” said Mr. Roberti, 56, a former chief executive officer of the Brooks Brothers clothing company who joined the turnaround firm a year ago.

For many in the St. Louis school community, the interim chief’s belt-tightening has come as a shock. His plan to save $15.3 million by closing 16 small and underenrolled schools will send some 3,000 students to new school sites this month. He says he won’t lay off teachers, but his budget eliminates large numbers of secretaries, teachers’ aides, and administrators.

Mr. Roberti, who also spent 30 years in the U.S. Army Reserves and retired as a colonel, has assigned about a quarter of the district’s principals to different schools. He also has proposed outsourcing maintenance and cafeteria services.

The school board continues to back Mr. Roberti’s team, but opposition has been mounting among some local groups. Civil rights lawyers unsuccessfully sought a temporary court order to halt plans by the consultants to borrow money meant for school desegregation to balance the books. The plaintiffs have since agreed to the loan.

Some critics dispute the whole notion that the district was in need of a complete turnaround. Dropout rates fell and some test scores began to climb under Mr. Hammonds’ watch, although not fast enough for the school board’s new majority. Supporters of the former schools chief say state cuts, not mismanagement, caused the system’s deficit.

Even some who initially backed the new board now criticize its decisionmaking.

“I think most of us would agree that we need to bring the budget in line, but there was really no input from the community,” said the Rev. B.T. Rice, the president of the Black Leadership Roundtable, a civic group that endorsed the new board members in the election.

First-Day Showdown

Some parents have advocated at board meetings that children be kept home on the first day of school, slated for Sept. 8, in protest. Although not legally able to call a strike, Mrs. Armstrong of the teachers’ union has suggested “school may not start in September.”

Talk of a boycott threatens an all-out effort launched last month by the district’s new management team to boost first-day attendance.

“I pray that they don’t,” Ms. Clinkscale said. "[Boycott supporters are] trying to make an impact on decisions that we have made, but it hurts the children.”

Despite the turmoil, City Hall still favors the district’s new management team. “The mayor supports them coming in and making difficult decisions that, frankly, previous boards and different administrations didn’t make,” said Robbyn Wahby, an education aide to Mayor Slay and a former school board member.

Ms. Clinkscale, the board’s president, maintains that the district’s fiscal crisis demanded rapid change at first, but she pledges more community involvement in the months ahead. The next step, she says, is to draft a strategic plan for improving academics, after which the district will look toward hiring a permanent superintendent.

“We are in the process of building an education system that the community wants for their children,” she said, “so we need their input.”

Coverage of leadership issues in education—including governance, management, and labor relations—is supported by the Broad Foundation.

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