Sunday, January 30, 2011

Central Falls Rhode Island - Harbinger?

Yesterday's WSJ highlighted the disasters facing a small poverty stricken city in Rhode Island, Central Falls. If you click the previous link, you will note the "Receiver's Report." That's because this town tried to file for bankruptcy, but was prevented from doing so by the state's legislature, who appointed a Receiver to straighten out the city's finances. Trouble is, it is a fool's errand unless pension benefits to city employees are redefined, which only a bankruptcy could have discharged. This little city of 19,000 has $80 million in liabilities. The Providence Journal reports "The median household income during 2005 to 2009 stood at $33,520, well below the statewide median of $55,569." Assuming an average household of four people, that's $16,842. Given the high level of poverty in the city, and the ability of those with income to leave, that doesn't bode well for any kind of rational fix.

How did this mess get going?

It's hard to pinpoint the exact moment when the town started deteriorating, says City Council President William Benson, but "it started with the John Hancock [pension] plan," named after the company that administers the benefits. In 1972, the city created a new pension plan for public-safety officers that allowed them to retire after 20 years and earn 50% of their final year's salary thereafter. What the city didn't anticipate was that firefighters would use the minimum staffing requirements that were part of their collective-bargaining agreement to rack up overtime and increase their last year's salary. Or that nearly a third of police officers would retire with a higher-paying disability pension.

Over time, such labor costs have swamped the city's budget. In 1991, the state took over the schools because the city could no longer afford to fund them. But that didn't solve the problem of costly and restrictive collective-bargaining agreements.

Further, the schools are also a mess. Teachers were unwilling to accept a collective bargaining agreement that would push school reforms. Eventually the entire teaching staff was fired. But even after their return, things are getting ugly in the schools.
Many teachers aren't showing up for work, often calling out sick. Several abruptly quit within the first few weeks of the school year. Administrators have had to scramble to find qualified substitutes and have withheld hundreds of student grades because of the teacher absences.
. . .
"The teachers have taken advantage of their sickness days. Almost every day they're absent, so students don't get a lot of education," said Jose Ortiz, as his daughter, Kyara, a Central Falls student, translated from Spanish. "The students don't pay attention in class because the teachers don't help them."
Parents have taken to patrolling the schools themselves.
. . . a growing number of parents who spend time at the school every day. They patrol hallways, assist teachers in classrooms and help administrators with detention. They are coming at the invitation of Supt. Frances Gallo and school leaders who believe parents play a central role in improving schools and educating their children.

Merging the city with other cities in the area doesn't appear to be a good option either, as those cities are in bad shape as well.

Image courtesy of Jon Lausten's Blog.

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