Under Control
By 
Springfield Finance Control Board his grade of the police
department: “Dysfunctional with a capital ‘D.'”
It was nearly a year after the city of Springfield, on the brink of bankruptcy, received a $52 million state loan, and the five-member Finance Control Board imposed by the state in return for the bailout to oversee city operations was making progress. Back taxes were being collected, and the city’s poorly performing retirement fund had been rolled into the state retirement fund. City departments had been reorganized, accounting procedures streamlined. There was a sense in City Hall that maybe, just maybe, things were turning around in the state’s third largest city.
Then came what one western Massachusetts legislator called “the ultimatum.” In mid-June, state Administration and Finance Secretary Eric Kriss told the city’s State House delegation that unless the board got more “tools” to do its work, the finance board and state loan fund would be withdrawn, and the city would be on its own. One such “tool”: appointment of a single arbitrator with the power to impose the terms of settlement in 29 labor contracts with the city’s unions. The finance board had previously rejected a proposal from the City Council for a panel of three arbitrators – one chosen by the union, one by the finance board, and one by both – to settle the contract with the teachers’ union, the city’s largest.
“This would be perhaps the greatest assault [on] unions that we know of in the state,” says state Sen. Stephen Buoniconti, a Democrat from West Springfield, who attended the meeting. “The intent of the legislation [instituting the Finance Control Board] was never to give the governor’s office this alternative, [that] either we accept the conditions imposed or the state was going to pull out of the city. That was never contemplated.”
City officials were also caught off guard, and they were knocked back further a week later when Romney, at a press conference announcing local workforce training grants, called Springfield the state’s “problem child,” one that would either learn independence or be forever supported by the state’s taxpayers. According to the Springfield Republican, Romney said, “The question is whether the unions here will conform to the kind of pay and work rules that are necessary for Springfield to break even or whether, instead, the state will provide an even larger subsidy to the city than it currently does.”
This episode was the latest act in the ongoing drama Springfield has become, and it may ultimately be the finale. As the control board’s chairman, state revenue commissioner Alan LeBovidge, puts it, “There are two issues [in Springfield], labor contracts and everything else.”
The contracts – all expired, some as long as four years ago – cover a workforce whose payroll accounts for 70 percent of the city’s $442 million budget. How, and when, they are settled will be a test of whether Springfield can ever become fiscally independent from the state. But it will also be a test of whether the Romney administration can impose on city and town halls its view of municipal budget woes – here and elsewhere – as a function of local officials giving away the store to public sector unions. It may even be a preview of municipal morality plays to come.
KEYSTONE KOPS
As meetings of the Springfield Finance Control Board go, the one held on a Friday morning in May is tame. At a previous “public speakout,” board members got an earful from municipal retirees who were angry about changes in their health care coverage that increased their co-payments. This time, decorum is the order of the day, but that doesn’t mean the subject matter is noncontroversial.
The agenda features an assessment of the police department by public safety management consultant Carroll Buracker. The rank and file is well educated and up to the job, Buracker says, but there are big problems. Lack of accountability. Friction among the top staff. Too many cops doing desk jobs. Record keeping so lax that the department doesn’t even know how many crimes it has solved. A labor contract that provides for 12 weeks of sick time. That last one took Buracker, whose firm has worked on more than 200 police department studies, by surprise.
“When we first heard that, we thought they’d misspoke,” Buracker tells the board. “We said, ‘Days?’ ‘No,’ they said, ‘weeks.’”
But the quote heard ’round the state comes later, when chairman LeBovidge asks Buracker to grade the management of the department under Chief Paula Meara, who has been in office since 1996.
“I would have to say dysfunctional, with a capital ‘D,’” Buracker replies.
It is one more sign of politics as unusual in Springfield, illustrating that the powers once vested in City Hall now reside in the Springfield offices of the Massachusetts Department of Revenue, which serves as headquarters for the Finance Control Board. The oversight board was created last summer, a condition of the legislation that provided loans for the struggling city.
Council President Timothy Rooke.
The board has wasted little time, cutting the city’s 2005 budget deficit in half, to $21 million. A private company has been hired to recover millions in unpaid taxes. The board has changed health insurers and restructured 27 departments into 11 divisions to streamline operations. And it has launched studies, similar to Buracker’s, of the operations of the public works, schools, fire, and parking departments.
In ordinary times, such outside interference would be regarded as a violation of the hallowed Massachusetts tradition of home rule. But in Springfield, these are no ordinary times. (See “Down But Not Out,” CW, Winter ’04.) The city sits at the center of a perfect storm of a lackluster economy, a decade of mismanagement, and a legacy of public corruption that makes Buddy Cianci’s Providence look like John Winthrop’s City on a Hill.
It’s hard to know which came first, the graft or the incompetence; either way, the impact is profound. The city with a budget of $442 million in fiscal 2005 lacks an integrated accounting system, and officials don’t even know how many employees are on the city payroll. Some $43 million in back taxes was owed last year, with scofflaws including prominent politicians and bar owners. Hundreds of thousands of federal dollars earmarked for housing and economic development went into the pockets of local officials. A year ago, there was much angst about outsiders coming in to run the city, but now it’s hard to see how a cleanup could have happened any other way.
“We had a situation, where, frankly, we were looking at a collapsible government,” says Mayor Ryan, who serves with City Council President Timothy Rooke as the local representatives on the five-member board. “It wasn’t just around the margins. It was a government that lost its way. You name it, there are problems. In some cases, gross problems.”
For an unelected body, the Finance Control Board has extraordinary powers: to hire and fire, borrow and spend, change the salaries of elected officials, and sell off assets. The board can change the structures of city government, consolidating, reorganizing, or abolishing departments if it sees fit. But not everything can be done by fiat: The board has to negotiate contracts with those 29 different bargaining units of municipal employees.
The board is comprised of two local representatives, Ryan and Rooke, and three members appointed by Kriss: LeBovidge, commissioner of the state Department of Revenue, who serves as chairman; Michael Jacobson, an expert in corporate turnarounds; and former deputy state treasurer Thomas Trimarco, who has experience in retirement fund management.
The board may be powerful, but the task before it is daunting. If the city could be compared to a drunk who has hit rock bottom, the police study represents the first of what Ryan and others hope will be more than a few proverbial moments of clarity. The $170,000 study, for which the city has to pick up the tab, was part of the board’s top-to-bottom assessment of how Springfield municipal government works – or, in more cases than previously thought, doesn’t.
City services have been reorganized and several department heads have been changed in the past year, as the board has set about rebuilding city government, if not from the foundations, says LeBovidge, “then certainly from the basement up.”
DIGGING OUT
Only in Springfield could the report of a $21 million deficit for the coming year be considered good news; earlier this year, the estimate was in the range of $40 million to $60 million. Meanwhile, other bad news abounds: The city’s retirement fund is among the lowest ranked of the 31 biggest funds in the state. Many of its schools have been dubbed failing by the state, and last September the Finance Control Board found that at least $10 million in school building funds had been “inappropriately” used to pay for municipal operating expenses. Following a crime spurt this spring, state troopers were called in to patrol the city, and are there still. At one point, even the streetlights had been turned off in some places.
In a report to the Legislature shortly after the board began its work last September, LeBovidge reported that conditions were “significantly worse” than previously known. He cited an information technology system firmly rooted in the 1950s: manual record keeping of a more than $400 million budget , with ledgers in the offices of the city’s treasurer, assessor, and auditor kept by hand; some property tax records still on index cards in file cabinets. There is still no integrated accounting software in place.
The accounting problems were compounded by layoffs over the past decade in the city’s finance department, says chief financial officer Mary Tzambazakis, who served as assistant CFO in the 1990s and returned to City Hall from the private sector in March 2004. But the measures necessary to get Springfield’s house – and books – in order required the intervention of something like the Finance Control Board, she says.
“The transformation that needs to take place to stabilize the city’s financial operations could not be done without them being here,” says Tzambazakis. “The tough decisions to implement long-term solutions are not always the popular decisions. They take the politics out of my job.”
Not everyone appreciates the board’s efforts. Some city councilors complain about the loss of local control and the cost of the board’s operations – in essence, an additional layer of government that has to be paid for by the city. But more than anyone else, municipal employees and union leaders are angry about frozen wages, stalled contract negotiations, and the board’s inclination to see private contractors as the means to save money on services.
Timothy Collins, who heads the city’s teachers’ union, says the board is using the city’s misfortune to carry out a Romney-administration agenda of union busting and privatization.
“The things that are being done [to improve municipal administration] would have been done if Charlie Ryan had been in by himself,” says Collins. But the board is going well beyond what is needed, he says, based on marching orders from the State House corner office. “Romney has been traveling around the state saying, ‘The problem is not the cuts I’ve made, it’s that you’re paying your employees too much.’ And he, through the control board, is trying to implement that in the city of Springfield.”
But Ryan admits that something drastic needed to be done. “The hole that was dug for Springfield is a deep, deep hole,” he told reporter Jim Madigan in a recent appearance on the WGBY public television show called, appropriately enough, The State We’re In, shortly before the Kriss dust-up. “Are we better off now? Sure we are. This is a city that had more than its share of corruption and more than its share of incompetence.”
LABOR PAINS
Executive director Philip Puccia handles the day-to-day administration of the control board, which now includes a to-do list of 200 initiatives, “from the small to the big,” designed to increase revenue or get better control of spending. “It’s not overnight work, but we’re getting there,” he says. Helping them get there is a $52 million no-interest loan fund from the state. As the city needs money to pay its bills, it borrows from the state fund, then pays the money back. Over the course of fiscal 2005, says Puccia, the city borrowed about $100 million and repaid about $80 million.
Already the board has gotten some results. A private company has recovered nearly $8 million in unpaid property taxes. A New Jersey company has been hired to automate and consolidate payroll services. Switching from Blue Cross to Cigna for health insurance coverage for the city’s roughly 2,000 retirees and 6,000 employees and their families has resulted in savings of $20 million. (For employees, it has also meant an increase in co-payments from $5 to $15.) Then there are the studies of city departments, which promise changes that will provide better services at lower cost.
“Right now, five different city offices are involved in parking management,” says Puccia. “The police study showed that there are 48 police officers whose jobs really ought to be civilianized. That will have a material effect, to move those [officers] out of the station and onto the streets.”
Puccia says it took a while just to get a handle on how bad things were. “I was amazed that it was so difficult to get normal financial reporting information,” he says. “There were no systems; managers were not empowered to have information to make decisions. There was no modern payroll system. It was, from my viewpoint, dysfunctional.”
When the board was named last year, there were complaints, from city councilors and then-state Sen. Linda Melconian, about “three white guys from Boston” overseeing a community that is 50 percent black and Hispanic. Puccia was a particular target: The former head of the MBTA was sued in the 1990s for sexual and racial discrimination, but that case was thrown out.
Even today, online chat rooms and message boards are full of suspicions about the board’s intentions and ulterior motives. “The composition of the board shows the determination of powerful financial and political interests to protect their interests in the city,” wrote Bryan Pfeifer on the left-wing Web site www.workers.org.
There’s also grumbling about the extensive use of private consultants and how much the control board itself is costing the near-bankrupt city. The board reported expenditures of $319,000 for the third quarter of fiscal 2005; Puccia, who commutes from his home in Andover each day, is being paid $130,000 a year; and the Buracker report cost $170,000. But complaints about these costs are likely to go unheeded.
“That was the best $170,000 we ever spent,” says Puccia of the Buracker report. “It gives us a very detailed roadmap to improve public safety in the city, and it will actually save us money when we civilianize some positions. We couldn’t have gotten it any other way.”
Ryan acknowledges some friction and suspicion early in the game. But he says he’s developed a good working relationship with the board.
“We’ve had passionate disagreements, but they’ve been handled in the way they should be,” says Ryan, adding that the board’s outsiders have proved their mettle. “I’m not sure Springfield was even on their radar screen before this, but they’ve passed the fundamental test, and that is that they care about the city.”
But even before the recent standoff, the city’s unions dissented from this view. The day after Ryan made those comments, city workers rallied against the board at the State House. First up in the 29 labor contracts to be negotiated by the board is the Springfield Education Association, the city’s largest, with more than 2,400 workers. Even before Kriss’s provocations, the talks had not been going well.
The board is using the teachers’ contract to impose changes on a school district that is among the lowest performing in the state. According to a report by Mass Insight Education, 11 of the city’s 44 schools have been ranked underperforming or chronically underperforming by the state Department of Education, and the high school dropout rate is more than double the state’s of 3.3 percent. (The student body in Springfield public schools is 78 percent black and Hispanic, compared with a statewide average of 21 percent, and its proportion of low-income students is nearly triple that of the state.)
More than 200 teachers have left the district in the past year, says Collins. Teachers have been working under a wage freeze since July 2003, and state budget cuts have resulted in the loss of 300 teaching positions and 200 paraprofessional posts. There’s no money for books, Collins says, and teachers often have to use one set of texts for five classes.
In the schools, the board is pushing for a “performance-based” contract, which would reward better teachers and pump up salaries for math and science instructors, who are in high demand. “We’re convinced that if we tie teacher pay to student performance, we’ll get a better system,” says Puccia. “So, if the average teacher got a 2.5 percent [pay raise], someone else might get 4 percent.” But Puccia says the union is resisting the idea. “We don’t think at this point they’ve embraced this concept.”
“They’re saying that the reason why the kids are not doing well is because of the teachers,” says union head Collins. “They are absolutely trying to put in an ideological perspective into the school system.” By mid-June, an independent mediator was conducting what Collins called “shuttle diplomacy” between the board and the union.
CREEPING CORRUPTION
This is Charlie Ryan’s second go-round in the mayor’s office; he served four two-year terms in the 1960s. This time the role is less power broker and more reformer, diplomat, and cheerleader. At age 77, and with 34 grandchildren, Ryan has lots of other things he could be doing right now. But because he’s at the end of his political career, instead of the beginning, many think he is the best person in the city to hold the office.
Ryan recently announced that he’s running this fall for one more term (he’s being challenged by Thomas Ashe, a school committee member who wants to abolish the control board), and he hopes that things will be cleaned up enough by the end of his second term to give the city a fresh start – though he thinks that will require a fresh infusion of funds from the state.
“This is tragic, what’s happened here, absolutely tragic,” he says. “Our job right now is to clean it up, make it work, determine what the cost is, present it to the Legislature and say, ‘Here’s what we need for municipal government.’ We’ve gotten the aid in education, but we need it in municipal government, too.”
Part of the problem, Ryan admits, is public corruption. Once known as the City of Homes for its tree-lined streets and good quality of life, Springfield now has a reputation for crime and malfeasance, which seem to have seeped into virtually every facet of municipal life (See Sidebar).
Federal investigators have been looking into public corruption for nearly five years. Since early 2004, 12 people have been convicted and nine more indicted in a catalogue of grifts ranging from the cheesy (the looting of public school vending machines) to the reprehensible (sexual favors for a no-show job, and the embezzlement of hundreds of thousands of federal dollars). In June, Ryan announced that a city investigation had found a “significant number” of city employees, mostly in school buildings, using city telephones to spend time on a sex chat line.
Equally damaging is the murky intersection between dishonesty and ineptitude – the illegal tax agreements, the lost records. And records are easy to lose when nothing is automated. Many of the delinquent property tax bills date back to 1990. Several bar and strip joint owners, some with alleged mob connections and most operating in the downtown “entertainment district” much touted by former mayor Albano, routinely failed to pay property taxes or repay economic development loans, yet they somehow held onto their liquor licenses.
“We had $2.5 million in back taxes owed by bar owners who, for six, seven years, didn’t pay their taxes,” says Ryan, adding that one was $700,000 in arrears. “Only two or three didn’t get their licenses renewed.”
Still, there are tentative signs of turnaround in Springfield. Renovation of the Civic Center is nearly complete, with the dull brick eyesore on Main Street becoming a sleek new convention center. The great silver orb of the new Basketball Hall of Fame lights up its site along the Connecticut River. (So what if its 14,000 square feet of retail space still lies empty? It’s a start.) Up the hill – near the city’s crown jewel, the Springfield Museum and Library complex – space has been cleared for a new federal courthouse. Some $113 million in federal funds are expected to come into the area to fund the courthouse construction, the renovation of Union Station, and improvements to State Street through the Mason Square area.
Home prices are on the rise, but as you drive downtown from the gleaming Baystate Medical Center you’ll still pass blighted, abandoned, even half-burned-out houses in the city’s North End, a minority neighborhood. Street crime is still a problem.
The city needs jobs, says Ryan. But no business wants to set up shop in a dysfunctional city. City CFO Tzambazakis says the groundwork being laid now will allow economic development to take hold.
“This is an environment of phenomenal opportunity,” she says. “We’re working with the state at a level that most communities don’t get to. Right now we have the opportunity to put in place long-term, good solutions that can turn the community around in the long run.”
The control board’s mandate expires in 2007, but even when the city gets back on its feet, Ryan cautions that Springfield, which has traditionally relied on state aid for 60 percent of its operating budget, will need still more financial help. He thinks there’s a case for more state help for third-tier cities like Springfield – the Lowells, the Lawrences, the Brocktons – whose more affluent residents have long since departed for the suburbs but which still provide services for large minority and immigrant populations.
“There’s a lot of tumult in our urban centers, and everyone else is a spectator,” says Ryan. “People have abdicated any sense of responsibility for making things better.”
State Sen. Buoniconti agrees that the city will be hard-pressed to do it on its own. Springfield, he says, is different from the state’s previous “problem child,” Chelsea, which went into receivership in the 1980s but is now free of outside supervision.
“The real factor in putting Chelsea back was the real estate boom that took place in the early 1990s, with the Boston market exploding,” he says. “There was investment by Massport and a couple of office buildings. That brought more of a tax base and jobs to the city. Chelsea saw a huge financial boom.” These, he says, were “fortuitous events.”
But Springfield can’t count on fortuitous events. So, at press time, Buoniconti was working on a compromise proposal, the language of which would please neither the unions nor the governor, that he hopes will move negotiations forward.
“First and foremost, any union resolutions have to start with conversations, and they haven’t started any negotiations with 28 of those unions. That should have been done six months ago,” he says. “We need to get something done sooner rather than later. And when it comes to presidential politics, the last thing you want is a headache in your own backyard. I hope the governor is more interested in resolving it than [in maintaining] a standoff.”B.J. Roche teaches journalism at the University of Massachusetts-Amherst.