1/13/2011 6:00:00 AMCleveland school officials, business leaders discuss dramatic solutions for district's financial crisis

January 13, 2011, 5:50 AM

By Thomas Ott, The Plain Dealer  

CLEVELAND, Ohio -- Clawing to get out of deep financial trouble -- and stay out of it -- the Cleveland schools are discussing everything from declaring bankruptcy and breaking into smaller systems to casting the district in its own TV reality show.

Other ideas that school officials and business leaders from the Greater Cleveland Partnership have kicked around include cutting pay, adopting a four-day school week, buying out employees and selling off not only closed schools but also the East Sixth Street administration building. [ See below for a list of more cost-cutting ideas.]

For the moment, all the suggestions are just the products of brainstorming, and not all will receive serious consideration. Some could require the approval of voters, unions or state legislators.

"It's a lot of data; we're still sifting through it," said Joseph Roman, president and chief executive officer of the Greater Cleveland Partnership, a metropolitan chamber of commerce. "It's very preliminary."

Nonetheless, the range and scope of strategies reflect the magnitude of the crisis. The 45,000-student district faces a $58 million deficit next school year, even after factoring in $17 million in federal funds awarded to save education jobs. More problems await in the following years and will mount if the state cuts aid.

A 178-page outline of discussion topics, released by the school officials at The Plain Dealer's request, acknowledges the need for the district to pass its first operating levy since 1996. But the document says even a substantial increase would not wring enough money from Cleveland's shriveled property-tax base to ensure solvency long term.

The possibility of a tax hike -- of 5, 9.9 or 15 mills -- is mentioned for placement on the ballot as soon as May. Depending on which millage is selected, the increase would raise $23 million to $70 million a year and require the owner of a $100,000 house to pay $153 to $459 more per year.

The document labels many of its suggestions for generating or saving money as "prioritized opportunities" that will get further study. Others -- selling the rights to a reality show, for instance -- are designated as "nonprioritized."
Among the possibilities receiving another look is declaring bankruptcy, going into state receivership and possibly emerging as one or more new districts. The group also will examine scheduling four-day school weeks and longer winter breaks to save on payroll and utility bills.

Options for reducing personnel expenses include cutting pay, delaying step increases, filling positions such as assistant principal and teacher's aides only where necessary, and contracting for instruction in areas like foreign language. Also on the list: offering buyouts to employees and making them pay more for health insurance.

Still other proposals call for closing traditional schools in favor of district-sponsored charter schools and sharing operations such as transportation and food service with the city, the county and other school systems.

The privately managed charters sponsored by the district turn over a small percentage of their state aid and receive no local tax money. Cleveland is considering backing more charter schools as part of a new academic "transformation plan," designed to expand choices for families.

School officials and business leaders are weighing the sale of closed buildings -- the document says the number could total 20 over the next seven years. They also will study selling the district's headquarters and moving into smaller space.
The administration building is near the site of the new medical mart, just going into construction. Years ago, developer John Ferchill proposed converting the school headquarters into a hotel, but the plan never materialized.

School district spokeswoman Roseann Canfora called the outline a "working document" that involves "potential approaches to solving our fiscal crisis." She expressed concern in an e-mail that a news story would be premature and create the mistaken impression that there is an "official proposal before all parties weigh in."

School board Chairwoman Denise Link declined to comment until after the board is formally presented with ideas Jan. 25.
Mayor Frank Jackson, who oversees the schools, has called for lasting improvement in the district's finances. He had not been fully briefed on the outline of ideas discussed by school and business leaders and could not comment, spokeswoman Andrea Taylor said.

Taylor said the district probably will not make any decisions until after the board and the mayor pick a replacement for Chief Executive Officer Eugene Sanders, who recently announced that he will retire Feb. 1. Jackson has said he hopes to begin a search soon and appoint Sanders' successor by summer.

Teachers union President David Quolke, who has criticized Sanders for failing to collaborate, declined to comment because he had not read the document. He said he had asked for a copy.

The Greater Cleveland Partnership wanted the study conducted before the chamber would consider investing in the district's academic reforms. The business organization raised $250,000 to enlist the help of the Boston Consulting Group, a firm that also was instrumental in developing the transformation plan.

The district will find no easy answers to its financial problems, said Eaton Corp. Vice President Barry Doggett, a participant in the efficiency study.

"There are going to be a lot of things that need to get done," he said. "What we've got to try to do is find ways that minimize the impact on children in the district."

School cost-saving ideas

Representatives of the Cleveland schools and the Greater Cleveland Partnership are brainstorming about how to head off the coming budget crisis and position the district for long-term financial stability. A range of cost-saving ideas are up for discussion, although no decisions have been made.

Among the ideas floated in a draft document:

• Adopting a four-day week for students and staff.

• Outsourcing or eliminating expensive academic programs -- for example, foreign-language instruction offered through a private company.

• Closing traditional district-operated schools and sponsoring and accrediting more charter schools.

• Selling unneeded buildings and land. Could include selling the central administration building and relocating to a smaller space.

• Declaring bankruptcy, entering state receivership or dissolving the current district and creating one or more new districts.

• Reducing base salaries or changing the structure of the salary schedule, such as step increases based on experience.
• Offering a buyout to all employees.

• Outsourcing or creating partnerships with the city, Cuyahoga County or other districts to provide such functions as maintenance, payroll, food service and transportation.