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Correction to This Article
A Dec. 5 article about St. Louis public schools incorrectly identified a teacher at the Gateway Institute of Technology. The teacher is Chip Clatto, not Chip Platto.

Corporate Model Proves an Imperfect Fit for School System

In St. Louis, Some Question Whether Bankruptcy Firm's Fix Is Working

By Michael Dobbs
Washington Post Staff Writer
Sunday, December 5, 2004; Page A03

ST. LOUIS -- It was billed as the next big idea in education, a way forward for struggling school systems everywhere. Plagued by falling enrollment and dismal test scores, the St. Louis school district hired a big-name New York bankruptcy firm to turn things around for a one-time fee of $5 million.

During his 13 months as superintendent of St. Louis public schools, former Brooks Brothers chief executive William V. Roberti closed 21 schools, lopped $79 million off the school budget, privatized many school services and laid off more than 1,000 employees. He stepped down in June at the end of his contract, proclaiming that the district had made "tremendous strides" toward putting its affairs in order, reversing decades of financial mismanagement.


As St. Louis school superintendent, former Brooks Brothers executive William V. Roberti, background, used "supply chain management" techniques. (J.b. Forbes -- St. Louis Post-dispatch)

Three months into a new school year, many teachers, parents and students in St. Louis were asking what they have gained from the whirlwind unleashed by the gruff, straight-talking retail executive. Student enrollment continues to decline, teachers complain about poor morale and low pay, parents are unhappy about school closures, and voters are up in arms about high salaries paid to top administrators.

"What we ended up with was a corporate model for running our schools," said Susan Turk, a middle-class parent with two children in the school system. "They started hiring administrators at salaries in excess of $200,000 while telling the teachers they couldn't get a raise."

Passions boiled over at a school board meeting in November as officials argued over who was responsible for a series of controversial pay increases given to senior administrators. At one point, police were called to the meeting after one school board member accused another of threatening her physically. The man who succeeded Roberti as interim superintendent, Floyd Crues, has since taken an extended leave after being accused of handing out unauthorized pay increases, leaving the district effectively leaderless.

Roberti and his supporters, who include the mayor of St. Louis and four members of the seven-person school board, say he averted a financial meltdown while laying the basis for long-term recovery. Conceding that there is much more to be done to restore public trust in the St. Louis school system, they say it was unrealistic to expect dramatic improvements in academic performance virtually overnight.

"This is a marathon, and we have only run the first leg," said Roberti, managing director of Alvarez and Marsal LLC, a New York-based financial turnaround company. "This was a school system that had been in decline and decay for at least 30 years."

The St. Louis experiment is being watched closely by other school districts, including that of Washington, D.C., which suffer from similar problems. During a school administrators' conference in Las Vegas in October, Roberti huddled in a corner with newly appointed D.C. schools chief Clifford B. Janey, who peppered him with questions about his experiences.

The search for a permanent replacement for Roberti -- the district attempted to recruit former New York schools chancellor Rudolph F. Crew, but he ended up going to Miami-Dade County -- has overshadowed an anguished debate about the reasons for the decline of the St. Louis public school system and its impact on the city. From his historic office in City Hall, beneath pictures commemorating the nation's westward expansion, Mayor Francis G. Slay says the revitalization of St. Louis hinges on improvements to its education system.

"Everything we want to achieve -- attracting new business, improving our neighborhoods or reducing crime -- is tied to the quality of education," said Slay, a Democrat who allied himself with corporate leaders to demand radical change. "We could not go on as before. The school system was failing our kids."

Slay says he began to get alarmed several years ago when the company that maintains the riverfront next to the city's most visible symbol, the towering 630-foot arch above the Mississippi River, complained that it was unable to recruit workers locally because of a lack of basic math skills. "We have kids who are unable to read or write or do math," said Slay, citing test results showing that in some 10th-grade classes only a single student had achieved proficiency in math or reading.

To reshape the school system, Slay supported a four-person slate of reformers, led by a former mayor of St. Louis who ran for school board in April 2003. Once elected, the new majority on the school board announced it would hire a turnaround company to run the school system for a year on the grounds that only an outsider could make the painful decisions necessary to balance the books. Alvarez and Marsal won the contract.

After just a few days in his new job, Roberti concluded that the school district's financial crisis was much more serious than anyone had imagined. Instead of a modest surplus, the district was running a $73 million deficit out of an annual budget of $450 million, and would not be able to meet payroll without an emergency infusion of cash. Slay accused the previous administration of spending money "like drunken sailors."

Aided by a team of auditors from Texas and a financial analyst from Kraft Foods, Roberti set about identifying areas where costs could be cut. He reported that the school system was in a state of "financial and operational chaos" and huge sums of money were being spent "with little or no accountability." Textbooks piled up in dilapidated warehouses, buses carried too few students, dozens of school district buildings were virtually abandoned.

The basic assumption behind the Roberti reforms was that a school district operates in much the same way as a retail business. Both systems rely on "supply chain management," he said. "Many people talk as if there's some magic to education. But the job of getting supplies from a warehouse to a building is the same in schools as it is in business as it is in the federal government."

To slash costs, Roberti outsourced many operations to private contractors. He also cut hundreds of positions, including supervisors, counselors and department coordinators. He is proud of the fact that he did not fire a single teacher -- dozens of teachers were permitted to retire without being replaced, which resulted in larger classes in many schools.

"Change is difficult, and a lot of people didn't like what happened," said Assistant Superintendent Myrtle Reed, a Roberti supporter. "But it was better to deal with these problems all at once than prolong the agony by closing two schools every year."

Even the critics acknowledge that mismanagement was rife in the school system and that some of Roberti's innovations -- such as the warehouse system -- are welcome. The problem, as they see it, is that at the level of individual schools, there is little to show for the changes. They also question why it was necessary for a school district in desperate financial straits to pay $5 million to an outside company when a simple audit would have turned up many of the areas that needed fixing.

"There have been absolutely no improvements at my school," said Chip Platto, a dropout-prevention specialist at the Gateway Institute of Technology, a St. Louis high school. "Teachers feel tired, overworked and neglected. Morale is terrible. The people downtown don't know the first thing about what is happening in the schools. It's all about the bottom line as far as they are concerned."

Like many other St. Louis teachers, Platto could earn $5,000 to $10,000 more by working for suburban schools, with fewer discipline problems and a more relaxed working environment. After freezing teacher salaries for a year, the school board has now offered to gradually increase teacher pay to the level of surrounding counties. But it is hard to see how it will deliver on this offer without going back sharply into the red. A Roberti aide, who asked not to be identified, said that the school board does not have the money to fund the proposed increases.

A state audit in June praised the Roberti team for cutting costs but criticized salaries in excess of $175,000 for top executives, which it said were "out of line" with comparable school districts. Roberti, however, is unapologetic, arguing that it was necessary to pay top salaries to recruit qualified people. "This school district never had a chief financial officer before," he said. "That was one of the problems."

Former St. Louis mayor Vincent C. Schoemehl Jr., Roberti's most outspoken supporter on the school board, said that he is convinced that hiring the turnaround firm was "the right thing to do." On reflection, he said, he would have signed Roberti to a two-year, rather than one-year, contract. "It turned out that there was too much to do in just 12 months."


© 2004 The Washington Post Company


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