DeKalb to close four schools and lose 15 bigwigs. Gwinnett sets furlough days.

2:39 pm February 19, 2010, by Maureen Downey

The budget axe is falling on four schools and the central office staff in DeKalb County where Superintendent Crawford Lewis announced Friday, “We can no longer afford to operate schools which are at half capacity.” Lewis said he will pare his cabinet back from 27 administrators to about 12, a move that should placate critics who contend that the central office is full of people who don’t have a real impact on student learning in the county.

The financially struggling DeKalb school system – the deficit is now at $88 million from state cuts and falling revenue — will name the four elementary schools that will close next week, choosing from among 29 schools with enrollments of less than 300 students.

According to the AJC story on DeKalb:

District officials are eyeing schools in south DeKalb now that Dunwoody has become the fastest-growing area of the county, Lewis said.

The Citizens Planning Task Force, a group of 20 residents appointed by school board members, will work with school officials to make a recommendation on which schools to close. The board will then vote on the final closings, school system spokesman Dale Davis said.

Last year, DeKalb’s enrollment grew by about 1,500 students to 101,000 children.

The school closings will allow the district to save about $2.5 million. Teachers from those schools will move with their students and be allowed to keep their jobs, but some other staff may be affected, Davis said.

The closings will mean the district will have to redraw the attendance boundaries and reroute buses before school starts in August.

The school closures are part of a systemwide trimming to meet a loss in state funding and property tax revenue.

“We are working really, really hard not to raise anyone’s taxes,” Lewis said.

Last month, Lewis proposed a series of program cuts, staff furloughs and other reductions to meet what officials thought was a $56 million deficit. He now is scrambling to identify $32 million more to cut from next year’s budget after learning the county’s property values dove 6.7 percent.

“This year’s budget will go back to the figure we had in 2005. That kind of tells you exactly how bad things are,” Lewis said.

Lewis said he will unveil those additional proposed cuts next Friday.

The district has about 14,000 full-time employees, including 8,000 teachers.

The proposed administrative cuts come less than a week after the AJC reported that the district posted a job to replace a deputy superintendent of teaching and learning for $163,900 while calling for teacher pay cuts.

The other staff in his cabinet will see pay cuts, Lewis said.

However, the superintendent does not plan to give back the $15,000 raise and contract extension that the board approved in January. Lewis told business leaders that the raise comes after he lost $30,000 in salary and bonuses last year.

“I don’t think $15,000 is going to have a profound impact on an $88 million deficit,” he added.

DeKalb’s actions are likely to be repeated around the state as all systems face unprecedented deficits. To cut costs, Gwinnett County has just scheduled three furlough days for employees next school year and will raise class size by one student, according to the AJC.

Can we still see academic gains with this level of budget crisis?

GA College tuition hikes get support from strapped lawmakers

College tuition hikes get support from strapped lawmakers

10:27 am February 24, 2010, by Aaron Gould Sheinin

It would take a 77 percent tuition increase at Georgia’s colleges and universities to meet the demand for a $385 million cut in the state’s higher education system budget, Chancellor Erroll Davis said Wednesday.

Davis, speaking before a sometimes testy joint House-Senate budget committee, said that would raise tuition at the research universities to more than $10,000 a year, while four-year colleges would raise to more than $6,700 and two-year college tuition would grow to more than $4,000.

But it took some time for Davis to get to that point. Sen. Seth Harp (R-Midland) interrupted Davis as the chancellor was explaining how dire the university system’s financial situation is.

“We are in a budget crisis,” Harp said. “I fully appreciate what you have offered. We are familiar with this. We have got to cut another $200 to $300 million out of your budget. Please, prioritize where those cuts will come or we will do it blindly.”

But Davis did not bring suggested cuts, arguing instead that the university system has already cut $360 million since July 1, 2008. Davis said he has not yet had a chance to speak to all 35 college presidents to discuss specific cuts, although he promised to provide lawmakers with ideas by Friday. Cuts will have to come from individual schools, he said, as there are few system-wide programs at the regents’ office that can be eliminated.

But Davis said he does not believe it is possible to cut $385 million from the system. That, he said, would total the entire budget for 23 universities. It is barely more than the University of Georgia’s annual budget.

Still, Davis could not immediately answer some questions, such as when Rep. Austin Scott (R-Tifton) asked how many employees of the system have total compensation packages of more than $500,000. A quick check of state salary data at opengeorgia.gov, however, shows a handful of university system employees making that much, including Davis himself and UGA President Michael Adams. Nor could Davis answer Rep. Bob Lane (R-Statesboro), who asked how much a 1 percent salary cut would save the system. A quick check of the 2010 state budget however, shows that a 1 percent cut to the systems’ teaching budget, the overwhelming majority of which goes to salaries, would save $1.9 million.

Harp said everything is on the table: Big tuition cuts, salary cuts, closing or consolidating schools.

“We are now where the state of Georgia does not have enough money to complete this fiscal year,” Harp said. “Please, we need definitive ideas, suggestions where to come up with that money by Friday. I hope you can do that. If you can’t, you put it on the folks of this committee to do it. And we do not know the best way.”

If tuition has to raise by 77 percent, “so be it,” Harp said. “If we have to break the promise of locking in tuition, we have to break the promise. It’s not something we wanted but I cannot emphasize enough we do not have the money.”

There were mixed feelings on the committee about tuition increases, however. Sen. Don Balfour (R-Snellville) said students and parents are the only ones who can pay.

“We’re becoming a socialist society when we say that you shouldn’t raise tuition at all,” Balfour said, adding that his son attends college in Georgia and that tuition “is embarrassingly cheap.”

“I don’t want a commitment from you you’re not going not going to raise tuition,” Balfour said. “I’d rather have a commitment from you that you are. The only group of people who can pay is the people taking the course.”

But Rep. Bill Hembree (R-Winston) said tuition increases cannot happen without the university system doing everything in its power to first reduce spending.

“We all know there are inefficiencies, excessive costs,” Hembree said. “If we walk away from this session without having cut somewhere in this system … then we have failed. If you go back and raise tuition, I for one will not stand for it.”

Hembree said a “modest” tuition increase might be acceptable if it’s accompanied by significant cuts.

Davis didn’t disagree that some savings can be found. And they will find it, he said.

“While I am here to agree there are room for improvements, I’m not able to say there are efficiencies that equal the total budgets of 23 of our 35 institutions,” he said.

DeKalb schools chief proposes cutting 148 positions

By Megan Matteucci

The Atlanta Journal-Constitution

11:39 a.m. Wednesday, February 24, 2010

DeKalb County schools’ superintendent is calling for 148 employees to be laid off.

The reduction in staff is necessary to meet a projected $88 million deficit, Superintendent Crawford Lewis told board members Wednesday morning.

The staff cuts will save the district about $10.7 million, Lewis said.

The cuts will be made in all areas of the central office. The 148 positions represent about 15 percent of the district’s 982 employees in the central office, according to Ramona Tyson, the district’s deputy chief superintendent of business operations.

“It does not target one particular group,” Tyson said. “This is to be fair.”

The district is also looking at furloughs or pay cuts, along with closing schools and cutting programs.

Last-Minute Credit Card Tricks

Published: October 16, 2009

The Credit Card Accountability, Responsibility and Disclosure Act, signed into law in May, gave credit card companies a leisurely timetable — as long as 15 months — to phase out predatory practices used to bleed consumers. Not surprisingly, the companies have exploited this generosity by driving already outrageous interest rates still higher and imposing fees that are pushing struggling families further into debt.

Congress can end this injustice by moving up the deadline, accelerating reform and helping consumers.

Some of the worst (and most common) abuses are now scheduled to be outlawed in February. These include the practice of arbitrarily raising interest rates, penalizing customers when they are late paying a bill unrelated to the credit card — so-called universal default — and charging customers interest on debt that they paid off a month or more earlier.

The banks claimed that they needed the long lead time to rework their computer processing system. Consumer advocates warned that this would invite banks and credit card companies to wring as much as possible out of consumers before the law finally took effect.

They were right.

A forthcoming study from the Pew Charitable Trusts’ Safe Credit Cards Project shows that credit card interests rates — already too high — rose by 20 percent in the first two quarters of this year, even though the cost of lending went down as a result of low federal interest rates. In testimony before Congress earlier this month, one consumer advocate cited case after case of struggling consumers who had seen their credit card rates more than double for no apparent reason, even when they had faithfully paid on time.

A House bill introduced by Representative Carolyn Maloney, a Democrat of New York, and Representative Barney Frank, a Democrat of Massachusetts, would halt this exploitation by making the act effective on Dec. 1. The Senate needs to take the same approach.

Secret Banking Cabal Emerges From AIG Shadows:

Commentary by David Reilly

Jan. 29 (Bloomberg) -- The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all.

Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials.

We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system -- apart from the matter of AIG’s bailout -- deserves further congressional scrutiny.

The New York Fed is in the hot seat for its decision in November 2008 to buy out, for about $30 billion, insurance contracts AIG sold on toxic debt securities to banks, including Goldman Sachs Group Inc., Merrill Lynch & Co., Societe Generale and Deutsche Bank AG, among others. That decision, critics say, amounted to a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been allowed to fail.

That move came a few weeks after the Federal Reserve and Treasury Department propped up AIG in the wake of Lehman Brothers Holdings Inc.’s own mid-September bankruptcy filing.

Saving the System

Treasury Secretary Timothy Geithner was head of the New York Fed at the time of the AIG moves. He maintained during Wednesday’s hearing that the New York bank had to buy the insurance contracts, known as credit default swaps, to keep AIG from failing, which would have threatened the financial system.

The hearing before the House Committee on Oversight and Government Reform also focused on what many in Congress believe was the New York Fed’s subsequent attempt to cover up buyout details and who benefited.

By pursuing this line of inquiry, the hearing revealed some of the inner workings of the New York Fed and the outsized role it plays in banking. This insight is especially valuable given that the New York Fed is a quasi-governmental institution that isn’t subject to citizen intrusions such as freedom of information requests, unlike the Federal Reserve.

This impenetrability comes in handy since the bank is the preferred vehicle for many of the Fed’s bailout programs. It’s as though the New York Fed was a black-ops outfit for the nation’s central bank.

Geithner’s Bosses

The New York Fed is one of 12 Federal Reserve Banks that operate under the supervision of the Federal Reserve’s board of governors, chaired by Ben Bernanke. Member-bank presidents are appointed by nine-member boards, who themselves are appointed largely by other bankers.

As Representative Marcy Kaptur told Geithner at the hearing: “A lot of people think that the president of the New York Fed works for the U.S. government. But in fact you work for the private banks that elected you.”

And yet the New York Fed played an integral role in the government’s bailout of banks, often receiving surprisingly free rein to act as it saw fit.

Consider AIG. Let’s take Geithner at his word that a failure to resolve the insurer’s default swaps would have led to financial Armageddon. Given the stakes, you might think Geithner would have coordinated actions with then-Treasury Secretary Henry Paulson. Yet Paulson testified that he wasn’t in the loop.

“I had no involvement at all, in the payment to the counterparties, no involvement whatsoever,” Paulson said.

Bernanke’s Denials

Fed Chairman Bernanke also wasn’t involved. In a written response to questions from Representative Darrell Issa, Bernanke said he “was not directly involved in the negotiations” with AIG’s counterparty banks.

You have to wonder then who really was in charge of our nation’s financial future if AIG posed as grave a threat as Geithner claimed.

Questions about the New York Fed’s accountability grew after Geithner on Nov. 24, 2008, was named by then-President- elect Barack Obama to be Treasury Secretary. Geither said he recused himself from the bank’s day-to-day activities, even though he never actually signed a formal letter of recusal.

That left issues related to disclosures about the deal in the hands of the bank’s lawyers and staff, rather than a top executive. Those staffers didn’t want details of the swaps purchase to become public.

New York Fed staff and outside lawyers from Davis Polk & Wardell edited AIG communications to investors and intervened with the Securities and Exchange Commission to shield details about the buyout transactions, according to a report by Issa.

That the New York Fed, a quasi-governmental body, was able to push around the SEC, an executive-branch agency, deserves a congressional hearing all by itself.

Later, when it became clear information would be disclosed, New York Fed legal group staffer James Bergin e-mailed colleagues saying: “I have to think this train is probably going to leave the station soon and we need to focus our efforts on explaining the story as best we can. There were too many people involved in the deals -- too many counterparties, too many lawyers and advisors, too many people from AIG -- to keep a determined Congress from the information.”

Think of the enormity of that statement. A staffer at a body with little public accountability and that exists to serve bankers is lamenting the inability to keep Congress in the dark.

This belies the culture of secrecy obviously pervasive within the New York Fed. Committee Chairman Edolphus Towns noted during the hearing that the bank initially refused to disclose even the names of other banks that benefited from its actions, arguing this information would somehow harm AIG.

‘Penchant for Secrecy’

“In fact, when the information was finally released, under pressure from Congress, nothing happened,” Towns said. “It had absolutely no effect on AIG’s business or financial condition. But it did have an effect on the credibility of the Federal Reserve, and it called into question the Fed’s penchant for secrecy.”

Now, I’m not saying Congress should be meddling in interest-rate decisions, or micro-managing bank regulation. Nor do I think we should all don tin-foil hats and start ranting about the Trilateral Commission.

Yet when unelected and unaccountable agencies pick banking winners while trying to end-run Congress, even as taxpayers are forced to lend, spend and guarantee about $8 trillion to prop up the financial system, our collective blood should boil.