A Brief Overview of Municipal Bankruptcy

Stephen Lisauskas
Stephen Lisauskas

Stephen Lisauskas is an experienced municipal financial leader who has worked as the executive director of the Springfield Finance Control Board and the deputy town administrator of Natick, Massachusetts. Over the course of his career, Stephen Lisauskas has become familiar with many areas of municipal finance, including municipal bankruptcy.

Chapter 9, Title 11, is a unique bankruptcy filing available only to municipalities. The filing was designed to assist financially compromised municipalities in restructuring their debt.

In most cases, Chapter 9 bankruptcy allows a municipality to either extend debt maturities (as a means of reducing the principal or accrued interest) or entirely restructure the debt with the help of a new loan. The most important distinction between Chapter 9 bankruptcy and other types is that municipalities cannot be forced to liquidate assets to satisfy creditors. Such an act would violate the Tenth Amendment to the US Constitution and would leave a municipality with little infrastructure to support itself or its citizens, essentially rendering a filing useless.

There are a number of notable Chapter 9 filings in the history of the United States. The city of Detroit recently filed for bankruptcy to the tune of $18 billion, the largest such filing in the nation’s history.

Lessons Learned about Municipal Bankruptcies

Detroit pic
Detroit
Image: forbes.com

An associate at the Edward J. Collins Center for Public Management at the University of Massachusetts, Stephen Lisauskas has a considerable background in helping cities manage their expenses. Stephen Lisauskas has worked with fiscally distressed cities to reduce costs and improve credit.

In 2014, Detroit faced critical distress and declared bankruptcy. The plan to deal with that crisis imposed many hardships, such as layoffs and tax increases, which exacerbated population declines. The Pew Charitable Trusts reported on several measures that states could implement to prevent or better manage municipal bankruptcies. These include offering early assistance to distressed cities and counties; tracking cities’ fiscal condition for warning signs of financial problems; and devising alternatives to bankruptcy, including the appointment of temporary managers and monitors.

When no alternatives exist to bankruptcy, policy makers could consult representatives of all parties who have a stake in the outcome, in order to settle conflicts. Once a government exits the bankruptcy, it should enact a short-term recovery plan and a longer-term strategy of economic growth. Equally important is budgeting to balance revenues and expenses over a multi-year span to help address underlying causes.

Edward J. Collins, Jr. Center for Public Management Helps Holliston

Edward J. Collins Center for Public Management pic
Edward J. Collins Center for Public Management
Image: umb.edu

Vice President of Government Affairs and Municipal Partnerships at WasteZero, Stephen Lisauskas also serves as a Senior Associate at the Edward J. Collins, Jr. Center for Public Management at the University of Massachusetts, Boston. Stephen Lisauskas has consulted in matters related to municipal business process improvement and distressed city engagements since 2010.

In April of 2016, the Town of Holliston entered a contract with Edward J. Collins, Jr. Center for Public Management. The Center, paid through a $25,000 state grant supported by Governor Charlie Baker and Lieutenant Governor Karyn Polito, will employ experts to evaluate the Town’s long-term capital needs, setting a priority timeline for when each item should be addressed over a period of five years. Additionally, recommendations offered will include a method for funding each initiative in a reasonable, but ambitious manner.

The Holliston project is one of approximately 80 engagements in which the Center will assist municipal governments in 2016. With the aid of the Collins Center’s experts, the Town intends to make the best use of taxpayer resources, improve services, and provide more value to residents of the community.

“Pay as You Throw” Helps Save Brewer $370,000

WasteZero pic
WasteZero
Image: wastezero.com

A public administration professional, Stephen Lisauskas serves as vice president of government affairs at WasteZero. Stephen Lisauskas also oversees the company’s municipal partnerships division in northeast.

Recently, WasteZero shared an article published by the Bangor Daily News that highlighted the success of its “Pay as You Throw” program. Following five years of participation by the city of Brewer in Massachusetts, the local government reported a savings of $370,000. The achievement was a result of the waste reduction program as well as the city’s implementation of zero-sort recycling one year prior.

Local residents utilize bags offered through the “Pay as You Throw” program to fill with waste for curbside pickup. The result, as of 2016, was a drop in solid waste collection by half. In addition, a boost of 24 percent in recycling was recorded, which amounts to a 29 percent recycling rate. The waste reduction solutions have also improved city tax rates as an added benefit to local residents.

WasteZero President Talks to LA Times about Garbage Crisis

WasteZero pic
WasteZero
Image: latimes.com

In addition to his role as a senior associate at the Edward J. Collins Center for Public Management at the University of Massachusetts Boston, Stephen Lisauskas serves as vice president of government affairs and regional vice president of sales at WasteZero. There, Stephen Lisauskas advises government officials on waste reduction initiatives. WasteZero is a certified B Corp on a mission to reduce waste in the United States by half. Since 1991, the company has partnered with towns, cities, and municipalities to help improve their recycling programs, reduce waste, and save money.

In a recent article in the Los Angeles Times, WasteZero President Mark Dancy was interviewed about the global waste crisis. Each year, 1.3 billion tons of waste is generated globally, and the U.S. is the largest contributor, at 254 million tons in 2013. Mr. Dancy weighed in on the reasons Americans may not realize how much waste they are producing, suggesting that since most people pay a flat fee for trash pickup, they don’t think about how much they dispose of. He advocates WasteZero’s “pay as you throw” program, in which people are charged by the bag, rather than paying a flat rate.

The Collins Center – GAP and Finance-Related Analytics Projects

 

Edward J. Collins Center for Public Management pic
Edward J. Collins Center for Public Management
Image: umb.edu

Having worked with a number of city governments, Stephen Lisauskas serves as the vice president of government affairs and the regional vice president of municipal partnerships at WasteZero. Stephen Lisauskas also helps cities improve their operations and financial management strategies as a senior associate with the Edward J. Collins Center for Public Management at the University of Massachusetts Boston.

Through its Government Analytics Program (GAP), the Collins Center helps governments implement best practices by collecting and applying data during short-term and year-long projects. GAP conducts a number of finance-related analytics projects, including projects focused on budget document development and improvement. According to the Collins Center, the budget document is the most significant policy document a government maintains, so GAP enhances the budget document and updates the budget process based on best practices established by the Government Finance Officers Association.

GAP also develops capital improvement plans, multi-year plans that guide the purchase and maintenance of publicly owned assets. During these projects, GAP works closely with government officials to assess resources, prioritize projects, and evaluate different funding mechanisms.

Report Helps Swampscott Improve Services

WasteZero pic
WasteZero
Image: wastezero.com

As an experienced budget strategist and public administrator, Stephen Lisauskas serves as the Vice President of Government Affairs and Regional Vice President of Municipal Partnerships at WasteZero. Stephen Lisauskas also serves as a Senior Associate at the Edward J. Collins Center for Public Management at the University of Massachusetts Boston.

The Collins Center recently created a report for the town of Swampscott, Massachusetts, which commissioned it in early 2015 after learning how the Collins Center helped nearby Salem. According to an article in the Salem News, the Collins Center report outlines ways in which Swampscott’s government can operate with more accountability and deliver services more efficiently.

To generate the report, the Collins Center conducted an expansive study of the town’s departments and fiscal 2014 figures. The study discovered that Swampscott was spending more on education, police, human services, fire, fixed costs, and debt service per capita compared to other municipalities. With this information, the Collins Center was able to suggest new and more effective ways, from consolidation to regionalization, for Swampscott to deliver town services.