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.

“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.

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.

The Collins Center Offers City Help with Capital Improvement Plan

WasteZero pic
WasteZero
Image: wastezero.com

With background in financial management and cost-saving solutions, Stephen Lisauskas serves as the Vice President of Government Affairs and the Regional Vice President of Municipal Partnerships at WasteZero. Stephen Lisauskas also leverages his experience in public administration to serve as a Senior Associate at the Edward J. Collins Center for Public Management at the University of Massachusetts Boston.

According to a recent news release, the Collins Center has partnered with the City of Marlborough to help the city identify and prioritize long-term initiatives that will advance a broad capital improvement plan. The partnership was formed after Marlborough received a $30,000 state grant through the Community Compact program to implement best practices and establish a multiyear capital improvement strategy.

Marlborough partnered with the Collins Center on the grant program because the center has experience helping municipalities develop planning initiatives and capital plans. In the early stages of the program, representatives from the Collins Center will work with city department heads to learn more about the City’s priorities and objectives, which will allow them to develop potential capital improvements. The capital improvement plan is expected to be completed by July of 2016.

WasteZero Programs Lead to Cost Savings in Brewer, Maine

WasteZero pic
WasteZero
Image: wastezero.com

For more than five years, Stephen Lisauskas has served as a Senior Associate at the Edward J. Collins Center for Public Management at the University of Massachusetts Boston. Stephen Lisauskas balances this role with his responsibilities as the Vice President of Government Affairs and the Regional Vice President of Municipal Partnerships at WasteZero.

Committed to halving the amount of trash in America, WasteZero helps implement cutting-edge waste reduction programs in communities across the country, including the city of Brewer, Maine. WasteZero helped Brewer establish a pay-as-you-throw program in 2011 to decrease the amount of trash transported to a facility in another town.

Over the past five years, these programs have saved Brewer $370,000 by significantly increasing recycling rates and decreasing the tonnage of solid waste collected. Brewer reports that the WasteZero programs led to an almost six-fold increase in recycling rates and cut the amount of curbside waste collected by 50 percent. According to a representative from WasteZero, the programs are successful in part because they improve consumers’ awareness about the cost of trash.