When Political Will Is Not Enough: Control Boards in Municipal Finance Restructuring

Harold S. Horwich and Seth J. Pruss

Municipal Finance Journal, 2011, vol. 32, issue 3, 59 - 85

Abstract: Many municipalities and other publicly financed entities will need to rebalance their revenues and expenditures over the next few years. A great deal of public discussion has centered on the prospect of Chapter 9 proceedings. In Chapter 9 proceedings, a municipality can discharge debt without payment and reject executory contracts, including collective bargaining agreements. But, due to the limitations in the court’s jurisdiction, Chapter 9 cannot force fundamental operational and management changes in a governmental entity. Control boards appointed under state law can, and do, implement these types of changes. This article describes several of the control board regimes under state law, illustrates some of their successes, and comments on some of their shortcomings.

Date: 2011
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