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Takeover Fever

Across America, states are taking over cities and school boards. Does it make a difference?

Getty Images/Spencer Platt

You’re a local government. You have a mostly minority population in an impoverished post-industrial area. You’re in debt by the billions, but paying it off would require taxes that residents can't afford. But wait, you’re in luck! Or maybe you’re out of luck? Either way, get ready: You’re about to get taken over.

America right now has a case of takeover fever. To solve decades-old, intractable financial problems, larger governments are eating small governments. States are taking over failing schools. Counties are absorbing city police departments. And governors are confiscating mayoral powers. 

In March, in the largest takeover in American history, Michigan Gov. Rick Snyder sacked Detroit, adding America's symbol of urban decline to the Republican governor’s portfolio of five cities already under his control. Tennessee and Virginia are confiscating poor-performing schools from local boards, and New Jersey just took over its third school district: Camden, the poorest and most dangerous city in the U.S.—which also just lost its police department to the county, by the way. Next door in Philadelphia, the school district has been run by Pennsylvania since 2001, and the state capital, Harrisburg, is now run by a “receiver” with full takeover powers.

The takeovers include the unilateral ability to sell off public assets, rewrite employee contracts without collective bargaining, fire employees without regard for civil service, and restructure debt. Private consultants become de facto cabinet officials. School boards, mayors, and city councils may continue to exist, but they are useless, their power usurped by appointed officials with long titles: financial managers, emergency managers, chief operating officers. 

“Viceroys” was what they were called back in colonial days, and indeed there's an unsettling neo-colonial aspect to takeovers. In Detroit, 700,000 residents—83 percent of them African American—are now under the auspices of a white governor. Just under half of Michigan’s African American population, in fact, now live in cities run by a state appointee. At a protest against the Detroit takeover, the Rev. Jesse Jackson tapped the vein of historical injustice and called the situation a “plantocracy”—a 19th-century word referring to plantations owned by whites and worked by blacks. 

So how come Detroit Mayor Dave Bing and emergency manager Kevyn Orr, both African Americans, were all smiles when the takeover was announced? How come a local NAACP leader in New Jersey announced his support for Gov. Chris Christie’s takeover of the Camden schools?

Takeovers, they realize, are not necessarily as stark as Jackson makes them seem. They are often totally meaningless.

The 27-year history of American takeovers indicate that while they may seem dire, they rarely have long-term significance (one exception: Chelsea, Massachusetts). Beyond those in politics or government, few even know the difference, because takeovers don’t usher in lasting change in poverty levels, academic achievement, or crime. Camden’s municipal government was taken over in 2002; statistically, life there was just as rough when the takeover ended in 2010, and the state continues to subsidize most of its budget. 

Often, takeovers just beget new takeovers. Ecorse, Michigan, is believed to be the site of the first takeover involving a state government in 1986; it got taken over again in 2009. Lou Schimmel ran that first takeover and a later one in nearby Hamtramck, a town that is currently on the verge of a second takeover. Schimmel is now emergency manager in Pontiac, Michigan. But if an emergency manager can’t permanently end the “emergency,” is the emergency really being addressed? If a takeover lasts for a generation—the Paterson schools have been run by New Jersey since 1991—can we still call it a takeover, or is it something else?

Voting rights during takeovers are always a concern, especially among those who have historically had theirs stolen. But the fact is these elected officials had already been rendered powerless—city councils and school boards in struggling areas have gradually abdicated much of their powers to states. In exchange for last-minute cash infusions to close budget holes and massive subsidies to operating budgets, they’ve agreed to all kinds of spending restrictions and in-house fiscal monitors.

So when a takeover happens, to citizens it’s just the same bunch of yahoos—or a similar bunch, anyway—running the joint as before. Takeovers are rarely hostile. Local politicians are complicit, either because they’re part of the same smoky backroom cabal that is running the takeover, or because they’re eager to unload impossible problems onto someone else. Would you want to solve the $327 million deficit and $14 billion long-term debt that Detroit now faces?

There are protests, of course—but mostly from the unions representing the public workers facing layoffs and pay cuts. As the state receiver in Central Falls, Rhode Island, told Governing magazine: “Of course your contracts are being destroyed—that’s what this is all about.”

There’s only so much contractual givebacks can do, though. And since cities have sold off so much already, there is little left of value. Privatizing animal control isn’t going to pay for decades in unfunded liabilities in retiree benefits. The American system taxes people, business, and property, but doesn’t offer a back-up plan if there are fewer people, businesses, and properties to tax. 

To be sure, certain governmental efficiencies may be found during a takeover. In Pontiac, three emergency managers cut the city budget from $57 million to $36 million by outsourcing street work, policing, and firefighting. As The New York Times described the situation: “Some residents say they worry that ... Pontiac will be dependent on private companies and surrounding communities for years to come.”

Those worries are justified. Takeovers are designed to stop the bleeding, not to create the kind of economic redevelopment and ratable base that make localities self-sufficient. Viceroys are supposed to go in and say: CUT, FIRED, SOLD. Schimmel, the veteran Michigan takeover artist, said economic development is “beyond my purview.” 

But without a refurbished economic engine to fuel a recovery, another takeover is inevitable. And the people will shrug, again and again, knowing problems are being temporarily solved but not permanently fixed. They’ll know it’s all sort of meaningless.

“What is it like to live not in a democracy anymore?” Stephen Colbert recently asked Charlie LeDuff, author of Detroit: An American Autopsy.

"Look,” LeDuff said, “it's better than living in Hell."