Public services - including schools - are being squeezed everywhere, and most plans for new projects have been shelved.
New York City has perhaps the biggest budget deficit of any city in the country - $4 billion dollars.
But in the middle of that full-blown fiscal crisis, Mayor Michael Bloomberg is attempting the most ambitious overhaul ever of the city's public schools, correspondent Leslie Stahl reports.
A lot of people say the New York school system would be unfixable even if the city were rolling in money, and they really doubt whether reform can work now.
But Bloomberg is bullying ahead, even telling New Yorkers to judge his entire term in office by the success or failure of his controversial plan. He says the city's schools are simply too badly broken to wait.
“We have schools where only five percent of the kids read at grade level. Lots of schools where only 20 percent can do math and read at grade level,” says Bloomberg. “If you went from 20 to 40 percent, people would think it's a phenomenal success. We all should be ashamed that the standards have become so low.”
To raise those standards, Bloomberg has launched sweeping reforms, including better pay for teachers, a streamlined bureaucracy, and a controversial revamping of curriculum.
And who has he put in charge as school chancellor? A career educator? No, a guy who's a product of New York's public schools, but has never worked in education in his life - anti-trust lawyer Joel Klein.
“One of the colleagues at City Hall said to me the other day, ‘Good thing about you is you don't know all the things that you don't know. So you're excited and actually think you can change things.’”
As deputy attorney general under Bill Clinton, Klein's biggest challenge was trying to break the Microsoft monopoly. Now he has a new challenge, running a school system of 1.1 million students.
“If you think about a big school district in the United States, [there] could be 100,000 students. So we're 11 times that. We have close to 80,000 teachers. The budget is $12 billion dollars.”
Twelve billion dollars for 1,200 schools. Klein inherited a hodge-podge system so decentralized that in parts of the city, individual schools have designed their own curricula.
In one school, you might find a rigid, count-them-out approach to math. While down the street, they're teaching what critics call "fuzzy math."
“I was astonished when I learned about it,” says Klein. “We have over 50 math curricula, and over 30 reading curricula. And most of them are not working; that's just a fact. Different books, different workbooks, different professional development. So there's absolutely no coherence.”
“New York is a very mobile city. Twenty percent of our children change schools every year,” adds Bloomberg. “If every school is on a different curriculum, 20 percent of your children will come into a school in the middle of a year and be so hopelessly behind they'll never catch up.”
That chaos in curriculum grew out of utter mayhem in management. Twelve different chancellors in just 20 years, a city school board with a big bureaucracy, and 40 disconnected school districts, each with its own board and budget. Plus, mayor after mayor who sniped, but never took charge.
“They deliberately, I think, wanted to make sure that nobody would be blamed,” says Bloomberg. “They deliberately made sure there was no place for the buck to stop.”
Klein says, “If you were a political adviser to Michael Bloomberg, you would tell him ‘Leave it where it is, Mayor. What do you need this for? Most people don't think you can turn them around. Why not leave them where they are.’”
Instead, Bloomberg went to war. He decided the citywide school board was in his way, so he convinced a majority of the state legislature to do away with it.
“We had recently a state legislator who called up complaining bitterly,” remembers Bloomberg. “And one of my deputy mayors said, ‘What's the problem? Mike had announced in a speech he was going to do something.’ And the guy on the phone said, ‘Yeah, but that was a speech. He's doing it now!’ And that was the problem.”
Bloomberg disbanded all the local school boards and put himself and Klein in direct command of every school in the city. He is now out to disprove the idea that the task is too big, that urban public schools simply can't be fixed. Just as Rudy Guiliani did with urban crime.
“If I can show that in a very diverse inner city, that we can take the resources and apply them better and focus better, and not just keep adding money, but really try to say ‘This is what we're going to do and hold ourselves accountable,’” says Bloomberg.
“If I can do that, then not only will I have done something for New York City, but New York City will have done something for the rest of the country and maybe for the rest of the world.”
The mayor is at heart a businessman. He's running the city and the schools much like his old corporation, even moving out of his private office at City Hall into an open bullpen like the one he used at Bloomberg News.
He's ordered Klein and his people to work the same way, and to adopt his business battle cry: No frills. Be efficient and eliminate duplication.
“Think of these 40 districts we are talking about,” says Klein. “They're all buying their own books. You think they're getting bulk purchasing rates on that? We can save real money here, and we need it for our kids.”
In the process, he's eliminating lots of jobs. Klein says he has already fired 1,000 people in two of their central bureaucracies.
“I think you've got to take resources and put it in the school building,” says Klein.
In the schools, they're "unifying the product line" - business-speak for replacing those scores of different teaching methods with one citywide curriculum for math and reading.
In big business, the focus is on the managers. In schools, that means the principals. Klein says he'll fire the really bad ones, perhaps 50, but hundreds more are due to retire.
“Whether we like it or not, we're going to lose 600 principals, half our principals, in the next five years,” says Klein.
He’s recruited the ultimate corporate manager, former GE boss Jack Welch, to design a leadership academy just for principals, to train new staff and retrain the old ones.
“We used to say in the corporation, ‘Any one of you jerk managers that's got a dull crowd hanging around you don't deserve your job.’” Says Welch. “Well, we'll say that to principals.”
But even Jack Welch couldn't manage the schools' most immediate problem: a crushing budget shortfall.
Klein says they’ve cut over $300 million from their budget over the past year and a half. And he may have to cut up to half a billion dollars more.
“In some sense, there’s the benefit of a budget crunch,” adds Bloomberg. “You focus and you question and you demand results.”
At the same time, Klein is preparing the public for tough times. He's asking the private sector to donate millions of dollars. And Caroline Kennedy has been recruited to head the fundraising.
So, with big names like Welch and Kennedy helping out, how much of what they are doing could be considered “razzle-dazzle”?
None of it, says Klein. “It's very important for the public, indeed for the city, to see that people like Caroline Kennedy and Jack Welch are willing to get behind this. That sends a powerful signal. But make no mistake. This is not borrowing peoples' names or faces. These are people who have rolled up their sleeves and are working here.”
Klein has rolled up his sleeves, too, visiting a different school every week - not the most familiar environment for this career lawyer.
What makes him think that being an outsider to the establishment can fix the schools?
“For many years in America, insiders were doing this job, without much success,” Klein admits.
“But it's very interesting in America today. If you look at the big cities - Los Angeles, Chicago, Philadelphia - in a lot of our major urban areas, they've gone to outsiders.”
Klein is an insider in one way: He attended Bryant High School in Queens. He told a ninth grade class recently that his school gave him more than a good education. It ignited his ambition.
“If you ask me my three dream jobs in my life, I'll tell you the truth,” says Klein. “One was to be point guard for the Knicks, second to be a Supreme Court justice, third to be Chancellor of the New York City Public Schools - the schools that gave me my shot.”
A point guard for the Knicks?
“ Some dreams die hard,” says Klein. “When I was a kid in Queens and somebody said ‘chancellor,’ I would have said, ‘What, are you crazy?”
“Well, unfortunately for me, given my jump shot and my height, I think actually chancellor was a little easier.”
Truth is, nothing is easy about Klein's job. He's trying to reform a system that's become accustomed to failure, and win over parents who've lost faith.
Klein has staged a number of visible community meetings, inviting questions and criticism.
"The school refuses to work with the family," says one mother at a community meeting.
But while he seems to listen, the real message he’s sending is “I'm the CEO, this is my plan. Get on board."
"We should stop the excuses, we should stop the blame game,” says Klein. “We should get on this mission and do it."
People say that there's not enough consultation, there's too much secrecy, Bloomberg and Klein are making decisions without reaching out and listening to what everybody else thinks.
“There's just a limit to how much you can consult. The way to stop any progress is to say, ‘Yes, yes, I love it, but,’” says Bloomberg. “And there's always a "but." And society can't focus that way. If you ever saw a system that was broken, it was our public school system. So we consulted an awful lot but we never did anything. Maybe this'll work.”