CHICAGO - Chicago Public Schools chief financial officer Kenneth Gotsch - one of thearchitects of the financial turnaround achieved by the system over the last seven years- has resigned to take over as the finance chief at the larger Los Angles Unified SchoolDistrict.
Gotsch, who sources said was recruited by LAUSD superintendent Roy Romer, will replacecurrent CFO Joe Zeronian. District officials did not immediately return calls to commenton why Zeronian was leaving the district or when he would depart his post. Zeronian, aformer managing director at U.S. Bancorp Piper Jaffray, joined the district in 2000.Gotsch, whose last day at the Chicago district was Tuesday, will start at the LosAngeles district next month.
Gotsch took the job as CFO of Chicago schools more than seven years ago at the behest ofthe district's former chief executive officer Paul Vallas - Chicago Mayor RichardDaley's choice to lead the schools following the state's 1995 decision to hand controlof the system over to the city. Gotsch had worked for Vallas during his tenure as headof Chicago's revenue department.
The schools' capital needs - long ignored as past administrations struggled with labordisputes and budget problems - were enormous, but the system lacked the financialwherewithal at the time to access the market.
The district implemented bureaucratic cuts and restructured contracts, and soon launcheda debt program. The Chicago Board of Education now has issued more than $3 billion ofdebt. At the same time it has seen its credit rating - pulled by one rating agency inthe late 1970s because of a financial crisis - steadily rise to the upper single-Alevel.
"Ken has provided strong leadership resulting in a streamlined and well-managed financedepartment, unqualified audit opinions, financial stability, and the highest creditrating in 45 years for the Chicago Board of Education," board president Michael Scottsaid in a statement.
Gotsch is the latest in a series of top-level administrators to leave the district inrecent months. The departures come as former Chicago Board of Trade president DavidVitale is reviewing the school system's management structure on a pro-bono basis. Thereview was sought by schools chief Arne Duncan and Scott. The two men were picked byDaley in 2001 to replace Vallas and board president Gery Chico in a shakeup of thesystem after academic achievements stalled.
Local sources said Gotsch remained a valued member of the staff, but might have felt abit restless, and was swayed by Romer's overtures. "It's a wonderful opportunity forKen," said one market participant, who has worked with the schools. "It's a chance forhim to be part of the reform process again instead of just working on the maintenance ofa school system."
A Chicago schools' spokeswoman said no decision has been made regarding a replacement,or even whether the position will be filled. The internal candidates include budgetdirector John Maiorca, treasurer David Bryant, controller Darryl Okrzesik, and budgetand finance consultant David Agazzi.
Gotsch moves to a larger district that has a massive borrowing program now under way asa result of voter approval for $3.35 billion of bonds last November to build about 120schools and expand 79 others.
The district's more than $4 billion of GO bonds are rated in the low double-A range.
Deborah Finestone contributed to this story.
