"You never want a serious crisis to go to waste. Things that we had postponed for too long, that were long-term, are now immediate and must be dealt with. This crisis provides the opportunity for us to do things that you could not do before."
 - Rahm Emanuel, quoted in the WSJ

[A] Washington nonprofit reported alarmingly low graduation rates in many of the nation's largest urban districts, including Dallas, which was listed as having the seventh-worst graduation rate among school systems in the 50 largest cities.

The study, issued by America's Promise Alliance, indicated that Dallas had a graduation rate of 44.4 percent in 2004, a figure that was a fraction of the official graduation rate of 80.8 percent reported for that year by the state and school district.

State officials attributed the huge gap to different methods of computing the graduation and dropout rates, noting that the state implemented a more stringent data reporting formula last year. The new formula showed lower graduation rates of 68.8 percent for Dallas and 80.4 percent for Texas for the 2005-06 school year, the most recent year data are available.

Dallas school officials expressed shock as they announced in September that they had overspent last year's budget by $64 million, and were on track to run up an $84 million deficit this year...What caused the deficits and how did they escape detection so long?

The answers are complex. A revolving door of top administrators over the years allowed long-standing problems to fester. Disparate computer systems in the budgeting, accounting and human resources departments didn't talk to one another -- and still don't.

Principals and area superintendents held the power in the district for years and, on hiring and spending, could often get the decisions of finance officials overturned.

But current and former Dallas Independent School District officials also acknowledge that they missed, or misread, recent warning signs that pointed to the district's precarious financial condition. Newly hired administrations failed to appreciate how deeply flawed the district's financial operations had become, while lower-level workers did little to bring the problems to their attention.

Years of slipshod accounting and inexact budgeting had produced financial statements that looked solid, but w[h]ere [sic] ticking upward each year masked the problem because there was always plenty of cash around to hide the system's fundamental shortcomings, according to those familiar with the district's financial crisis.