The state has ordered the Maryland School for the Blind, which annually receives more than $10 million in public funds, to repay nearly $300,000 that school officials have distributed in severance payments and employee bonuses.
Nancy S. Grasmick, the state superintendent of schools, said in a letter to the school's president that a financial review found $31,604 in state funds was used for bonuses to 292 employees in the past two fiscal years. The bonuses were not based on any performance evaluation, she wrote, and must be repaid by Dec. 1.
She also ordered the Northeast Baltimore school to repay $264,552 in severance payments to five program directors who were fired in June last year.
Mrs. Grasmick wrote to Louis M. Tutt, the school's president, that she was "disappointed" the school did not seek agency approval for the expenditures. "The expenditures were blended with the total salaries expenditure reported to us and we would have had no knowledge that state funds were being used in this manner, had it not been determined as a result of our fiscal review," she wrote.
One of those fired directors, Suzanne Wayson, said yesterday that school officials made the severance offers in exchange for ,, an agreement by the dismissed employees not to sue the school.
"That agreement came with our walking papers," she said. "They were concerned we would file suit for wrongful discharge. There was the very real issue of discrimination. All of us were over 40; every woman went."
Mr. Tutt was out of town yesterday and was not available for comment. Harry F. Wright Jr., chairman of the school's all-volunteer board of directors, did not return several telephone calls yesterday.
To repay the severance settlements, Mrs. Grasmick said, school leaders will have to trim staff positions and transfer the expenditures for severance to the school's endowment fund.
"We are not forcing immediate repayment of such a large sum because it could have an adverse effect on the school's 175 blind and multiple-disabled students," said Richard Steinke, assistant superintendent for special education.
The financial review completed this month by education auditors comes two months after a state audit by the Department of Fiscal Services uncovered a $111,553 discrepancy in spending for contractual services at the school in fiscal 1993.
Both audits and charges of questionable fiscal management will be explored next month and in October before the Joint Budget and Audit Committee in Annapolis.
Sen. John J. Hafer, a Republican committee member from Allegany and Garrett counties, said yesterday that the Department of Education audit is "confirmation of earlier reports that a financial management problem does exist at MSB. It is sad for the children who need to be served, for that is the reason the school exists."
In April, The Sun detailed a major school reorganization in which the directors were fired, two board members resigned in protest and 40 other staffers quit or saw their positions abolished. Parents of students, current and former staff members and special education professionals said the changes hurt student care, as well as the school's reputation, which was built up over 142 years.
The state funds about 85 percent of the school's annual budget.
Among the other findings and required action in the Department of Education review:
* By Dec. 1, officials at the school must update the "Parent/Student Handbook," which informs parents of their legal rights. Those rights include access to their child's records, the opportunity to challenge information in those records, and services that extend beyond the school year.
* The state must be included in any further discussions about the future use of the school's 95-acre tract on Taylor Avenue near Belair Road. Because of budget cutbacks, the school's board and president have explored leasing some of the buildings or land, or selling the entire property.
* Copies of all management memorandums must be forwarded to Department of Education officials for review, a move that will allow the agency to monitor the school more closely.
* Federal Medicaid funds were appropriately used to pay the salaries of school employees who provide teaching services for students. The auditors pointed out, however, that their review of monthly Medicaid services records did not include a comprehensive investigation of student case files.