Trust at issue for Baltimore schools

Problems blamed on faculty oversight by education officials

June 04, 2000|By Liz Bowie and JoAnna Daemmrich | Liz Bowie and JoAnna Daemmrich,SUN STAFF

It came down to a matter of trust.

State legislators believed that with $250 million in additional aid, less red tape from City Hall and new leadership, Baltimore's schools could be reformed.

The governor and mayor appointed a new school board, with savvy business leaders they trusted. And the school board found Robert Booker, a financial expert, to be its new schools chief. He relied on his chief financial officer, Roger Reese, and his business officer, Wilbur C. Giles Jr.

Everyone felt confident that everyone else was doing his job.

Three years later, amid revelations about lucrative, no-bid school contracting, many are wondering if their faith was misplaced.

Reese has resigned. Booker has suspended Giles for a month. And officials and taxpayers are left questioning how money needed in the classrooms could have been spent on consulting fees.

It appears to many observers that the investment to improve Baltimore's schools was based on trust that the new leadership would be vigilant - not on a foundation of sound financial policies that would detect conflicts of interest and protect taxpayers' money.

Officials from Annapolis to City Hall have reacted with dismay.

"What in the world was Roger Reese doing?" asked state Sen. Barbara A. Hoffman. "Whether Booker was asleep at the switch or Giles is acting as though he has no bosses, this is an embarrassment."

"I am surprised we are in this position," said Del. Howard P. Rawlings, who with Hoffman was instrumental in drafting the 1997 reform legislation creating a new school board. "I think we have taken their word for the way they have managed the system."

But questions concerning oversight extend beyond school headquarters.

Some city politicians are pointing a finger at the state, saying the legislation spun the school system out of their control. "I felt once the state got involved, a lot of those questions would be answered. I thought the state would do the audits, put their feet to the ground," said Councilman Nicholas C. D'Adamo Jr.

Yet the city provides 25 percent of the $800 million annual public schools budget. And the mayor has joint authority with the governor to appoint the school board members.

State school Superintendent Nancy S. Grasmick said she assumed city school officials would set up the kind of internal checks and balances that are commonplace in other school systems in Maryland. But she's known at least since March that serious trouble loomed.

First, the school system missed an opportunity to get state money to repair aging schools because a project had not been properly advertised or bid. Then The Sun revealed questionable contracting practices that caused the cost of a computer technology project to balloon from $5.2 million to $11.4 million within a year.

Grasmick sent a blunt memo to Booker on April 4, noting that while the computer upgrade to help the school system keep better track of students, cut its own checks and manage its finances appeared to be going well, she was concerned over the way the contract and the cost overruns had been handled.

Her memo urged Booker and the school board to put in place spending controls.

The measures were introduced last week, although they came too late to prevent other problems.

On Tuesday, The Sun disclosed that two other consulting deals that were not competitively bid had been slipped past the school board last fall. Common government practices were not followed by senior staff in awarding the financing and management of a $12.3 million project to reduce school energy costs.

The plan was for the school system to put new lights, windows and boilers in 30 schools, and pay for the work with energy savings.

To raise the money, the school system turned to Columbia financial broker J. P. Grant. Grant set up a deal whereby he borrowed the money more cheaply from a New York financial institution and kept the difference.

He invested the money he was lending to the schools and is keeping the interest. He will make at least $1 million on the deal, by the school district's estimate - up to eight times the industry standard.

The financing arrangement was signed by Reese, not Booker, and was not approved by the school board.

The energy project is being run by Giles, the business officer, who is friends with Grant. They went on a golfing vacation together in late March at a luxury resort.

Giles hired Carnegie Morgan Resource Management, a Baltimore energy planning firm, to manage the energy project. He didn't seek bids, or show the $670,000 contract to the school board, which had to approve it retroactively.

Carnegie Morgan is a well-connected firm. Its senior staff includes Lynnette Young, chief of staff for former Mayor Kurt L. Schmoke, and Wendell Rawlings, son of the state delegate.

Delegate Rawlings said he had nothing to do with the firm getting the work. "I'm not stupid," he said.

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