City schools to post hundreds of layoff notices next week

Bad fiscal news may not be over because invoices are still out, Neall warns

November 19, 2003|By Liz Bowie | Liz Bowie,SUN STAFF

Hundreds of Baltimore school system employees will be sent layoff notices Tuesday as the district attempts to pull out of a financial tailspin that would have resulted in bankruptcy by the end of the school year, officials say.

If the city schools do not lay off up to 1,000 employees by January, "everyone's paycheck would bounce in May or June," Robert R. Neall, a former state legislator who has analyzed system finances, said yesterday.

The school system will be operated on a bare-bones budget in order to meet its legal obligation to educate every child, Neall said.

Neall did not promise an end to gloomy news after the layoffs, saying he is not sure he has a complete picture of the system's finances. Spending decisions were highly decentralized, he said, making it difficult for top administrators or the school board to get a handle on finances.

Bonnie S. Copeland, who had been serving since July 1 as interim chief executive before being permanently appointed to head city schools Nov. 11, asked Neall to advise her last month after a review showed that the system had accumulated a $52 million deficit by the end of June.

That deficit, combined with a payroll that is $24 million over budget for this year, means that the district would experience a "crushing cash flow problem" soon, Neall said.

He said he is not sure he has uncovered the full extent of this year's overspending because some invoices have not been totaled.

Copeland said employees have been told to turn in all invoices and have been offered a kind of "amnesty" - there will be no repercussions - if it is done promptly.

State schools Superintendent Nancy S. Grasmick supported Neall's analysis.

"I had my own suspicions about the solvency of the system," Grasmick said. "We were beginning to feel that they were already having difficulty making payroll. ... We were already seeing some evidence of creative bookkeeping."

Grasmick said she believes the city school system was temporarily covering operational expenses with money earmarked for other uses.

Neall said he has advised Copeland to "cut as much as you can, as deep as you can, as fast as you can," and hope it is enough.

Neither Copeland nor Neall would say what jobs are likely to be cut first, but they indicated that a significant number of high-level positions would be eliminated.

They said workers in each of the school system's unions will be affected. Seniority rules do not allow administrators to choose which employees are laid off, Neall and Copeland said.

The top priority, Neall and Copeland said, is to ensure that there is a teacher in front of every class, and textbooks and materials needed for instruction. After that is taken care of, Neall said, he will work from the schoolhouse to the central administration, laying off the bulk of employees in the central office.

School officials said last week that half the staff at the North Avenue headquarters could be laid off.

Copeland said she could not promise that the system would not have to lay off teachers, but said principals have been advising her on ways they believe they can reduce spending without increasing class size. The silver lining to the fiscal crisis, Copeland said, is that the system will have to focus on its core mission in the classroom.

"This is actually the hammer," Copeland said. "This is forcing us to return to what, I think, are the real values of education."

With one-third of the school system's budget being spent on special education, Neall and Copeland said they will seek permission from a federal judge to cut administrative positions in that area as well.

U.S. District Judge Marvin J. Garbis, who has overseen a lawsuit involving city schools for the past 18 years, has required the system to improve special education.

The school system spends about $1 million a year on legal fees and costs associated with the lawsuit. For instance, Garbis has required the system to pay for a special court master to investigate whether the system is making progress - at a cost of about $400,000 this year.

School officials were in court recently to tell Garbis that they intend to file a motion seeking to end the court's oversight.

Even had there not been a change in school system leadership in July, when Copeland was appointed interim CEO to replace Carmen V. Russo, Neall said the financial crisis would have come to a head soon.

Neall said the report of an outside auditor, expected to be ready in the next few weeks, would have sounded an alarm to state education officials.

Grasmick said she and the state school board would have been forced to decide whether to take control of the city schools.

"I would have gone to the legislature," Grasmick said. "The system was moving toward total insolvency."

Neall and Copeland declined to point fingers in the school fiscal crisis, saying it would not be productive. But Neall, a former state senator, accepted some of the blame, saying the legislature should have kept closer watch on the Baltimore school system after it was made independent of City Hall in 1997.

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