School panel takes on crisis

Grasmick names group for independent probe of system's finances

Officials plan weekend of talks

Ehrlich says Annapolis may offer fiscal support

February 14, 2004|By Liz Bowie, Tanika White and Mike Bowler | Liz Bowie, Tanika White and Mike Bowler,SUN STAFF

State and city leaders will be negotiating throughout the weekend in an 11th-hour attempt to solve the Baltimore school system's financial crisis, which has the system on the brink of imposing mass layoffs or deep pay cuts.

Gov. Robert L. Ehrlich Jr. said last night that officials would try to put together "the outline of a more long-term agreement" that might be announced as early as Monday. The governor suggested that if no solution to the financial difficulties is found, the issue could be played out in court early next week.

As talks began yesterday, state Superintendent Nancy S. Grasmick appointed a panel to investigate the financial crisis in the city schools.

"Was there any wrongdoing, and did anyone profit personally from this egregious $58 million deficit?" are among questions Grasmick said she has charged the panel with answering.

The panel consists of Barbara Kerr Howe, a retired Baltimore County Circuit Court judge; Craig A. Thompson, an attorney with the law office of Peter Angelos; and Sanford V. Teplitzky, a lawyer and former Baltimore County school board member.

In other developments:

A sick-out by city teachers, while not widespread, left a few schools severely understaffed.

The city school board said it will meet today in executive session.

A parent group is scheduled to meet today to discuss strategies for forcing a solution.

Ehrlich said yesterday that key players - including Grasmick, representatives of the governor, and former state Sen. Robert Neall, who has been a financial adviser to the schools would participate in a Sunday conference call that could lead to state assistance.

The governor said he is seeking long-term fiscal and management changes to the school system structure, and he conceded that the state was the only possible source of funding.

"The city has no dollars. You've seen the trend line over the years. Clearly, state dollars are going to have to play a role here," Ehrlich said. "Now, under what circumstances ... and where those dollars come from and the terms - are actually issues that we are going to be working on over the weekend."

Ehrlich said that if a long-term agreement were achieved, state assistance would begin flowing "almost immediately."

The governor said that he believes personnel changes in the school system are coming.

Grasmick introduced the investigative panel yesterday saying it would be charged with tracing a "sequence of events" at the North Avenue school headquarters that began two years ago when the system's deficit was $18 million and continued into last year, when it grew at the pace of $2 million a month.

If evidence of criminal activity is found, Grasmick said, an accounting firm has agreed to offer the panel its forensic accountants to look for wrongdoing. In that case, the matter could be referred to the attorney general's office.

Grasmick said that if the panel finds the deficit was not a criminal matter but was strictly a matter of mismanagement, then it will aim to identify the problem's source as a way of improving accountability in school finances.

The panel will get support from the state in its search for documents, but it does not have subpoena power. It is to make a public report by May 15.

While officials talked behind the scenes, a public debate over how to solve the financial crisis continued yesterday, with Mayor Martin O'Malley and Ehrlich taking to the airwaves.

O'Malley insisted that the governor should play a role in solving the problem.

Early in the day, the governor seemed disinclined to give the city schools money to help pay down the deficit. "Is it good money after bad? Is it simply more state dollars wasted?" he said.

The governor dismissed speculation that the state would assume responsibility for running the system.

Later, the governor seemed to soften his stance in saying that talks were continuing and that state help might be on the way.

The mayor said there are flaws in the structure of the city-state partnership, created by the legislature in 1997, that provided for shared responsibility between the city and state for running the schools.

The mayor suggested that a fiscal control board - an independent board appointed to run the system's finances - might be needed.

Earlier yesterday, the school board announced that it would meet in executive session at 8:30 a.m. today. The board said it must meet in private to confer with its lawyer about a union threat to sue the system if it imposes a pay cut on employees.

The Baltimore Council of PTAs is convening a parent group at 9 a.m. today at Union Baptist Church on Druid Hill Avenue to discuss action that might ease the crisis.

By midday yesterday, 620 teachers had called in sick, not enough to close schools but enough to require administrators from the system's area offices and North Avenue headquarters to be dispatched to unmanned classrooms as substitutes. On an average day, 493 teachers, or 7 percent, are absent. Yesterday, the absentee rate rose to 9 percent.

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