Deal on loans to city schools appears near

Abell Foundation, other philanthropies may lend $8 million to stem crisis

City match from reserve fund

Negotiations continue on move that would avert layoffs, employee pay cuts

February 15, 2004|By Liz Bowie, Tanika White and Ariel Sabar | Liz Bowie, Tanika White and Ariel Sabar,SUN STAFF

Baltimore officials said last night that they were close to reaching an agreement with the Abell Foundation to help end the city school system's financial crisis without substantial layoffs or steep pay cuts.

Under a deal that officials said was nearly complete, the Abell Foundation - and possibly other philanthropies - would lend the system $8 million, ending weeks of turmoil amid allegations of fiscal mismanagement that has left the system with a $58 million deficit.

The Abell money would be added to another $8 million loan the mayor offered to the schools last week from the city's rainy day fund. The $16 million would erase a portion of the deficit by the end of the fiscal year in June and allow the system to operate without a cash flow problem.

Details of the loan are complicated, but a city administration source said it would do more than simply get the school system through its immediate financial problems. Negotiations on the agreement will continue today, just as representatives from the governor's office were scheduled to work with city school officials on a solution that would have included state funding.

It was not clear last night what might happen today if both the governor and the mayor offered new solutions.

"Clearly, this doesn't solve all the problems that this deficit causes," said Sean R. Malone, the city's interim labor commissioner. "But it is the first step toward clearing the hurdles down the road."

"We don't want to have another week like last week, and the mayor is putting all of his time and effort into resolving this as quickly as possible," said Steve Kearney, a spokesman for Mayor Martin O'Malley. "Right now, we're trying to do that through an agreement with the foundations."

O'Malley and city schools chief Bonnie S. Copeland had been meeting with Robert C. Embry Jr., director of the Abell Foundation, since Wednesday in an attempt to reach a deal before school unions voted Thursday to reject a 3.5 percent pay cut. Officials said they closed in on an agreement late yesterday after several hours of negotiations.

Embry did not return telephone calls last night.

The Abell Foundation, based in Baltimore and established a half-century ago by descendants of Arunah S. Abell, founder of The Sun, is one of the largest foundations in the state. It reported assets of $187.6 million at the end of 2002, the last year for which figures were immediately available. It approved $9 million in grants that year.

The foundation has provided grants and other support to the city schools for many years. Embry is a former chairman of the city and state school boards.

Before news of the negotiations with the foundations broke yesterday, city officials said they would announce tomorrow whether they would lay off employees or force them to take a steep pay cut.

The nine-member city school board met for two hours yesterday in executive session. Afterward, board members took part in informal talks with state and city officials, weighing potential solutions to the fiscal problem.

School board members will meet again privately at 8:30 tomorrow morning at the system's North Avenue headquarters.

Discussions are expected to continue today, including a 3 p.m. conference call among officials of Gov. Robert L. Ehrlich Jr.'s administration, Copeland and state schools Superintendent Nancy S. Grasmick.

Community members also met yesterday to discuss the system's financial problems.

About 100 parents and activists gathered at Union Baptist Church in West Baltimore for two hours to talk about plans of action, including protests at city and state school board meetings.

"I've gotten tired of hearing, `Where are the parents in the process?'" said Michael Hamilton, president of the Baltimore City Council of PTAs. "We will do whatever it takes to protect our children and ensure their education."

Last week, Copeland was hoping that members of the system's employee unions would accept a last-minute compromise from the city that would have required teachers and other workers to take a temporary 3.5 percent pay cut in exchange for monetary help from the city.

But three of the unions - including the largest, the Baltimore Teachers Union - resoundingly rejected the deal, saying they would not be held responsible for a $58 million budget deficit they didn't create.

That has left Copeland, board members, and city and state officials scrambling to find other ways to save $16 million this year. Officials say that amount is necessary for the system to balance this year's budget and pay off a portion of its deficit.

Copeland has said that without financial help from outside the system, she may have to force employees to take a 6.8 percent pay cut through the end of the school year or lay off up to 1,200 employees, most of them teachers.

Copeland declined to comment after yesterday's board meeting, saying only that she and board members consulted with their attorneys about "what we're going to do about the $16 million."

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