Despite bailout, schools facing difficult times

City loan will act only as a temporary solution

Officials developing plan

New taxes, cuts, layoffs could loom next year

March 11, 2004|By Tanika White | Tanika White,SUN STAFF

Now that Mayor Martin O'Malley has taken up the burden of the city school system, he and school leaders have to figure out how to carry the rescue off.

And even if they feel better today about their circumstances, they acknowledge that none of the problems has been solved and a great deal of pain lies ahead.

While a city loan may forestall an imminent financial collapse, the mayor says, he and school officials will have to consider every possible option as they head toward a long-term solution, including layoffs, financial concessions, rebidding of contracts -- and even higher taxes.

Everything "is on the table," the mayor said yesterday when asked if raising taxes or fees was an option.

Although the mayor is not proposing a tax increase to help bail out the schools, according to his spokesman, Stephen Kearney, taxes are considered every year during budget season.

On Monday the mayor offered the school system a last-minute $42 million loan, spurning a state proposal that would have provided more money -- and more strings.

Yesterday, school and city officials were working on a memorandum of understanding to outline the terms of the deal, preparing to present it for approval to the city's Board of Estimates, which has authority over the city's finances. The board, which is controlled by O'Malley, is expected to consider the loan Wednesday.

One troubling detail for school leaders: The infusion of money would only address this year's cash flow shortfall, not the system's $58 million accumulated deficit. And the schools will have to repay $34 million to the city by August, creating another cash-flow problem just as schools are opening.

To combat such "waves" of cash problems, O'Malley said this week that the city may have to continue to offer the school system loans after the bulk of the $42 million loan is repaid.

Those periods of cash shortages may be long-lasting.

"We will continue to have cash-flow problems ... until we can fully make up the deficit and until we are a fully healthy organization," schools chief Bonnie S. Copeland said.

Copeland said the school system -- with help from financial experts from O'Malley's staff -- will put together a "fiscal recovery plan" to deliver to the Board of Estimates next week.

That plan will spell out the school system's financial picture -- how the loan will help Copeland pay bills and employees through the end of the school year, and how she and board members will reduce the deficit beginning in July.

To attack the deficit, Copeland said yesterday that the system is considering a number of remedies, including increasing class sizes in elementary grades by two children. That would eliminate the need for 300 teachers and save the system about $15 million.

But the payroll would need to be still smaller.

Attrition

Although the mayor said layoffs were possible (though not in the middle of the school year), Copeland said she now hopes to cut the staff through attrition -- leaving vacant positions unfilled -- rather than by laying off large numbers of workers, as the system had threatened for months.

Close to 900 city teachers are eligible for full retirement, Copeland said.

"If they did take that option, it would be more than enough" to start shrinking the deficit, she said.

At a school board meeting Tuesday, where the mayor discussed his plan to back out of a proposed deal with the state -- which was about to be considered by the legislature -- he heartened school officials, calling teachers hardworking, students gifted and the schools a source of pride.

"We got a new lease on life," school board member Dorothy Siegel said yesterday.

If the board was cheered by O'Malley's rousing words to them, many staff members are deeply demoralized.

Subjected to an unflattering verbal barrage -- some state legislators have repeatedly referred to funds for Baltimore's schools as going down a rathole -- and under threat of pay cuts and layoffs recently, many teachers have said they intend to find work elsewhere.

"Some healing has to take place," said board chairwoman Patricia L. Welch. "That is absolutely critical. Right now our teachers feel devalued, dehumanized. They feel used and abused. Their integrity has been put on the line."

School board member Ralph Tyler said the board is committed to the challenge of rebuilding.

"The first thing we're absolutely interested in doing is restoring stability and reducing the level of chaos and confusion in the system so that people can focus on education," Tyler said. "And then of course we do have to focus on the management and fiscal problems so that the deficit is addressed and so this problem never recurs."

Anger over dismissal

And the recriminations are not over. The dismissal Tuesday of Cassandra W. Jones -- the city school system's second-highest-ranking official -- provoked anger yesterday.

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