Reform opened door to crisis

Law: Neither the mayor nor the governor had sole responsibility, allowing the system's poor finances to go unchecked.

Baltimore Schools In Crisis

April 04, 2004|By Liz Bowie | Liz Bowie,SUN STAFF

Before Baltimore's schools were on the verge of insolvency and Mayor Martin O'Malley and Gov. Robert L. Ehrlich Jr. were vying for the role of savior, no one saw the school system's financial problems as his to solve.

That may have been one of several flaws in a 1997 law that replaced mayoral control with a collaborative partnership between the city and the state to run Baltimore's school system. No leader had sole responsibility for governing the system. The buck didn't stop at a desk - not O'Malley's, not Ehrlich's and not state Schools Superintendent Nancy S. Grasmick's.

The law also didn't require the system to balance its budget at the end of each fiscal year, as both the city and state government must. And legislators underestimated the bureaucratic difficulty of extracting a school system that had been an agency of city government for more than a century and making it independent.

So when the schools posted their first major deficit in 2000, no one stepped in to find out why the system was $18.8 million in the red. And even a year ago when that deficit looked as though it would grow to $41 million, no one intervened.

State and city officials agree that legislators focused on the academic improvements without giving the same attention to fiscal accountability.

While Grasmick had wide leeway to force academic changes - she took over three city elementary schools - she wasn't given the same control over finances. Grasmick said she tried to put a full-time auditor who would report to the state in the school system. But when the schools declined her offer, she said she didn't have the authority to force the issue.

"I think the state should have had a stronger role in the finances of the system and that there should have been monthly finance reports," Grasmick said.

At the time the school system was separated from the city in 1997, legislators were sensitive to the concerns of Baltimore residents that their school system not be taken over by the state.

But they left the City Council with authority to approve the system's budget each year, as county governments do.

"We have the same authority as every other jurisdiction," O'Malley said. "That may legally be true, but ... clearly there was the expectation that the school system would operate independently of City Hall. Much of that debate [in 1997] accepted that the more independent we can make it of City Hall the better that will be for the city schools."

But the mayor said the school system failed to provide accurate spending information: "There was not timely reporting or monthly closeouts that enabled anyone in to provide the sort of oversight necessary to ensure that the CEO did the things she said she was doing."

Officials generally agree that the school system did not get enough help with its finances.

"We all made some assumptions that didn't turn out to be true: that the separation from the city would be easier," said Barbara Hoffman, a former state legislator who helped write the 1997 legislation.

To deal with the problems, spending on administration rose rapidly and the system often relied on expensive consultants to do the work, particularly when it involved putting in computer software systems to manage the finances or keep track of students. Annual spending on administration nearly doubled in five years.

While some of the increase may have been justified, administrative costs rose higher in the past couple of years than in any other system in the state.

Those costs are now substantially lower. About half the North Avenue administration has been laid off since January.

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