More money woes

July 15, 2004

THE STATE AUDIT that calls into question the way the Baltimore school system has been spending federal money, as reported yesterday by The Sun's Liz Bowie, raises serious issues about financial control and competence on North Avenue.

But for a system barely off the ropes after the big deficit and cash-flow problems of earlier this year, the state's proposed course of action -- to hold back $18 million in September -- seems hasty and more than a little draconian.

The city disputes $7 million of the total, and the city solicitor, Ralph S. Tyler, not unreasonably asks why the state can't wait until all the arguments have been thrashed out before imposing drastic sanctions. Nancy S. Grasmick, the state schools superintendent, said yesterday she sees no point in talking further and wants to get on with a resolution. She says that the quicker the damage is cleared up, the less painful it will be in the long run.

Nationwide, recent disputes in a variety of districts over the spending of funds in the Title I program -- which is specifically aimed at low-income children -- have involved much smaller amounts than are at stake in Baltimore.

Generally, they are resolved with a reform of the budgeting process and a guarantee that the funds will not be misspent in the future. But Ms. Grasmick said she was concerned that the problem was so big in Baltimore that dramatic action was called for.

It's important to understand that misspending Title I money, in this case, does not involve embezzlement or the construction of plush office space or any similar outrage. It has to do with using the funds to support programs that also benefit students outside the Title I program -- for instance, in the city's decision in 2002 to hire academic coaches. This is hardly scandalous.

It's also important to understand that the $18 million sanction is essentially a threat. If the city enters into mediation with federal representatives and they work out a course of action before September, Ms. Grasmick says, that threat will be withdrawn. Asked yesterday if she would then lobby the U.S. Department of Education to forgive the $18 million, she replied, "Absolutely."

That's encouraging news. The people of Baltimore, and their friends throughout the state, will be watching intently as this latest drama unfolds.

It is unfortunate that the school system's financial woes have become so deeply embroiled in the gamesmanship between Mayor Martin O'Malley and Gov. Robert L. Ehrlich Jr. That's why evidence of Ms. Grasmick's good-faith efforts to foster a just solution will be met with relief. But she hasn't given the process very much time.

That said, the Title I program is supposed to help poor children; the people who run Baltimore's schools should take that responsibility seriously, and fix their spending.

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