School officials defend finances

They reject city's offer to manage capital funds

'We are confident we can do it'

Leaders say uses exist for unspent $97 million

February 26, 2005|By Laura Loh and Eric Siegel | Laura Loh and Eric Siegel,SUN STAFF

Baltimore school officials defend yesterday how they have handled money for school construction, and rejected a proposal by the city's Planning Commission that such funding be taken out of their hands and controlled by city agencies.

On Thursday, the commission sharply criticized the school system's management of its construction and renovation projects, although it approved the system's capital spending plan for the coming year. The commission's approval was given on one condition: that the city take control of certain school construction funds.

The commission's action is part of a larger push by Mayor Martin O'Malley to take over responsibility for the day-to-day maintenance of the city's dilapidated schools. O'Malley and school officials have been in talks for months, but no agreement has been reached.

The commission's criticism came after school officials acknowledged last month that about $97 million in approved construction money from the state and the city had gone unspent over the past five years. City planners said they were alarmed about the unused funds, which included $38 million in city bond money dating to 2000. The commission recommended turning over that bond money to the city.

School officials responded to the commission's findings yesterday. They said they have identified uses for all of the $97 million, but the money cannot be spent yet because the projects are in various stages of completion. Some projects are in the planning stage. Others are awaiting approval by the state, which funds a major share of school construction projects.

Schools chief Bonnie S. Copeland said she believes there has been a misunderstanding between her staff and the commission, although the two sides have met several times and exchanged correspondence in the last few months.

"I'm really wondering if they understand the process that we need to go through" to spend construction dollars, she said. "It's a protracted process."

Peter E. Auchincloss, the Planning Commission's chairman, did not back off yesterday from the commission's action. He reiterated some of the strong criticism he leveled at the school system at Thursday's meeting, where the commission also recommended that the system close an "appropriate number" of underpopulated schools.

"We have absolutely no misunderstandings," Auchincloss said. "We just have lots and lots of documents that clearly shows they're not sure what they have."

"There's no sense of urgency. [Thursday's] action was to create a sense of urgency."

But school officials said they don't believe control of city construction money should be taken out of their hands, as the commission is demanding.

"I just don't think there's any reason for it," said Jeffery N. Grotsky, the system's chief of staff. "We've accounted for the funds. We know where the funds are. Until someone can show that we have been irresponsible and unable to manage the funds, we are confident that we can do it and continue to do it in a proper way."

Auchincloss gave an example of what he called a "litany" of complaints against the school system in the area of construction spending.

Last month, he said, school officials told commission members on a Friday that they had $9 million in a capital reserve account. The following Monday, he said, the officials told the commission the account had a balance of $19 million.

"I said, `How did we find $10 million over the weekend?' They said, `We turned on a computer in another office and we found there was $10 million in state capital appropriations from fiscal year 2000 that no one knew about,'" Auchincloss said, recounting the exchange.

He acknowledged school officials had "worked very hard" to comply with Planning Commission requests since they were taken to task in November, but he called their responses "a day late and a dollar short, quite frankly."

Copeland, who has headed the school system since 2003, said she and her staff have been working for nearly two years to undo problems in the way the system handled its spending on operations and construction. Much public attention has been paid to the system's efforts to recover from a $58 million operating budget deficit, which accumulated under Copeland's predecessor and contributed to a cash-flow crisis that led to major spending cuts and layoffs last school year.

Copeland said she has long known of major problems in the capital budget process as well.

The system's chief financial officer, Rose Piedmont, has been working for more than a year to create a clear financial accounting of every existing school construction project, many of which are spread over several years and receive funding from multiple sources, Copeland said.

Last month, Copeland acknowledged in a letter to city planning director Otis Rolley III that gathering financial data the commission demanded has been "much more challenging and time consuming than envisioned."

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