Accord reached on Title I funds

City schools can keep $18 million if they improve internal controls, tutoring

Baltimore & Region

October 19, 2005|By SARA NEUFELD | SARA NEUFELD,SUN REPORTER

The Baltimore school system will not have to repay $18 million that state auditors found was misused.

But to keep the money, under the terms of a settlement agreement, the system must improve its internal controls and spend $10.5 million on extra tutoring and programs for the needy children the $18 million was meant to serve.

The deal, announced yesterday, was worked out in federal mediation by the school system and the Maryland State Department of Education.

School system officials maintain that they did not misuse the money, but they agreed to repay all or part of it if they do not uphold their end of the deal in the years ahead.

In a joint statement, state Superintendent Nancy S. Grasmick called the settlement "a major win for the students of Baltimore," and school system Chief Executive Officer Bonnie S. Copeland said it "benefits the students most in need of academic support."

State officials said in July 2004 that the school system might have to repay $18 million in Title I money, federal funds earmarked for schools serving large numbers of poor children.

The purpose of Title I money is to give poor children services beyond those other children have. Auditors, surveying records from 2001 to 2004, found that the school system was using some of the money to give Title 1 schools the same things other schools had, not something extra.

The state said there was no evidence of fraud but that the school system had failed to follow federal rules.

The audit followed a financial crisis in the school system, and school and city officials said at the time that the state's accusation was an unwarranted attack.

Copeland said yesterday that the school system's only shortcoming was in improperly documenting how the money was spent.

"It wasn't a mismanagement issue," she said. "It's a documentation issue, which we're working on diligently."

Over the past 14 months, state and school system officials have worked out the details of a settlement using a U.S. Department of Education mediation service designed to resolve audit disputes. Grasmick said the process was "very long and protracted" and "contentious at certain very critical times."

Under the settlement, the school system will:

Spend $9 million in local money over the next three years on extra tutoring for low-income children. The school system expects to provide tutoring to between 10,000 and 12,000 children this school year, up from about 5,000 last school year.

Spend $1.5 million on extra academic programs for low-income children, starting next school year. It will use this school year to determine what those programs will be.

Establish federally acceptable practices to document the way it spends Title 1 money. If the school system does not uphold that part of the agreement, it must repay $7 million.

Rose Piedmont, the school system's chief financial officer, said the system has implemented all the necessary internal controls. Last school year was the first time in years that the state found the school system in compliance with the requirement that Title 1 schools receive the same state and local money as other schools.

Though Baltimore has 116 Title 1 schools, Piedmont said the money for extra tutoring, at least initially, will be focused on the 54 Title 1 schools that are failing to make adequate progress on the state's standardized tests.

sara.neufeld@baltsun.com

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