A lesson learned?

The mediated agreement announced last week allowing Baltimore schools to keep $18 million in federal funds for low-income students that state auditors said had been misused is welcome, but it's hardly an exoneration. While city school officials don't have to replace all the money, they must give low-income students additional services as well as improve internal controls. That's a fair resolution - and school officials must live up to it.

The dispute came to light in July 2004 when state auditors found that from 2001 to 2004, city school officials had used some of the federal funds - known as Title 1 funds - for standard services, instead of the extra tutoring and other special services that the federal money is meant to provide. While no fraud was alleged, poor record-keeping by the city school system was certainly an issue. And the state's audit came as Baltimore schools were reeling from the discovery of a $58 million deficit, another instance of poor record-keeping, among other things.

Although city school officials accused the state of launching an unwarranted attack, the two sides agreed to a federal mediation process that is frequently used to resolve audit disputes. After 14 months, the agreed-upon settlement requires the school system to spend $10.5 million in local funds to provide extra tutoring and other academic programs to low-income students over the next three years. In addition, the school system has to establish federally acceptable methods to document how Title 1 money is spent - or it will be forced to repay $7 million.

Bonnie S. Copeland, the schools' chief executive officer, insists that the problem was one of documentation and not management. But being able to document services to students is part of good management. The Title 1 dispute should be the last time the school system puts itself on the hook for not learning that lesson.