The Maryland State Department of Education may have to pay back up to $540,000 in federal money intended to help the state's poorest schools after a scathing audit found that Baltimore City was one of two school districts that misspent the funds, using the money for dinner cruises, makeovers and meals.
The report, reviewing grant expenses from 2009 and 2010, was conducted by the Office of the Inspector General for the U.S. Department of Education. It found similar misspending in Prince George's County schools.
The audit findings come as the city school system has been embroiled in controversy over financial mismanagement in the past year that became an issue as the city sought funding from the state legislature to fix its dilapidated infrastructure.
Among the inappropriate expenditures highlighted by auditors was $4,352 of stimulus funds and Title I dollars — which are designated for schools with the poorest populations — that two elementary schools used to pay for dinner cruises in Baltimore's Inner Harbor. According to the report, the cruises were said to be for parents and school volunteers and included more than a dozen staff members.
Republican state lawmakers called attention to the federal report Wednesday, saying it reveals that the state needs better and more detailed auditing.
"These dollars were supposed to put more teachers into our classrooms," said Senate Minority Leader E.J. Pipkin in a statement. "Instead, it's putting them into cruise ship dining rooms."
The audit also drew concerns from Democrats who said the spending was counter to the mission of the stimulus program.
"Obviously, no matter whether it's state, local or federal dollars, the taxpayers should know exactly where their money's going and exactly what it's spent on," said Del. Keiffer J. Mitchell Jr., a Baltimore Democrat. "I don't think when President [Barack] Obama set aside money to stimulate the economy and improve education that it was meant for a makeover."
In a statement, city school officials acknowledged the findings, saying that the district "provided revised guidance, training and support to district and school staff on federal grant guidelines" in the 2010-2011 school year.
District officials said $15 million of $112 million the city received that year was reviewed.
The statement also addressed the dinner cruises.
"Such parent recognition events are not allowable under federal grant guidelines because they are not explicitly linked to building parent capacity," said the statement, referring to school efforts to attract more parent volunteers. "Had these not been grant funds, the expenses would be considered acceptable as general fund expenses."
The auditors also called the $2,413 that the district spent on food for a parent-teacher association meeting "unnecessary and unreasonable."
According to the auditors, the money spent on fried chicken, potato salad, coleslaw, biscuits, cookies and soda for 28 attendees to discuss a school's budget averaged to $99 per parent, which far exceeded the federal government's $36 per-diem for meals at the time of the purchases.
Auditors highlighted an inappropriate $1,336 expenditure to take 30 people to a theater performance downtown that was described as a parent appreciation dinner and awards ceremony. It also included dinner, dancing and a performance by a local singer.
The report also found that the district inappropriately paid $500 for a catered "makeover day" for mothers and daughters at a local elementary school.
"A makeover day does not fit the requirement of a parental involvement activity, which is to improve student academic achievement," auditors concluded.
Auditors also questioned spending of grant money that is intended to be used to avoid reducing essential educational services. The district used $5,410 for entertainment, such as face painters, balloons and a steel orchestra, at a middle school fair.
"None of the expenditures were for essential activities or services ... or related to school reform, as stated in the purpose of the grant," auditors wrote.
There also was an instance where the system provided faulty and incomplete information.
The district reported that it spent $1,425 in Title I money to order food for 100 people for an activity at a school, but auditors said the sign-in sheet the district provided as supporting documentation only included 17 names. The district failed to provide other documentation, such as an agenda that specified the activity.
"As a result," the audit concluded, "we could not determine whether the activity, and therefore the food, was allowable."
The report is the latest in a series of financial missteps by the city school system.