After another audit criticizing how the state oversees $10 million in annual public funding to the Maryland School for the Blind, legislators plan to investigate the school's fiscal affairs and why oversight has been so lax.
The recent audit by the state Department of Fiscal Services paints a troubling picture of state education officials charged with budgetary oversight of the school. The officials failed to follow the recommendations of previous audits that criticized management decisions and how public money was spent at the school, the recent audit found.
"You have to wonder where the state has been through all of this," said Sen. John J. Hafer, a Western Maryland Republican who originally called for a probe of the school in Northeast Baltimore. Hearings are scheduled for September in Annapolis.
Nancy S. Grasmick, state superintendent of education, said through a spokesman that her agency has just completed an independent audit of the school; results should be available in about two weeks. "We have not yet achieved a level of perfection, but we have made significant strides toward correcting problem areas," she said.
Officials at the school contended that there has been no wrongdoing.
The audit -- in which the Department of Education concurred on all points -- included these findings:
* Discrepancies between budgeted and actual expenditures were not investigated by state education officials, a point that was raised in a 1992 audit. Auditors noted that in fiscal 1993, the school's contractual services totaled $329,631 while the approved budget provided $218,078 -- a discrepancy of $111,553.
* The Department of Education had little or no documentation on the school's spending.
* State officials should be included in any discussions of the possible sale or lease of buildings and property at the school's 95-acre Overlea campus.
"Because the vast majority of the School's costs are supported by State funding, and because a more efficient and effective use of campus space and facilities could result in reduced operating costs and possibly reduced State support," the Department of Education wants to monitor those plans, the audit said.
On Thursday, Overlea residents were told by a school official that several parties, including the Kennedy Krieger Institute in Baltimore, have shown an interest in leasing campus buildings next year.
The latest audit, released last month, and the announcement of hearings by the Joint Committee on Budget and Audit come as officials at the historic school confront major challenges. Annual state funding to the school has decreased by $300,000 since 1991. Meanwhile, the school must deal with a changing student population, including more children and young adults with multiple disabilities.
The state funds approximately 85 percent of the $12 million budget at the school, which is governed by a private, all-volunteer board of directors.
In April, The Sun detailed a major school reorganization in which five program directors were fired, two board members resigned in protest and 40 other staffers quit or saw their positions abolished. Parents of students, current and former staff members and education professionals said the changes hurt student care and the school's reputation.
Harry F. Wright Jr., chairman of the school's board of directors, said the drop in state funding has led to "the toughest times" in the school's 142-year history.
Mr. Wright said he has not seen the most recent state audit but defended the school's financial operations. An annual audit by a private accounting firm has consistently issued a favorable report on the school's finances, he added.
"No one has ever criticized us," he said. "All of this criticism is very disturbing to me. If [state education officials] don't like the way we spend the $10 million, they should tell us."
But Mr. Hafer said school officials have not yet resolved questions, raised in the 1992 audit, about who received $7 million in salaries and wages. He also questioned the purchase of a 1994 Buick for the school president, Louis M. Tutt, and $35,000 in renovations to the president's campus home while school officials were lobbying to restore state funds in 1993.
"It's becoming more obvious to me that in spite of the 1992 audit, there is little evidence school officials or board members have taken any recommendations seriously," said Mr. Hafer, a trained accountant.
"They [school officials] came to my office twice and appeared to be cooperative, but some of the things they told me turned out to be not altogether true," he said.
For example, he said Mr. Wright and Mr. Tutt told him the school's board of directors had not discussed selling or leasing school property. In fact, the board hired a consultant in 1991 to study fund-raising alternatives, including selling land, the senator later learned.
Anthony J. Verdecchia, chief legislative auditor, said overspending in a state budget is "not uncommon" but auditors want to better understand the basis for the $111,553 discrepancy and how it was spent.
Mr. Wright said he did not know about the discrepancy. David L. Evans, the school's chief financial officer, could not be reached.