Having spent $5 million more than they had last year, Baltimore school officials said yesterday they will have to make "very hard decisions" in trimming this school year's spending to make up the deficit.
Chief Executive Officer Carmen V. Russo disclosed the shortfall yesterday and pledged not to cut programs that affect children. She would not rule out having to reduce costs on the administrative side.
"We are not touching the children and their programs," she said.
The announcement of the shortfall - out of a budget of $850 million - comes at a time when school officials are seeking more than $100 million in new state aid to try to reform the city's low-performing schools. School officials downplayed the problem, but an influential state legislator criticized school system management.
"Every time you run a deficit and you have to eat it out of the next fiscal year, you just deprive the students in that school year of needed resources," said Del. Howard P. Rawlings, a Baltimore Democrat and House Appropriations Committee chairman. "Very clearly, they're having a fiscal management problem that they have to address."
Rawlings said officials need to run the city school system with "discipline."
School officials said overspending occurred because the school board is committed to making improvements quickly.
C. William Struever, vice chairman of the board, said it "needs to take some responsibility" for the deficit. "This board feels a deep sense of urgency to move forward in fixing our schools. ... If we are going to err, we are going to err on the side of going forward."
Had it not been for a $15 million surplus entering the year, the deficit would have been far worse.
Under Robert Booker, the former chief executive officer hired for his financial background, the school system spent $20 million more than its revenue for the year ending June 30.
Booker made decisions in conjunction with the school board and its finance committee, chaired by board member Colene Daniel.
About $10 million was spent to repair toilets, boilers, roofs and floors in dilapidated buildings. Another $7 million was consumed by unexpected cost overruns on a computer contract with Information Control Systems. The company managed a change in computer systems used to track student records and financial data.
The system also spent $3 million more than budgeted to provide school breakfasts and lunches and on other smaller items, said Donald Manekin, the school system's interim chief operating officer.
In addition, he said, the system experienced a shortfall in revenue.
Fortunately for the school system, the surplus built up in the previous two years helped defray $20 million in extra spending, leaving a $5 million deficit.
Manekin said the system would take steps immediately to reduce spending so that the school system would not end the current fiscal year, which ends in June, with another deficit.
Struever pointed out that the school system, although it carries a deficit from last year, has cash reserves.
"We can write a check. It is not going to bounce," Russo said.
Russo said she will work with Manekin and the board to come up with a $5 million list of what can be trimmed. But she must also find $8 million not budgeted in this year's spending plan.
The school board voted two weeks ago to end social promotion, but the price to provide extra tutoring and after-school help for students in danger of failing is $8 million.
Russo said she would aggressively seek new money from the state, foundations and federal sources for the current year.
One place additional money is not likely to come from is the city. Mayor Martin O'Malley said he has committed $5 million more than required under the state formula this year.
"I don't have more," O'Malley said yesterday.
School officials have not discussed the deficit with the mayor.
Cathy Brennan, education director for Advocates for Children and Youth, called the school system's overspending "atrocious" and "irresponsible."
"The board has a responsibility to ensure that the system operates effectively, and the system cannot operate effectively if its books are not in order," she said. "It also makes it difficult for the system to justify asking for additional money if they can't account for the money they've already received."
But Struever defended the system's financial management. He said Moody's Investors Service had recently given the system an AA1 bond rating, the highest rating a school system can receive.
"We think our year end is a credible year end," Struever said. "I am not embarrassed."