Poor financial planning by Baltimore school administrators and costly remedies for the system's enormous problems have contributed to a multimillion-dollar deficit, school board members said yesterday. As a result, the district is facing the prospect of its largest layoff in years.

Last night, school system Chief Operating Officer Mark D. Smolarz acknowledged at a school board meeting at the North Avenue headquarters that the system would need to reduce costs by as much as $30 million from this year's budget to ensure it is balanced.

Its first step came this week with the layoff of 396 temporary employees, and stronger measures are likely before Christmas because of the grim figures.

Smolarz said the district ended the first quarter in September with a $6 million deficit, adding to a $19 million deficit the school system carried over from last year.

While it is unclear where the deficit spending occurred, school officials mentioned several factors, such as an expensive summer school program, increasing employee health care costs and the addition of highly paid administrators.

School board member Kenneth Jones said there was one other reason: When last year's budget was being planned, items that were normal, recurring costs were not included.

"Ordinary stuff got left out the budget, and then [bills] showed up and hadn't been reflected in the plan and had to be paid," he said.

Jones said school administrators had been spending money during the last school year believing they were on target to meet the budget - until those bills that were unaccounted for came due late in the school year. Worse, the same mistake was made this fiscal year, Jones said.

"It is difficult to believe that [the board] suffered the level of misguidance that we did last year because it is not necessary," Jones said. "We can do better than this, and we will."

Jones said that Chief Executive Officer Carmen V. Russo is responsible for overseeing management of the budget. Neither Russo nor Smolarz returned phone calls yesterday.

The temporary employees who were laid off this week, virtually without notice, included classroom aides, librarians and custodians.

The news of cutbacks angered staff and education advocates. Christopher Maher, education director at Advocates for Children and Youth, said he was particularly disturbed that school board members have been unable to get precise information about staffing and were not alerted to the budget problems earlier.

"It is symptomatic of the epidemic that runs through North Avenue of keeping everything close to the vest," he said. "This is just more evidence. ... No one knows what is happening, not even board members."

At last night's meeting, several board members expressed surprise that the deficit had grown so large and anger that they were kept in the dark. Member Sam Stringfield said if he had known in May that the district was facing a shortfall, he would not have approved the hiring of additional teachers to reduce class size this school year.

If the board made a mistake, he said, it was that "we failed to notice the [financial] system was failing, and now a bunch of people are paying the price."

Board President Patricia Welch said perhaps impatience to see improvement in the city schools had caused the board to spend more than it should have. But, she said, "it isn't going to serve us to point at who did it."

The board will take several steps in the next week to resolve the budget problems before Christmas. On Monday, Russo and top administrators will meet with the unions representing employees to ask for suggestions on how to manage the budget crisis. Then staff will present a series of options to the board at a special meeting next week, and the members will vote on those options.

In addition, board member C. William Struever asked Smolarz to come up with a list of things the district could do to help temporary employees who might have worked for the system for years and were laid off this week. "I want to see some serious effort to mitigate the hardship of those who have been with us," Struever said.

Six board members contacted yesterday said they were confident the budget problems would be straightened out this year. Several said that while the deficit is tens of millions of dollars, it represents a small percentage of the $900 million budget.

Three other members declined to comment.

"We face a serious but manageable situation," Stringfield said. "I think we are accountable, and it is our job to balance this budget."

Some board members said that while the money spent improved the school system, budget constraints should have been met. But a number of educators blamed the problem partly on expensive decisions by top leaders.

At least a half-dozen highly paid administrators have been added in the past year, as well as more than 100 academic coaches who earn as much as $70,000 each.

Adding to the district's budget woes have been increases in the cost of health care for employees - about $12 million this year - and the costs of special education, information technology and summer school for 40,000 children.

While board members might have realized that cuts would have been required in other areas to pay for those items, some said that no one alerted them.

"We were sort of caught by surprise," said board member J. Tyson Tildon. "We function by committee, and the finance committee may have been more aware of [the deficit]. Now we need to pay more prudent attention."

In fact, Jones said, he believes that even top administrators didn't realize the extent of the problem.

External auditors, who reviewed the school system's previous-year expenditures, criticized the district Monday night for not having controls in place requiring administrators to make sure there is money in the budget to cover an expenditure before it is made.

The board must deal with how to cut tens of millions of dollars midway through the school year. About 80 percent of the school system's budget goes to paying salaries and benefits for its 13,000 employees.

After laying off the temporary workers this week, school officials said they will turn to permanent employees, hoping the unions that represent them will agree to concessions in the form of pay cuts or furloughs.

But Struever said he believes that the system must find more permanent solutions than employee concessions.

He said he wants an analysis of the administrative work force at the district's North Avenue headquarters and at the schools to see if there are too many layers of bureaucracy and where employees could be used more efficiently.

"We don't want a system focused on cuts and pulling back," Struever said. "We want a system that is surging forward."

Sun staff writer Mike Bowler contributed to this article.