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State's hand forced on funds


State schools Superintendent Nancy S. Grasmick said yesterday that she was following federal regulations when she withheld more than $35 million in funds from the cash-strapped Baltimore public school system.

The State Department of Education, which distributes federal funding to local school systems, would have faced sanctions from the federal government if her office had released the money to the city, Grasmick said. But she added that she is willing to work with city school officials to help them become eligible to receive the funding next month.

"I'm not trying to be punitive to them," Grasmick said. "We just have a fiduciary responsibility."

The money - $38,285,254 in federal Title I funds, which are earmarked for students in poor schools - was due to be released to the school system last month, once city school officials submitted a "master plan" detailing how they intended to spend the federal funds.

But that plan has been delayed until at least next month, schools chief Bonnie S. Copeland said, because the school system is facing a financial crisis and has had to make changes to all of the system's spending plans.

The system is struggling with a $58 million deficit that has forced hundreds of employee layoffs and may trigger up to 1,200 more.

Without the city system's master spending plan, Grasmick said, the state could not release the Title I money, or any other federal money that needed to be accounted for in that plan - no matter how badly the school system needed it.

"The problem, of course, that we have across the board is cash flow," Copeland said. "So [withholding the Title I money] just compounds the problem."

Grasmick agreed that Copeland should get more time to submit her plan, based on the city school system's unique financial situation.

"But that doesn't mean ... that I can give them more money without a plan," Grasmick said. "We will move heaven and hell to work it out with them. But I don't think it's fair to expect us to give money [when they haven't] met the legal requirements. Because it places all of us in jeopardy."

Copeland said yesterday that she didn't know that delaying the master plan would hold up Title I money.

"I'm the new kid on the block. I didn't realize that that was the case," said Copeland, who took over in July. "If I had known it was $35 million, maybe I wouldn't have said February. Maybe I would've hurried up."

The spending plans are crucial because they help Grasmick and other state officials determine whether local school systems are using federal money the way federal regulations stipulate, said JoAnne L. Carter, assistant state superintendent for students and school services.

The state could not approve an earlier plan submitted by the city school system because it was out of compliance with provisions of the federal No Child Left Behind Act, which requires school districts to give students in failing schools a choice about where they attend, and also provide free tutoring, Carter said.

The federal regulations require school districts to spend 20 percent of the Title I funding to pay for students to attend better schools or receive extra after-school help. That means that of the city school system's $50 million in federal Title I funding, officials should have budgeted to spend about $10 million this school year for that purpose.

Instead, Copeland's original plan showed the schools had budgeted only $5.1 million.

In addition, many parents had complained to state officials that the city school system had not provided enough slots in higher-performing schools for students who wanted to transfer, and that the system failed to make clear that families would not have to pay for transportation in order to attend a better school outside of their neighborhoods, Carter said.

"So we have come to the conclusion that the process they had in place needed to be revised," Carter said, "to be more parent-friendly."

Under the original plan, city schools would have been out of compliance with the federal school-reform law, which could have triggered sanctions, Grasmick said. "That was expressed directly to us by the federal government," she said. "And we [the state] would be the people under sanctions because we're not allowed to [distribute funding] without approved plans."

Federal education officials, reached yesterday, said Grasmick was right to withhold the money.

"It's not generally the first course of action, but what they did was correct," said Thomas M. Corwin, associate deputy undersecretary for innovation and improvement in the U.S. Department of Education. "The state has the first level of responsibility for monitoring the enforcement of the law."

After a meeting yesterday between city and state school officials, Carter said she was confident the city schools would allocate the full amount of Title I funding, and do more to assist parents who want their children to transfer or receive tutoring, which are conditions for meeting federal requirements.

"From our standpoint ... they have put themselves back into compliance," she said.

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