As former state Sen. Robert R. Neall prepared to present a crucial plan today to the governor's staff, the Baltimore school system's financial adviser said he believed the city schools need to be redesigned to operate more efficiently in the future.
Gov. Robert L. Ehrlich Jr. has asked Neall, who has been thrust into the role of the system's chief financial architect, to produce a blueprint for fiscal accountability for the cash-strapped school system. That plan is a condition of a proposed $42 million state advance that school officials say will help them pay bills and meet payroll through June.
As late as yesterday afternoon, much of the plan was still being polished, Neall said in an interview with The Sun, and he offered few details. But he did say that the system's central administration will have to get leaner and more productive in coming years. The staff at the system's North Avenue headquarters had grown to 800 when Neall - known for his financial acumen - arrived in October to help. After layoffs he recommended, there are fewer than 400 central office employees.
And the number could get smaller, Neall said yesterday - possibly as low as 200 people.
"We are not going to be able to afford a Montgomery-esque staffing model," Neall said, referring to the larger-by-comparison central office staff in the more affluent Montgomery County school district. "We're taking this organization to a different size ... and we're going to try to sit on it and keep it there."
The school system is facing a $58 million accumulated deficit and has had to resort to drastic measures to erase it. In addition to having to lay off close to 800 employees this year, school officials have had to go to the city, the state and a private foundation for financial help.
In the short term, Neall said, the $58 million in an advance and loans that the school system hopes to receive from the state, city and the nonprofit Abell Foundation to handle an immediate cash flow crunch won't prevent further belt-tightening through the end of the current fiscal year, June 30.
Layoffs and employees pay cuts - which were proposed in recent weeks but shot down by angry union members - remain options, Neall said. But he said such attempts at cost-cutting could face court challenges.
Neall said the steps the school system has taken to rein in spending, and measures that will be taken between now and June, are critical to its future.
"This is the most difficult fiscal year this organization has faced in recent history," Neall said. "This is a crucial make-it- or-break-it year."
What happens after the cost-cutting is also important, he said.
To maintain school system productivity with a smaller staff, Neall said, the profile of a central administrator may have to change.
"We're going to have to develop, train and motivate some real hustlers to make things happen," he said. "We're going to use a combination of younger people who think they can change the world, with a 60- to 70-hou-a-week work ethic. To be sure some may be a little underqualified, but that's the prototype."
Neall also said that the school system needs to have outside constraints on its spending habits. Much of the system's deficit can be blamed on years of overspending.
He said he plans to recommend to the governor that the school system be required by law to balance its budget, something it currently does not have to do.
And while the budget trimming goes on, Neall said he understands that academic performance will be closely monitored by a range of interested parties - from federal courts who oversee some city school programs to parent groups.
"We're going to have many masters," he said.
Yesterday morning, for example, Neall met with judges overseeing two important court cases involving the city school system. In his meetings with U.S. District Judge Marvin J. Garbis and Baltimore Circuit Judge Joseph H.H. Kaplan, Neall said it became clear that the system will be expected to maintain high academic standards, even while cutting programs and employees. Garbis oversees a special education case known as Vaughn G., and Kaplan, along with a federal judge, oversaw creation of the city schools' current governance system.
"They do not want to see a diminution of classroom activity, of the education program," Neall said.
He said school officials must consider the perspectives of judges, as well as parents, students and teachers, in devising the accountability plan.
With the exception of the savings-and-loan crisis of the 1980s, Neall said, "this is the most complex financial problem I have ever encountered in my career."
Should the system manage to get its fiscal house in order, Neall estimates that it will take a minimum of two years for the schools to dig out of the financial hole the system is now in.
And while he can't predict where the deficit will stand July 1, he said he is hopeful it won't grow past the $58 million.
If it is substantially greater, he said, he will have failed in his mission of untangling the system's financial mess.
But if it is lower, he said, "it will be the miracle of the loaves and the fishes."
Sun staff writer Mike Bowler contributed to this article.