A small but powerful panel controlled by the state would run the troubled Baltimore school system for at least the next 16 months under a tentative agreement brokered last night between Gov. Robert L. Ehrlich Jr. and Mayor Martin O'Malley.
Officials called the new Baltimore City School System Authority a "superstructure" that would temporarily assume all the powers of the current school board, and would balance the system's books and cut costs. The agreement, which requires General Assembly approval, would pave the way for the schools to receive a state loan of $42 million or more to solve a cash-flow crisis.
With an accumulated deficit of at least $58 million and a crushing cash flow problem, city schools could run out of money to pay bills by the end of next month with no help. Questions surrounding how the deficit came about have drawn the attention of U.S. Attorney Thomas M. DiBiagio, whose staff has begun interviewing people familiar with school affairs.
State leaders would not say last night whether teachers would face immediate pay cuts or layoffs under the new management structure.
Outlines of the pact were hammered out during a closed-door State House meeting last night that appeared to deliver a significant victory to the governor, who has lobbied to bring more accountability to the deficit-ridden schools.
O'Malley entered the meeting with a final trump card: Early in the day, he had received agreements from current school board members that they would resign under certain conditions that would protect teachers. But the mayor's suggestions were quickly tossed aside.
While details were to be completed over the next three days, with emergency legislation ready by Monday, the authority's shape largely followed a proposal drawn by Ehrlich advisers. By reaching a tentative understanding, city and state officials have discarded the option of placing the system in receivership, a far more drastic step that would have abolished union contracts.
With talks close to conclusion, the governor appears to have broken a promise he made early in the week that parents and community groups would be included in negotiations. State Budget Secretary James C. "Chip" DiPaula Jr., the architect of the plan, said that parents could come to bill hearings in Annapolis to let their views be known.
Panel to take shape
Ehrlich would likely appoint a majority of the new panel of at least three people, and would name its chairman, giving the governor far more oversight of city schools than exists now. The board would have budget and audit control, and while the governor proposed a three-person panel, some lawmakers suggested it include five people - with two appointees each by the governor and mayor and a fifth from an independent entity.
The governor said he would probably name former state Sen. Robert R. Neall, a financial administrator with the Johns Hopkins Hospital and Health Systems as one of his appointees. Neall volunteered as an adviser to the school system before resigning after the school board would not endorse a 5 percent teacher pay reduction.
"This is an opportunity to fix [city schools] for good. So, Bobby, don't screw it up." Ehrlich said referring to Neall.
State schools Superintendent Nancy S. Grasmick also could be on the authority.
Neither Grasmick nor Neall is a Baltimore resident, so the control authority could have only one city member, a troubling prospect for current school board members and some education advocates.
City schools chief Bonnie S. Copeland said she didn't expect to be on panel and hoped to continue as the chief executive officer.
The agreement would essentially dissolve the current nine-member school board, gutting the management structure put in place by the General Assembly seven years ago to reform the school system.
"Most of the things the governor wanted were agreed upon," said Comptroller William Donald Schaefer, who participated in the talks.
O'Malley favored a less extreme resolution offering a plan that avoided teacher pay cuts and layoffs until the summer break, but his proposal for a memorandum of understanding was quickly rejected during last night's session.
But the mayor said last night that he thought the arrangement was fair, and called it a "great compromise."
"We are going with the governor's plan," O'Malley said as he and Schaefer left the State House. A mayoral spokesman, Stephen Kearney, later described the comment as "light-hearted" and a reference to the former governor.
In an interview later, the mayor said that while the new board "would have the ability to enter into contracts" as the current board does, "I don't believe we should do away with the collective bargaining with the stroke of a pen."
Pay cuts for teachers or layoffs had not been decided, he said.
Even as state and city leaders negotiated a solution to the school crisis, federal investigators in Baltimore had begun interviews to see if there had been any misuse of school system funds.
A Baltimore education activist said he has been interviewed to determine if "there was some misuse or theft" of funds in the school system. Tyrone Powers said investigators also have met this week with the school system's chief academic officer, Cassandra W. Jones.
Powers, who is employed as director of the Institute for Criminal Justice, Legal Studies and Public Service at Anne Arundel Community College and is a former FBI agent, said investigators in DiBiagio's office interviewed him Monday. "Their initial concern was the fiscal stuff, especially if federal funds were involved, to see if there was some misuse or theft," said Powers, who has championed more funding for schools.
Powers said he requested the meeting with investigators to discuss a variety of topics, including possible school system violations of the Equal Employment Opportunity Commission.
DiBiagio's staff met with Jones at 1 p.m. Wednesday, Powers said, after he suggested they contact her. Powers, who knows Jones, said he thought she had useful information.
Jones could not be reached for comment and Edie House, a school system spokeswoman, had no comment about whether any school official had been interviewed or contacted by DiBiagio's office.
Vickie E. LeDuc, a spokeswoman for the U.S. attorney's office, said she could neither confirm nor deny whether the federal prosecutor was investigating the schools' financial troubles.
Early this month, DiBiagio urged anyone with information that indicates criminal wrongdoing in the system's financial crisis to call his office. DiBiagio said he would be interested to hear any information about possible kickbacks, bribes, no-show jobs or theft that contributed to the system's deficit.
Much of the school system's future remains uncertain. Officials could not say what management structure would be in place after the 16-month emergency period. State leaders hope to eradicate the deficit by June 2005 and have the loan repaid within a year after that, but the dates could change.
Another outstanding issue was whether a school board would exist to serve as advisers to the new authority. In what may be an initial step, school board members were directed yesterday to tender their resignations to O'Malley.
"We, the board, unanimously agreed to offer our resignations, but contingent only on the mayor's being able to broker a deal to keep local control of the schools, and to avoid receivership," said board member David Stone. "We believe that that would be very disruptive to the system, and we want to avoid that."
The majority of the board could not be reached for comment, but Brian D. Morris said, he issued his letter of resignation against his better judgment. "I have done that against absolutely every fiber of my being," Morris said. "I vehemently disagree with the concept of resigning from the board."
But Morris indicated that state leaders seemed to be engaging in a tug of war for power, and the Board of School Commissioners was the rope.
"There are those who have power to help the system that want to use our contingent resignations as a trophy for their mantels, and that's the only way that they'll move to do what they're required to do by law," Morris said.
Under the plan
The proposed Baltimore City School System Authority will:
Give the state control over city schools for at least 16 months.
Assume powers of current school board, including finances.
Include at least three members, a majority of whom would likely be chosen by the governor.