In April 1996, Maryland schools Superintendent Nancy S. Grasmick stood before the Baltimore City Council and promised to help solve the city school system's financial and academic problems, if the city would agree to give the state more authority.
Eight years later, the city-state partnership she enthusiastically endorsed has improved academic performance. But financial management, which she singled out in 1996 as a cause for concern, has gotten much worse: a $58 million deficit. The system might be forced to cut teacher pay and lay off workers, in addition to the 800 dismissed in the middle of this school year.
And now, as Grasmick is about to be given even more authority over the ailing system, state lawmakers and critics are asking: Where was she when the red ink was pooling?
"I've been disappointed with the actions of the superintendent," said Sen. James E. DeGrange Sr., an Anne Arundel County Democrat and member of the Senate Budget and Taxation Committee. "You can stay actively involved and be aware of what's going on. I think that's part of their role."
Some critics have gone so far as to say that at least half of the responsibility for the school's fiscal problems belongs to Grasmick, who was the state's representative in the city-state partnership.
But no one seems to be holding her accountable, at least not with the same vigor with which the school board members were compelled to submit letters of resignation.
"Someone said, 'Teflon Nancy,'" said Baltimore state Sen. Joan Carter Conway. "That's what they call her."
Grasmick argues that fiscal oversight was never within her power. She said the state wanted control over the school system's finances, but the General Assembly removed that authority when the city-state partnership was formed in 1997.
The fear, she said, was that the deal would be viewed as a takeover rather than a partnership. And so the fiscal oversight remained with the city, she said.
"It's a part of city government, just as in every other jurisdiction," Grasmick said. "We had no authority over the financial management of the system. ... We got their crummy reports, two and three months late."
But lawmakers, union leaders and others say Grasmick should have pressed for reports and taken the issue to the governor or attorney general's office, if she was not getting satisfactory information from the schools.
"The state has all of this investment out there; the superintendent has to be attentive," said Del. Maggie L. McIntosh, a Northeast Baltimore Democrat. "She is not being held equally accountable in this situation. I think accountability is going to be tighter on the state side, too."
Grasmick's boss, Gov. Robert L. Ehrlich Jr., stands solidly behind her. "The governor has absolute confidence in Superintendent Grasmick," said Henry Fawell, an Ehrlich spokesman. "Dr. Grasmick has been aggressively pursuing the reason for the budget crisis."
As the debate rages, there is growing pressure on city and state officials to find a solution to the crisis and to explain to the public what went wrong and who is to blame.
Whether anyone besides the administrators who have already been fired or the board members who have already tendered their conditional resignations will have to surrender their posts remains to be seen.
But the view of Grasmick is that she knows how to weather political storms.
In her 13th year as superintendent, Grasmick, 65, is a survivor among state school chiefs. In fact, she is the nation's longest-serving appointed state schools chief and is highly respected among her peers.
"Nancy's the quintessential survivor," said William Moloney, Colorado commissioner of education. "Her colleagues around the country view her as someone with exceptional political gifts, and those skills will serve her well, what with this political caldron bubbling over."
In Maryland, Grasmick and her husband, businessman Louis Grasmick, are longtime friends and allies of Comptroller and former Gov. William Donald Schaefer. Her relationship with former Gov. Parris N. Glendening was less close, but he strongly supported her reform measures.
And Ehrlich, in the early days of his campaign, approached Grasmick about serving as his running mate. After a weekend of pondering, she politely declined.
Grasmick insisted last week that she is no slacker when it comes to managing money. "I'm in my 13th year," she said. "I've overseen $4 billion in annual budgets, and I've never run a deficit, not once in 13 years."
But the legislature did remove her from the state pension board last year when it restructured the panel in the aftermath of an embarrassing scandal and poor investment performance.
In the case of the city schools, Grasmick said the state inherited the problems and needed to intervene because of poor academic and fiscal performance.
In a videotape of her 1996 appearance, which was reviewed last week by The Sun, Grasmick can be seen telling wary City Council members that the city-state partnership was urgently needed by the system.
Grasmick, who was born in Baltimore, told the council that she wanted the city to have a say in running its schools, which she noted would not be the case under receivership.
"However, that governance needs to be held accountable," which she said would happen under the partnership.
Grasmick described problems with academics, pointing out that in some schools, not a single student achieved a satisfactory score on achievement tests.
But her emphasis was on finances, and she said the system was so mismanaged that it wasn't even taking advantage of money available to it. It lost out on $43 million in state and federal aid from 1993 to 1996, she said.
"There is, in fact, a serious urgency around the dollars," she said. "The ability to process those dollars appropriately, to target them and to use them on behalf of the children of Baltimore City.
"We see that to satisfy the needs of the citizens of Baltimore City and our constitutional requirement as the State Department of Education on behalf of the children of this city, that the best solution and remedy to this would be a partnership that would, in fact, rest the decision-making in a competent oversight board. ... Under the new structure, there is accountability by the state and the city."
But a year later, Grasmick said, her suggestions fell apart when the General Assembly cut the state out of financial oversight.
Mayor Martin O'Malley says he, too, was cut out of fiscal oversight because the new school board was no longer required to submit monthly reports to the city's financial authorities. O'Malley said he does not think the city had any more responsibility for fiscal oversight than the state.
He said the call for school board members to resign to allow the city and state to craft a solution to the budget crisis was "unjust."
"We didn't ask for Grasmick to resign in order to do that," O'Malley said.
Valerie Cloutier, an assistant attorney general who serves as counsel to Maryland State Department of Education, which Grasmick heads, said her review of the law passed in 1997 to create the partnership showed that Grasmick did not have the legal responsibility of fiscal oversight. She said the burden of financial oversight rested with the mayor.
"In my view that's the first level of fiscal authority," Cloutier said. "The mayor had authority to reduce appropriations. It wasn't the state's primary responsibility."
Even so, Grasmick has taken pains in recent weeks to counter charges that she was asleep at the switch in her oversight role as the financial crisis deepened. She issued documents showing that she had warned of troubles as long ago as 2002 and that her annual reports to the General Assembly also hoisted red flags.
Last week she said she had warned legislative leaders and the governor in March 2003 that the schools were in trouble.
Grasmick has also said that she attempted to assign a permanent state auditor to North Avenue school headquarters, but that the offer was spurned by former schools chief Carmen V. Russo.
"I'm willing to step up in accountability if someone would show me what authority I had," Grasmick said. "No one has been able to do that."