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Leadership of schools was absent

Baltimore school spending spiraled dangerously out of control as a system that lacked strong leadership and oversight tried to respond to pressure for improved academic performance, a state panel reported yesterday.

The three-member panel, asked in February to investigate the causes of a $58 million deficit as the city school system lurched toward insolvency, criticized the General Assembly as well, saying it failed to establish clear lines of authority and responsibility with a 1997 law that created a city-state partnership to oversee a rejuvenation of Baltimore's schools.

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The panel said city and state officials failed to intervene when they saw warning signs of the schools' burgeoning deficit -- caused in part because the city system spent money on academic initiatives it could not afford.

"I think it's profound," said Nancy S. Grasmick, the state superintendent of schools. "To just identify one person and say that person's the culprit would have been marginal compared to the magnitude of the recommendations they've made."

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The panel, which Grasmick appointed, offered a scathing assessment of the city school system, declaring that "the makings of a disaster were there from the beginning," including:

No continuity of leadership.

No discipline or accountability.

A failure by top administrators to communicate with each other.

No sanctions for failure to perform.

'It's not my job'

"The culture of complacency and the pervasive attitude that 'It's not my job' established a situation in which the train was moving down the track and all of the conductors were standing at the station watching it go by," said panel member Sanford V. Teplitsky, a lawyer and former Baltimore County school board member.

Bonnie S. Copeland, who was hired 15 months ago as city schools chief, said she wasn't surprised by the panel's findings.

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"This is a look at past practices at North Avenue [school headquarters]," said Copeland. "But within the last year or so, virtually every top job is in new hands, and we've instituted procedures and controls around our finances and operations."

Although the panel found no evidence of fraud by top school officials, it said controls were so weak that Grasmick should authorize a further investigation of several departments suspected of improper spending.

Allegations of cost overruns, improper awarding of contracts and favoritism arose during interviews with more than two dozen school administrators, elected officials and others, and a review of thousands of documents, according to the panel, led by former Baltimore County Circuit Judge Barbara Kerr Howe.

But the panel said it was unlikely that fraud was a major cause of the financial crisis. Rather, it was the failure of anyone in the school system, city or state to take full responsibility for operations and finances of the city's schools.

"Nobody we spoke to said they did anything wrong," Teplitsky said at a press briefing after the meeting. "They told us stories of what other people did wrong."

Problems from start

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The 1997 law was intended to increase state aid to city schools while demanding improved academic performance and accountability. The panel said the law failed to define roles for the school system, the city and state governments, and the State Department of Education when it created an independent city school system from what had been a city agency.

"The expectations, duties and responsibilities of each entity were never clearly defined, forcing each to fly blind into the new system," said attorney Craig A. Thompson, a panel member.

As a result, the panel found, the Board of School Commissioners failed to provide meaningful oversight of spending, often deferring to the judgment of administrators, in the early days after it was formed.

Later, when the board directed the schools to cut costs, the instructions were often ignored by administrators, and the board did not follow up, the panel said. The board sometimes approved contracts after they had been awarded.

The system was run by a succession of administrators during this time. Robert Schiller was in charge for 11 months in 1997. Robert Booker led for two years, and Carmen V. Russo arrived in July 2000 and left last year.

In 2000, the panel said, the system overspent by more than $30 million, resulting in a deficit of nearly $20 million. City and state officials should have intervened then, the report said, but failed to do so.

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From 2001 to 2003, the school system and the school board forged ahead with expensive initiatives, including the reduction of class size and the hiring of academic coaches, despite the fact that the budget could not sustain them, the panel said.

During that time, the budget was growing by 8 percent a year for salaries and benefits, while school system revenues rose by only 2 percent annually, the panel found.

The school system lacked "even the most basic budgetary protocols and procedures," and could not determine how many employees it had because the payroll and human resources departments did not communicate, the panel said.

This shaky structure was rife with potential for wrongdoing, the panel said, adding that it received reports of maintenance and construction contracts awarded without fair bidding.

'Incompetence, ego'

Problems occurred in part because the central administration was hampered by "alarming levels of inattention, incompetence, ego struggles and petty political disputes," the panel found.

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Grasmick said she will review the panel's recommendations to decide whether further investigation is needed.

Copeland said she has already tried to solve many of the problems, for example by appointing an in-house procurement committee to review purchasing contracts before they're taken to the school board.

"We are no longer asking that contracts be approved after the money has been spent," Copeland said.

The panel said it heard "numerous" reports of the awarding of contracts to "friends of the family" without competitive bidding. Copeland said shortly after she took the top job in April 2003, she referred three such contracts for prosecution.

Copeland said she hopes city schools "will soon be out from under" a 20-year-old special education lawsuit in federal court that Grasmick's panel said costs the city nearly $1 million a year in legal fees.

"We've filed a motion to dismiss on the grounds that we're substantially in compliance" with federal law governing the education of disabled students, Copeland said.

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At the press briefing, panel members said they were impressed with the efforts of Copeland and Chief Financial Officer Rose Piedmont. But they said the "culture of complacency" remains, because of a pervasive feeling among midlevel managers that the top leadership will continue to change.

Sun staff writer Mike Bowler contributed to this article.

State report on city school

Summary of the report by Nancy S. Grasmick, state superintendent of schools.

* Severe breakdowns in communication within Baltimore schools as well as between its staff and the Board of School Commissioners with respect to the most important aspects of budget of budget priorities.

* A lack of overall structure, discipline and accountability, particularly at the management level.

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* A lack of communication among the various parties to the City-State "Partnership."

* Inadequate attention within the legislation to the practical aspects of transitioning the system from a city agency to an independent school system, and a perception among many stakeholders that the transition was temporary.

* A failure within Baltimore schools and externally to respond with urgency to the various alarms that were raised over the course of several years about the financial situation.

For the record

An article in yesterday's editions of The Sun about a state panel's report on the financial crisis in Baltimore schools misspelled the name of panel member Sanford V. Teplitzky.The Sun regrets the error.


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