Schools budget full of errors

The Baltimore Sun

The Baltimore school board has approved a $1.2 billion budget for the next academic year that is filled with errors and tens of millions of dollars of discrepancies, a Sun review has found.

In dozens of cases, the amounts budgeted for salaries do not match with the number of people who are supposed to be paid. One line item shows $6.2 million in salary money to pay zero employees.

The problems surface just months after the school system declared itself fiscally healthy after a major financial collapse and as the state infuses hundreds of millions of dollars in aid to the city's chronically underfunded schools.

The school board chairman and the head of the board's finance committee acknowledged that no one had noticed the many discrepancies before the board unanimously approved the budget March 27, with one member absent.

Among The Sun's findings:

If the figures listed in the budget were correct, at least 460 employees would earn more than $200,000 a year on average, while more than 2,000 employees would earn less than $9,000 a year. One person would earn $1.4 million, another would earn $1.9 million and 13 would earn more than $510,000 each.

Different sections of the same document provide drastically different figures. A summary page lists 7,011 employees, including teachers and principals, assigned to work under the school system's chief academic officer. Elsewhere in the document, the number of employees exceeds 10,000.

While the budget is supposed to include an extra $1.5 million to decrease class sizes in selected elementary schools, it would effectively increase class sizes by reducing the number of staff assigned to elementary schools citywide by 204 positions.

Presented with a list of the findings, city education advocates expressed outrage.

"Second perhaps only to ensuring that there's a good CEO, making sure that the right spending is taking place is the most important function that any school board has," said Matthew Joseph, executive director of the nonprofit Advocates for Children and Youth. "It's hard to believe that the city school board can carry out that function properly if the information they have is contained in that budget document."

School system officials attributed many of the problems to a new budget format. They said they reformatted the document this year in attempt to make it more transparent and user-friendly, and to reflect a recent reorganization of administrative offices. As a result, they said, some numbers were converted inaccurately. In other cases, parts of the budget reflect the new management structure and parts do not.

"If you can blame us for anything, it's blaming us for trying to improve the process at a pace that is probably faster than what is reasonable," the board's chairman, Brian D. Morris, said in a meeting last week where three board members and five top administrators told a reporter that the budget discrepancies were not newsworthy. "That altruistic spirit to try to be transparent got us in a little bit of trouble."

Officials said that the figure of 7,011 employees working for the chief academic officer doesn't include special- education employees now in that jurisdiction but that the 10,000 employees outlined later in the book does.

Similarly, they insisted that they did not forget to budget for 187 guidance counselors whose positions are listed in a table at the beginning of the book but never show up again in the detailed sections. They said guidance counselors now fall under the "general instruction" category.

But they could not explain why The Sun found similar problems in the budget for the current academic year. That budget passed muster last spring with the City Council and Gov. Martin O'Malley, who was mayor at the time.

Officials pledged to fix all the figures before publishing a final version of the adopted 2007-2008 budget this week and forwarding it to the council and Mayor Sheila Dixon for approval.

A budget is a detailed outline of an organization's projected income and expenditures for the coming fiscal year. While the city school system's budgets include financial comparisons from the previous two years, the official sources to track how money is spent are year-end financial statements and annual independent audits.

Board members said that based on those documents, they are confident that the system is at last in good financial order after years of operating with a deficit, which ballooned to $58 million in the 2003-2004 school year and required a city government bailout.

"From everything that the board knows, no money has been misspent," said Kalman R. "Buzzy" Hettleman, chairman of the board's finance committee. He said the discrepancies in the budget are "presentation issues that are in the process of being straightened out." He conceded that "they should have been straightened out sooner."

The system's budget is being monitored closely by advocates for the city's 17 charter schools, public schools that operate independently. Charter operators are in the midst of a court battle with the school board, arguing that they deserve the same amount in cash as the system spends on its regular schools. But what is spent on regular schools, they say, can be hard to discern.

"We're trying to work with the system in good faith to create a funding model, and their budget doesn't line up," said Bobbi Macdonald, president of the board governing City Neighbors Charter School. "There is no reason under any circumstances that the Baltimore City public school budget should not be clear and transparent to anyone who picks it up and bothers to read it."

The budget process in the city school system -- which has about 12,300 employees and 83,000 students -- has historically unfolded long after surrounding suburban jurisdictions have approved their spending plans. This year, the city school board set a goal of adopting the budget earlier, but it was a month behind Howard, Anne Arundel, Carroll and Baltimore counties.

Repeatedly this budget season, the city school administration has hurriedly released flawed documents.

Interim schools Chief Executive Officer Charlene Cooper Boston was not ready to present the 268-page budget to the school board March 13 as scheduled. Instead, administrators gave the board a 42-page summary.

Boston and her chief financial officer, John Walker, said in an interview that day that the budget contained $18 million for new initiatives. They then outlined initiatives whose cost in the summary added up to $31 million.

Made aware of the discrepancy, Boston said publicly that the budget contained about $30 million in new money, but only $18 million of that would go directly to classroom instruction. "I really was focusing in on what we were assigning to the instructional programs," she said. "You can see where my heart is."

The summary also listed several new initiatives to be covered with existing money, but it did not say what they would cost or what else would need to be cut to pay for them. At the board meeting, Hettleman called the lack of transparency "inconceivable." The summary was rewritten in response to his concerns.

Hettleman was the only one on the nine-member board to publicly question the budget, which was released in full form a week before its approval. But he joined his colleagues in voting for it amid self-congratulations that the system had come -- in Morris' words -- "light years" from where it was during the fiscal crisis.

When presented with The Sun's findings last week, Steve Hamlett, the system's controller, first denied that the budget approval had taken place. He said the vote was in concept only, based on the summary document, and that the board would vote on the budget details late this month, once corrections had been made.

System officials quickly retracted that statement. "We approved the budget," Morris said.

For every department, the budget includes a line listing the number of employees and another line listing funding for salaries and wages. In the budgets for this school year and next, those two lines repeatedly do not correlate.

In the current year's budget, for example, the page for the chief academic officer's administration lists $4.4 million for the salaries of 15 employees, amounting to more than $290,000 each. (The highest-paid employee in the system is supposed to be Boston, who makes $202,000.) The same page, listing comparable figures for the previous two years, shows $2.2 million in salaried money from 2006 with zero employees.

A page for charter schools lists two employees in 2005 with $8.9 million for salaries, or nearly $4.5 million each, plus $1.3 million in grant-funded salaries with no employees. From 2006 to 2007, the number of charter school employees grew from 80 to 125, but the charter schools' salary budget declined from $15.3 million to $14.7 million.

In next year's budget, five departments all have the same budget for grant-funded salaries -- $2,654,711 -- but the number of employees to be paid with that money ranges from 26 to 70. Hamlett called the salary figure a "place-holder."

The page for speech and language services shows 120 employees in 2007 but only $151,971 for salaries, amounting to $1,266 per person. Another line item shows $2.4 million in grant-funded salaries, but no employees.

Hamlett explained why average salaries often appear higher than they are, and why sometimes salary money is budgeted where there are no employees: Salary line items include money for temporary workers, severance pay and stipends -- even though that is not indicated anywhere in the documents.

"Maybe we need to make a better breakout," he said. (The system did not respond last week to a request for the formula it uses to determine how much to allocate for temporary workers, severance and stipends.)

Later, Morris offered an additional explanation: Sometimes employees are budgeted on different pages from their salaries. The $6.2 million that appears to pay no one in fact will pay the salaries of 73 instructional support teachers, who appear on other pages to be not getting paid at all.

In the case where $6.7 million appears to be paying 13 people more than $510,000 each , Morris said that $5.7 million of the money is going to pay 32 instructional coaches and teachers listed elsewhere in the budget. But even then, the 32 people would earn an average of about $180,000 each.

System officials acknowledged some typographical errors. One page shows a salary budget of $129.5 million for 445 employees, averaging more than $290,000 each. On that same page, there is $17.8 million in salaries from grants for 2,003 employees, averaging $8,886 per person. Morris said the numbers 445 and 2,003 were transposed.

Despite the mistakes, officials were firm that the budget's figures for elementary school staffing were accurate.

The budget shows 204 fewer staff positions in elementary schools, even though the system had initially allocated an extra $7 million for elementary class-size reduction. In the final adoption of the budget, the $7 million was reduced to $1.5 million so that more money could go toward middle school reform, but the budget the board voted on hadn't been updated with the change.

Still, officials said, it would make sense that the staffing at elementary schools would decrease because of the system's declining enrollment. To make the point, Morris took out a chart in the budget book and showed how the system's enrollment is projected to decrease by 2,666 students next school year.

But that same chart breaks down the enrollment by grade, showing that the entire decline is happening in middle and high schools. In the city's elementary schools, enrollment is projected to increase next school year from 39,083 students to 41,145.

sara.neufeld@baltsun.com

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