Top lawmakers have agreed to withhold more than $3.1 million in planning money for Morgan State University's new $80 million business school until the university overhauls its procurement processes, which are under criminal investigation by the state attorney general's office.
The proposal, which the House of Delegates approved last night, is the legislature's response to an audit report that uncovered millions in questionable contracts at the Northeast Baltimore school.
Delegates had recommended stronger action last week, but key senators wanted to wait for the conclusion of the criminal investigation. Their compromise comes after days of negotiations and consultation with Morgan's governing Board of Regents, according to people involved in the talks.
Del. John L. Bohanan Jr., a St. Mary's County Democrat who chairs the education panel in the House, said the comprehensive reform required of Morgan will put the campus "in a much better position to move ahead with major projects like the business school."
Morgan spokesman Clinton Coleman said he was not aware of the deal and could not comment on it.
Sen. Edward J. Kasemeyer, chairman of the Budget and Taxation education subcommittee, praised the House for coming to a "classic compromise" on the issue.
"They showed restraint," said Kasemeyer, a Baltimore County Democrat. "I really thought they did a good job in being able to reach the compromise. ... It was a very fair one."
But Del. Galen R. Clagett, vice chairman of Bohanan's subcommittee, said legislative oversight of the historically black public college was hampered by racial politics.
"I would have gone further," said Clagett, who helped broker the agreement. "What we have here is a compromise that takes care of the fiscal part of it, to some extent, and then we have a good posture politically so we don't get into a contest over whose dog got whipped."
Clagett said "the Morgan administration tried to mobilize the troops to say we were picking on Morgan ... immediately calling it a race issue and all of that, saying we're treating Morgan differently."
Under the terms of the restrictions, Morgan State would be required to hire an independent management consultant to review the university's capital project management and recommend comprehensive reforms in order to receive the $3.1 million, as well as about $750,000 earmarked for an ongoing campus utility project.
Then the university would have to revise its internal processes accordingly and submit a report of its actions to the legislature and the Office of Legislative Audits. Finally, the Board of Public Works - Gov. Martin O'Malley, Treasurer Nancy K. Kopp and Comptroller Peter Franchot - would have to approve the reform plan before Morgan State could get the money.
Under the agreement, which must be approved by the full legislature, Morgan would also lose $2.23 million this year for renovations to a campus-owned museum in Bolton Hill, Bohanan said.
The action comes in response to an audit report in February that found that Morgan State officials padded a construction contract with a $3.1 million cushion and then used those funds to pay the same contractor, Baltimore-based Whiting Turner Contracting Co., for different work without getting state approval.
Whiting Turner was also overpaid $825,250 by the school in duplicate billings, according to auditors. The school also appeared to artificially divide other projects into smaller pieces to avoid scrutiny by the Board of Public Works, auditors said.
Despite apologies from Morgan State officials and promises that corrective actions have already been taken - including the dismissal of a senior construction manager - the audit undermined confidence in Annapolis with the school's administration.
But the criticism of the school also provoked complaints from Morgan backers that the university was being picked on. In an effort to address that complaint, the language in the agreement also includes a general directive to the Department of General Services to review procurement processes at all state agencies.
"I'm very happy about that," said Sen. Joan Carter Conway, a Baltimore Democrat who has accused the Appropriations Committee of "bias" against Morgan. "They always seem to be concerned about Morgan. And Morgan did make an error ... but Morgan is not the only one."
Conway said Morgan's Board of Regents had provided legislators with a detailed reform plan that should have assuaged lawmakers' concerns. "Instead of trying to stigmatize and crucify Morgan, all they had to do was read the documents," Conway said.
House Speaker Michael E. Busch acknowledged that Morgan's past as an historically underfunded campus made the legislature's oversight function politically thorny in this case.
"People think there's a certain bias, I can't account for all of that," Busch said. "Morgan is a very important institution to the state of Maryland, and we want it to be as fine an institution as it can be."