- The Washington Times - Monday, February 16, 2004

BALTIMORE — A nonprofit group wants assurance that a cash-flow problem won’t force significant teacher layoffs before it loans $8 million to the city’s troubled school system, the group’s president said yesterday.

But Bonnie S. Copeland, the school system’s chief executive officer, said officials can’t make that promise.

“This is a major cash-flow problem,” Mrs. Copeland said at a news conference.

The city’s school system is stuck with a $58 million deficit. It needs $16 million to avoid up to 1,200 layoffs — many of them teachers — and state and local officials have been meeting continually since teachers rejected a pay cut last week.

The Baltimore-based Abell Foundation tentatively has offered an $8 million loan to help the city avoid the layoffs. The money would match $8 million from the city’s rainy-day fund.

Robert Embry, president of the foundation, said yesterday he wants to be assured that the cash-flow problem, which is larger than previously known, won’t cause major layoffs later this year and render the loan pointless. He also said the group must be repaid in a year.

“We want to be persuaded that our investment is a good one,” Mr. Embry said at a separate news conference with Mayor Martin O’Malley.

Mr. Embry learned about the size of the cash-flow problem Saturday. He said one problem is that about $50 million in bills will come due for the school system this year, before money already allocated is available to pay them. Those bills previously weren’t factored into the $58 million budget deficit that could force the layoffs, Mr. Embry said.

The cash-flow problem could be solved if the state advances money already allocated to the school system, Mr. Embry said.

Last night, Mr. O’Malley’s office released a statement saying a conference call including the mayor and Gov. Robert L. Ehrlich Jr. “gave the city the indication the state will step forward to assist in addressing the outstanding cash-management problem” in the school system.

Mr. O’Malley said in the statement he hoped to announce “an agreement in principle” today.

But earlier yesterday, Mrs. Copeland wouldn’t make any promises.

“It’s not just a $16 million cash-flow problem,” she said. “It’s much larger than that, and so we cannot make promises at this time. It would not be prudent of us to do that.”

Mr. O’Malley said the state should come through with the advances, because the state, rather than the city, has primary responsibility for the troubled school system’s financial oversight since a 1997 state takeover.

Mr. O’Malley said, “There are some people at the state who aren’t even aware of their legal responsibility in this partnership.

“I’m optimistic that having been fully briefed on the state’s legal responsibilities in all of this — not to mention moral responsibilities — I think that the governor and his able staff will find a way to advance the dollars, much as the city already has,” Mr. O’Malley said.

State Schools Superintendent Nancy L. Grasmick said long-term planning to bring down the $58 million deficit will be handled by the state, but she said it’s unclear what kind of legislative permission will be needed.

Mrs. Grasmick said the governor understands the urgency of the deficit.

“Restructuring and accountability are essential for providing a long-term comprehensive plan, rather than a quick fix, band-aid solution,” the governor said in a statement.

Mr. O’Malley said the $8 million from the city will be available this week to keep paychecks coming to teachers for the next couple of months.

Meanwhile, Kevin Slayton, chairman of a 14-member parents board, called for the resignations of six members of the school board yesterday, saying they had “fiduciary responsibility” for the system’s problems.

The parents board was set up as part of the city-state partnership in 1997 to provide parental input. Mr. Slayton said the board hadn’t been aggressive in the past, but he vowed that would change.

The school system initially asked teachers to absorb the $16 million in either an eight-day furlough or a 7 percent pay cut. When the teachers rejected it, the mayor offered to kick in $8 million, cutting in half what the teachers would have to absorb — but the teachers also rejected that offer last week.

Mrs. Grasmick has set up a three-member investigative panel to look into the deterioration of school finances and present a report by May 15.

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