- The Washington Times - Tuesday, February 17, 2004

ANNAPOLIS — Maryland taxpayers are next to help bail out Baltimore’s mismanaged school system under a $42 million proposal yesterday by Gov. Robert L. Ehrlich Jr.

Mr. Ehrlich said the state will provide the system with a $42 million short-term loan to help it pay a $58 million deficit and avoid laying off 1,200 teachers and staff.

However, he said such a loan would come with strict requirements and deadlines — including an audit and the promise to repay the money by June 30, 2005.

“This plan will be prepared for my consumption,” said Mr. Ehrlich, a Republican. “There may be some additional elements, but we have an outline of the agreement.”

The loan would need the approval of the Democratically controlled General Assembly, but that seemed certain yesterday.

“The legislature will look at [the loan] as an advance,” said House Speaker Michael E. Busch, Anne Arundel Democrat. He said lawmakers also will “evaluate accountability measures” to ensure the money will be repaid.

Senate President Thomas V. “Mike” Miller Jr., Prince George’s Democrat, agreed, but said loopholes would have to be closed before the money was loaned.

State taxpayers would not be the first ones to help the school system with its $58 million deficit.

The Abell Foundation, a Baltimore-based nonprofit group, has pledged an $8 million loan as long as teachers are not laid off and the money is paid back by the end of the year.

Baltimore Mayor Martin O’Malley, a Democrat, has also offered an $8 million loan from the city’s Rainy Day Fund.

However, Bonnie S. Copeland, the school system’s chief executive officer, and former state Sen. Robert R. Neall, an adviser to the school system on financial matters, said the money only helps a cash-flow problem, not the structural deficit.

Mr. Ehrlich said he is also considering appointing an “oversight person” to report to him on the school system’s progress.

“As the state, we have right to expect benchmarks,” he said, though he stopped short of calling such oversight a takeover.

There has been no proof so far that criminal acts have led to the financial straits.

However, U.S. Attorney Thomas M. DiBiagio has asked the public to come forward with information about theft, kickbacks or bribes that could have contributed to the problem.

State Superintendent of Schools Nancy S. Grasmick is also conducting an investigation and has charged a three-member panel with completing a report by May 15.

“I believe there are outstanding questions,” Mrs. Grasmick said. “This panel needs to help us understand: Was there criminal intent?”

The loan offers follow a few tense days, including Friday when teachers became upset after Mrs. Copeland proposed a 3.5 percent pay cut. She was forced to delay classes the next day for two hours because more than 600 of the system’s 6,800 teachers called in sick.

This is not the first time the state has helped the city’s school system.

In 1997, students were performing so poorly that the state gave the system more money and assumed more financial responsibility.

Officials also formed a city-state partnership, in which the governor joined the mayor in appointing school board members and top administrators, including a chief financial officer and a chief executive officer instead of a superintendent.

Mr. O’Malley said those who created the recent problems are gone but that he now wants people with stronger financial backgrounds to run the system.

Mr. Ehrlich did not ask six board members to resign, though parent and community groups have called for their resignations.

He will instead wait for a plan being submitted by Mr. Neall and Mrs. Copeland and hear the report from Mrs. Grasmick’s investigative panel before making further decisions.

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