- The Washington Times - Wednesday, February 25, 2004

From combined dispatches

ANNAPOLIS — State leaders yesterday stepped into the spotlight shining on the Baltimore school system, working to draft a bill calling for a takeover of the city school board but stopping short of receivership, the Senate president said.

President Thomas V. Mike Miller Jr. said leaders instructed the Department of Legislative Services to draft a bill modeled after a takeover of a school district in Oakland, Calif. That 2003 bailout loaned schools $100 million and appointed a state administrator to take control away from the school board, which was relegated to the role of an advisory panel.

“We will work with the governor and independently of the governor,” said Mr. Miller, Prince George’s County Democrat.

Baltimore Mayor Martin O’Malley, a Democrat, who is resisting a state takeover of city schools, submitted a letter to Gov. Robert L. Ehrlich Jr., Republican, calling for cost-cutting options other than slashing teacher pay.

Until yesterday, Mr. Ehrlich had been the face of the state efforts to find a solution for the financial quandary. He held a news conference Tuesday to announce his administration would prepare emergency legislation that could include putting the school system in receivership.

Mr. Ehrlich has offered city schools a $42 million loan on the condition that the system restructure itself to guarantee it won’t continue to run deficits. Mr. Ehrlich’s budget secretary revealed Tuesday the system was $75 million in the red as of late last month.

The governor stepped aside early yesterday at a Board of Public Works meeting to allow state Comptroller William Donald Schaefer, a former Maryland governor and Baltimore mayor, to address the situation.

Mr. Schaefer, a Democrat who is an Ehrlich ally and an outspoken political figure, said the state has no choice but to take over city schools for at least four years. He called the school system a “tinderbox” that has been in trouble for “many, many years.”

Mr. Ehrlich was to meet late yesterday with House and Senate leaders, Mr. O’Malley, Mr. Schaefer, the state treasurer and former Sen. Robert Neall, who until Friday worked as the school system’s volunteer financial adviser. Mr. Neall resigned in frustration after the city school board refused to agree to his plan for a fix, which included cutting teacher pay by 5 percent and halting free summer school.

Mr. O’Malley, who criticized the Republican governor for not responding to his requests for meetings Tuesday, said he wasn’t “sure why there’s this continuing desire, this fetish, to stick it to the teachers.”

Besides disrupting classrooms by “earning the scorn” of teachers, cutting pay would jeopardize a promised $8 million loan from the private Abell Foundation, Mr. O’Malley said in a letter submitted yesterday to Mr. Ehrlich. The Abell loan was offered with the condition that teachers would not have to pay for administrative “mismanagement,” Mr. O’Malley wrote.

Instead of a pay cut, the mayor offered three options:

• The city could pay the school district $34 million it owes after entering into a 15-year agreement in 2001 to pay for unpaid leave accumulated by employees. The city has been making $2.8 million payments every year.

• The district could accelerate and encourage early retirement for about 1,000 teachers who have been with the system for about 30 years.

• The district could lay off more teachers at the end of the school year.

Meanwhile yesterday, the state school board authorized the release of $38 million in federal funds to city schools even though the city’s comprehensive master plan — a prerequisite for getting the money — showed serious flaws.

State schools Superintendent Nancy S. Grasmick recommended that state board members release the money, which is already earmarked for services. Without the cash, the school systems’ deficit would continue to increase, she said.

The Chamber of Commerce, hoping to thwart legislative plans to raise corporate taxes, has issued a report saying businesses in Maryland already bear a heavier tax burden than in some neighboring states.

The study shows that any proposed tax increases “need to be looked at very carefully as probably putting Maryland off the chart of competitiveness with our surrounding states,” said Karen Syrylo, a consultant on tax matters for the chamber.

The study by Ernst & Young covered all state and local taxes paid by businesses, and compared Maryland with North Carolina, Virginia, Delaware and Pennsylvania. It showed Maryland ranked in the middle of the five states on two measurements of business taxes and second behind Pennsylvania on the amount of taxes paid per dollar of capital income.

The report “counsels all of us to be careful about any changes that would make Maryland noncompetitive,” Miss Syrylo said Tuesday.

Maryland is competitive nationally on business taxes, but business decisions are often made on a regional basis, where comparisons are made between neighboring states, the report said.

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