The Washington Times

Baltimore schools face fine of millions

Published July 15, 2004


BALTIMORE (AP) -- State officials might penalize the city school system millions of dollars after auditors found that officials misused $18.3 million in federal Title I funds between 2001 and this year.

The money could be withheld this fall unless the city can negotiate an agreement with the federal government, state officials said Tuesday.

School and city officials disagreed with the audit's findings. In a year when the school system already is struggling to close a $58 million deficit, the loss of federal funds likely would have an even greater impact on students.

"We are certainly not out to do anything harmful to the Baltimore city public schools," said state School Superintendent Nancy S. Grasmick, but she added that she could not ignore the misuse of funds by city schools. "We have a fiduciary responsibility for federal dollars."

Bonnie S. Copeland, the school system's chief executive officer, referred all questions to her staff, who defended the school system's spending.

The system has proof that at least $7 million of the disputed $18 million was spent correctly, said Chief of Staff Jeffery N. Grotsky.

He said the school system was surprised that the state had not discussed the audit more before taking action.

"We would like an opportunity to negotiate at the state level," Mr. Grotsky said.

Baltimore City Solicitor Ralph S. Tyler, a former school board member, said Mrs. Grasmick's actions were inappropriate.

"There was no requirement to withhold or threaten the withholding of funds," he said. "Shehad the choice to allow the process to proceed then to impose a sanction if one is needed, rather than have the execution before the trial."

The audit, completed in the past few weeks, found that Baltimore schools had spent Title I funds on schools that were not considered needy. The federal money is supposed to be allocated to give poor children a boost. Ninety-seven of Baltimore's 184 schools are designated Title I schools.

Although the state found no evidence of fraud, Mrs. Grasmick said, it was clear that city school officials failed to understand the rules and control spending.

Mrs. Grasmick said she hoped that Mrs. Copeland would seek to negotiate with the state and U.S. Department of Education to resolve the issue.

Federal officials could forgive the misuse of funds, without requiring repayment, she said.

Title I money is given to schools with a high percentage of students who are poor enough to qualify for reduced price or free lunches. Baltimore was expecting to receive $23 million under the program this year. But the money is first disbursed to state governments to administer.

State auditors said the school system used federal funds to pay teachers at non-Title I schools, pay for administrative costs, and fund a parent outreach program -- all inappropriately.

The state launched the audit after a firm hired by the school system last fall found evidence that money might have been misused.

"We had very clear signals that things had gone awry," said Mrs. Grasmick. "We are not helping them if we allow this kind of disregard for the rules."

Mrs. Grasmick said Baltimore staffers rarely showed up at state training sessions to learn the rules of federal spending. But the system's chief financial officer, Rose Piedmont, who started last fall after Mrs. Copeland took office, denied that assertion.

"My grant staff goes to those meetings religiously," she said.

School board Vice Chairman Brian Morris said the state's move was a blow to a system that was trying to turn itself around.

"During a period where there is a successful financial recovery, the state is choosing the most draconian measure in front of them," he said.

Copyright © 2004 News World Communications, Inc. All rights reserved.

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