Budget & Finance

City, Not State, to Lend Money To Baltimore Schools

By John Gehring — March 17, 2004 1 min read

Mayor Martin O’Malley of Baltimore backed away last week from a deal that would have given the state much greater authority over the city’s school system in exchange for a loan to keep it afloat.

The mayor’s decision to support a City Council vote to provide the schools with a $42 million loan, drawn from the city’s rainy-day fund, was an unexpected departure from his support for an earlier bailout plan. The turnabout stunned Maryland’s governor and state legislative leaders.

For weeks, Mayor O’Malley, a Democrat, and Gov. Robert L. Ehrlich Jr., a Republican, have been negotiating, along with city and state education leaders, to come up with a plan to provide aid for the 90,000-student Baltimore schools. The district faces a cash-flow emergency that could leave it insolvent by the end of this month, along with a $58 million shortfall in its $914 million budget.

After Mr. Ehrlich rejected the district’s plan for accountability in handling its finances—a measure the governor said was needed before the state provided a loan—his administration began pushing for a plan to form a public school “authority” to oversee the district. (“Baltimore Bailout in Doubt; State Takeover on the Table,” March 3, 2004.)

Local Criticism

But the plan faced increasing criticism from Baltimore legislative leaders, who saw it as handing too much power to the state, even as the mayor and governor agreed on March 5 to move ahead with the compromise plan.

Mayor O’Malley said his decision to change course and support a city councilman’s proposal to tap the $56 million rainy-day fund came after the mayor decided the city was in a better position to maintain local accountability.

“I have come to the conclusion that we can better reform Baltimore’s school system by taking more responsibility, not less,” Mr. O’Malley said in a March 9 statement.

The loan must be approved by the city’s Board of Estimates.

Henry P. Fawell, a spokesman for the governor, said the mayor’s decision reflected Mr. O’Malley’s shifting positions on how to handle the crisis.

“It’s back to square one,” Mr. Fawell said. “We are back to where we began, which is the city taking responsibility for the gross negligence of the city school system. The governor wishes them well.”

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