Greater Baltimore Committee - Presidents' Roundtable

Review Team of the Baltimore City Public School System's
Fiscal Management Practices and Budget Process

I. INTRODUCTION

On January 14, 2003 Baltimore Mayor Martin O'Malley and Baltimore City Public School System Board Chair Patricia L. Welch sent a letter (click here to view) to Donald C. Fry, President, The Greater Baltimore Committee (GBC) and Garland Williamson, President, The Presidents' Roundtable asking them to convene a working group to review the budget process and fiscal management practices of the Baltimore City Public School System (BCPSS) and to offer recommendations and appropriate modifications to ensure adequate controls. State Superintendent of Schools Nancy S.Grasmick sent a second letter supporting the request (click here for the letter.)

The letters came shortly after news reports of a projected $31 million deficit in the BCPSS budget for fiscal year 2003. The deficit was not a one-time occurrence but rather reflected an accumulation of deficits over a period of years that were compounded by several unexpected expenditures and inaccurate cost estimates during fiscal year 2003.

The mayor's letter asked the review team to examine five areas of concern:

• Evaluate budgetary preparation, monitoring, and management processes to ensure the existence and enforcement of necessary internal controls that safeguard the ongoing financial stability of BCPSS.
  
  
• Identify major operating and capital cost centers that consistently exceed budgeted levels or that have experienced the highest rates of cost growth in recent years, determine appropriate budget levels and, as appropriate, propose specific cost reduction and/or cost containment strategies.
  
  
• Examine contracting and expenditure thresholds and the requisite administrative and executive approvals to ensure necessary scrutiny of budgetary expenditures.
  
  
• Review existing inventories and utilization of physical assets (buildings, real estate, vehicles, equipment, etc.) to identify opportunities to achieve consolidations.
  
  
• Scrutinize all operating and capital encumbrances to identify opportunities for liquidation.
  

The board of directors of the Greater Baltimore Committee and the Presidents' Roundtable agreed to take on the project, but cautioned that the two groups would not become deeply engaged in a detailed analysis because of the size and complexity of the budget. Shortly after receiving the letters of request, both Mr. Fry and Mr. Williamson began a series of phone calls and meetings to determine who among their members would be best suited to look at the situation and offer informed and constructive suggestions.

At the time, Mayor O'Malley had asked that recommendations be forwarded to him within a 45-day time frame, but after consultations with budget directors and finance directors from other school systems, non-profits and businesses, it was determined that a lengthier time frame would have to be pursued. The breadth of work that the study required was the group's first indication that the expertise needed to perform a detailed analysis of a $1 billion budget was beyond the initial scope of the review team. The best product the team could provide would be a framework and appropriate indicators showing where problem areas existed that required a more in-depth study.

The team was invited to convene for a series of four to five in-depth meetings at which they would hear about the budget process and financial management in the BCPSS from present and former financial staff. The presentations and question and answer sessions would be augmented by budget documents from the BCPSS. Mark Smolarz, chief operating officer for the BCPSS was designated as the key contact for the review team. Comparable budget information was made available by other school systems in Maryland.