Baltimore City Schools Superintendent Bonnie Copeland and School Board Chairman Brian Morris presented an $8 million check to Mayor Martin O?Malley and Baltimore City Council leaders Wednesday, marking final payment on a $42 million emergency loan from the city two years ago.
With the school system $58 million in debt two years ago, the School Board laid off more than 1,100 employees and sought $42 million in loans to alleviate a fiscal crisis that began brewing shortly after traditional city hall budget oversight was eliminated in a 1997 restructuring plan.
“We?re paying this loan back seven weeks early,” Copeland said. “This completely eliminates the schools deficit for the first time in seven years.”
A loan offer by Gov. Robert Ehrlich, which included the creation of a state authority to replace the Baltimore School Board commission, was rejected early in 2004 by the city and schools leadership.
O?Malley?s office eventually made the loan in March 2004 from the city?s “rainy day” fund.
Morris said the largest expenditure is salaries, and putting fiscal controls in place as well as maintaining a separate human resources system has been the key to controlling expenditures.
“There wasn?t the infrastructure to track payroll,” Morris said. “Grant funding would run out, and positions would just be moved onto the operating budget.”
Morris also acknowledged that increased state funding from the Thornton Act played a role in helping the school system pay off the loan.
O?Malley said the repayment answered critics who doubted the city?s ability to turn around the school system and sends a positive message to nonprofit foundations and potential education investors.
