WHERE DOES THE MONEY GO?
By ERIK LARSON/BALTIMORE
Everybody knows that money is a crucial ingredient in a school's success. There is something absurd, and deeply unfair, about a nationwide system of funding that provides the least amount of money to the most impoverished students. But cries of poverty obscure the role of other, equally powerful forces that determine how well a school system manages the money it does get. Each year, schools receive a torrent of funds. Exactly where this money ends up, however, is often something of a mystery, embedded in budgets that might as well have been written in Sanskrit.
TIME set out to track the flow of cash through a single large urban district--Baltimore's--to test the widespread assumption that urban schools fail because they don't have the money to do better. Last year the city spent $646 million on 110,000 children for a per-pupil total of $5,873, just shy of Maryland's statewide average. Yet the money produced a student body that failed to meet the most rudimentary state standards, as measured in a battery of tests that gauge functional skills in reading, math, writing and citizenship. The system's interim CEO, Robert Schiller, has called the city's schools "academically bankrupt." Within the district many administrators and teachers blame this failure on the fact that Baltimore, despite the extra costs of running an urban school system, spends less money per pupil than surrounding suburban counties do, echoing a comparison made in similar school-funding battles being waged from New Jersey to Alaska. But such comparisons say nothing about why even poor districts somehow manage to produce a handful of excellent schools, such as Baltimore's Canton Middle School (see box), flourishing even though 86% of its students fall below the poverty line. Nor do comparisons explain situations where schools spend more than they should. Last year, for example, Baltimore spent $125 million, or 20% of its total school budget, on 18,000 students identified as disabled, although many observers believe that about a third of these children aren't disabled at all--or at least wouldn't be if the school system had done its job properly in the first place.
Clearly Baltimore faces expenses its suburban peers don't. With many of its schools in high-crime areas, the Baltimore system spends more than $5 million a year to field its own sworn--and armed--police force of 112 personnel, whose overtime pay alone would be enough to provide the starting salaries of two dozen full-time teachers. But the city must also pay the routine expenses faced by every school system, the largest of which is always salaries. Last year Baltimore spent $260.4 million to pay teachers and other staff members associated with regular instruction. It paid its special-education staff an additional $82 million. The district spent $24.6 million on central administration, of which $18.9 million went to salaries.
Even so, $646 million is a lot of money. Why didn't it buy Baltimore's children even the most basic education? Why is real reform only now coming to Baltimore, when the schools' problems have been so evident for so long? And how did things get so bad in the first place?
When Baltimore's baby boomers wax nostalgic about the public schools of the city's past, they do so with some justification. Although class sizes were larger and schools were segregated by law into white and "colored" facilities, attendance was high. In 1950, average daily attendance at Baltimore's senior high schools was a stellar 92% for both black and white children. In 1954, according to city school records, 83.1% of white high school seniors "achieved" in algebra; fully 99.2% of black students did likewise.
With World War II, the city underwent the first phase of an amazingly swift transformation. The war brought an influx of poor blacks from the South and poor whites from Appalachia to work in the city's shipyards and aircraft plants. Postwar prosperity, good roads and the rise of the suburban dream triggered an exodus of middle-class whites to adjacent Baltimore County, a migration hastened by the Supreme Court's Brown v. Board of Education decision, in which the court ruled that segregated schools were unconstitutional. By last year, black children accounted for 85.1% of the city's total enrollment, compared with 33% in 1950.
The transformation devastated Baltimore's schools--a result not of the change in color but of the poverty that came with it. By the 1980s, even the black middle class had begun leaving the city. Declining enrollment and an accelerating middle-class flight distilled the city's school population to the point where today more than 70% of students qualify for a free lunch, a standard marker of poverty. Nearly 35% of the city's pupils are absent more than 20 days a year, triple the rate in suburban Baltimore County. Fewer than half the city's ninth-graders passed the Maryland Functional Test in mathematics, which measures only the most basic skills; in Baltimore County, 85% passed.
As the city's schools declined, their employees thrived. In 1950, Baltimore's public schools employed 5,463 administrators, principals, teachers and other staff. By 1995 it employed 10,622, nearly twice as many, even though its enrollment had by then actually dropped 7%. A kind of black aristocracy bloomed within the central office. Today the city's school system is run with few exceptions by black administrators and staff, many of whom got their first teaching jobs in Baltimore back in the 1960s and '70s and grew into middle age working side by side. They went to the same colleges, joined the same fraternities and sororities, and now attend the same influential churches--ties that produced what Marion Orr, assistant professor of political science at Duke University, calls a powerful "bond of personalism" that goes a long way toward explaining the reluctance of the system to fire poor performers and its resistance to reform. "There was a tacit decision made back in the early '70s that the school district would become the black agency of government," says Orr, who is black.
It wasn't race, however, that caused Baltimore's schools to congeal but rather the ingrown nature of bureaucracy. Race, in a city that remains deeply if informally segregated, merely intensified the us-against-them outlook of school administrators. Many outside observers say the school aristocracy came to view the black underclass as beyond help. David Rostetter, now a court-appointed overseer of schools in Chester, Pa., once studied Baltimore's school system at the request of the city's federal court. "What you have," he says, "is a black middle class being created on the backs of their own failure to educate the city's kids." He hastens to add that inbred white school districts behave the same way. "I mean, good ole white boys also control school districts," he says.
In Baltimore, the failure to educate, coupled with low expectations, worked to produce one of the district's most inflated expense categories: special education.
Until 1984, Baltimore's schools paid only scant heed to the requirements of the federal Education for All Handicapped Children Act of 1975, which required public schools to provide disabled children with a free, appropriate education designed to meet their unique needs. Susan Leviton, a University of Maryland law professor, used the law, which she called "the greatest piece of social legislation ever written," to file a federal lawsuit in 1984 on behalf of a group of disabled children denied timely delivery of educational services. The lawsuit, known locally as "Vaughn G.," resulted in a 1988 consent decree in which the school system agreed to follow a strict timetable for evaluating and educating the children.
Yet school administrators continued to operate as if the decree had never been signed, an intransigence that resulted in a cascade of increasingly punitive--and expensive--court orders. Meanwhile, the school system continued to refer an ever greater number of kids for the special-education programs. Not only are 17% of the system's children now in such programs, but a disproportionate share have been assigned to Intensity IV and V programs--typically the most expensive, often requiring separate classrooms and separate schools.
Experts agree that concentrated poverty is likely to produce more kids with more severe emotional and physical disabilities. But Sister Kathleen Feeley, retired president of Baltimore's College of Notre Dame who was appointed to fill the court-created post of special education administrator in Baltimore's public schools, estimates that 6,000 to 8,000 children have been inappropriately identified as disabled. John Mohamed, who until last February was principal of the city's Southeast Middle School, believes only 55 to 60 of the 160 special-ed kids at his school truly required special education. The rest, he says, just needed a little help to catch up to their peers. He calls special education "the most devastating problem" he has had to deal with. "No one stopped to ask, What is this costing the other kids?"
It's costing a lot, especially in Baltimore and in other cities where federal courts have effectively taken control of special education. A Philadelphia attorney appointed by the court to monitor Baltimore's compliance with the consent decree billed the school district $125 an hour for her time. Her personal fees for March 1997 alone came to $20,000. The total March bill for her office, including various support services, came to just over $36,000, enough to pay the salary of a mid-level teacher for an entire year--this in a district where some principals claim they cannot buy paper for their copy machines. In the first nine months of the 1996-97 fiscal year, the school system overall spent $2.5 million to comply with the consent decree, including $6,129 for carpeting, $97,996 for printing--and this tantalizing entry: $40.18 for "drugs."
David Rostetter, despite being legally blind and an ardent advocate for disabled children, estimates that Baltimore spends 35% more on special ed than it needs to. At last year's rate of spending, that's over $40 million, enough to cover the annual salaries of more than 1,000 mid-level teachers. "They have plenty of money," he snarls, with characteristic bluntness. "You can give these people $500 million. They'll piss it away." Baltimore's high special-ed costs come on top of the fact that Congress originally intended the Federal Government to pay 40% of the tab for educating handicapped children. In Baltimore last year, the Federal Government picked up less than 4%. "There's all this talk about unfunded mandates," says Robert Slavin, co-director of the Johns Hopkins Center for Research on the Education of Students Placed at Risk. "This is a classic."
But congressional mandates deserve only part of the blame. Beginning early last year, the state attorney general's office started gathering an extraordinary collection of legal depositions from city-school administrators and teachers that describe a dysfunctional management culture--dubbed in an earlier management audit the "culture of complacency"--that hindered effective use of the money that Baltimore schools received each year. In particular the depositions provide telling testimony on the "dance of the lemons," a phrase education researchers use to describe the way school bureaucracies shuffle unproductive, even dangerous, employees from post to post.
Harold Eason, principal of Charles Carroll of Carrollton School and an employee of the system since 1970, told investigators how a mentally unstable teacher called him one Sunday and told him that she not only felt suicidal, but also that "she was worried that she may hurt someone's child." He resolved right then not to allow her back into the classroom but did not try to fire her. Rather, he arranged a transfer to another school--to its library, in order to reduce her contact with students. That was around 1988, he stated. Nearly a decade later, in his February 1996 deposition, he said, "I still carry her on my payroll." Eason declined further comment on the episode. Peggy Jackson-Jobe, principal of Thomas G. Hayes Elementary School, described how a teacher, without warning or explanation, "literally stopped coming to school." The teacher was not fired, merely transferred. Jackson-Jobe failed to return TIME's phone calls.
Internal documents acquired by TIME include the results of a performance evaluation of the system's principals as of June 1994. Of the 175 principals evaluated, none received an unsatisfactory rating--despite the abysmal performance of the schools. Two other documents rated the system's special-education-department heads and managers on a five-grade scale from E for unsatisfactory to A for superior. Despite continuing pressure from federal judge Marvin Garbis, to say nothing of the judge's contempt citation against former superintendent Walter Amprey, none of these officials was rated unsatisfactory. Far from it: 26 of the 37 department heads got superior ratings. Forty-three of 58 managers did equally well.
Amprey and other administrators, teachers and principals questioned by state investigators agreed that the system desperately needed more money. Yet the investigators discovered that the system failed to use millions of dollars it did have. When school administrators somehow failed to spend $600,000 earmarked for early-intervention programs now deemed crucial to real urban-school reform, the state pulled back the money. The school system also failed to tap a $58 million building-construction fund until a girl was seriously burned when a school boiler forced superheated steam through a school toilet, says Nancy Grasmick, state superintendent of education.
The system lost additional millions when its "third-party billing" office failed to pursue Medicaid reimbursement for certain special-ed services, revenue that has become a lifeline for urban districts around the country. In fact, for reasons unknown, the billing department's supervisor actively resisted seeking reimbursement. Says Grasmick: "It was shocking beyond belief that that kind of behavior was tolerated and that there was no sanctioning of that individual's behavior." The office is vigorously seeking reimbursement and has managed to recoup $13.3 million in just the first 10 months of the past fiscal year.
A more pernicious effect of the system's culture was its resistance to real, cost-efficient reform, especially when the impetus came from outsiders. When the Calvert School, a costly Baltimore private school, tested its nationally renowned curriculum in one of the city's elementary schools, it produced startling advances in achievement and drew visitors from as far away as Japan. But the superintendent in place when the program was first installed branded it a "rich man's" curriculum. "The school system," recalls Robert Embry, whose Abell Foundation helped fund the experiment, "resisted it to the death."
The one reform program the school administration did adopt system-wide is an Afrocentric self-help regimen marketed by the Efficacy Institute of Lexington, Mass., and embraced by other black-majority school districts. Through a sequence of four-day, $10,500 group training seminars for teachers and staff, the institute hopes to spark school districts to extract better performance from both teachers and students by promoting a greater belief in the power of individuals to succeed no matter what their personal circumstances.
Proponents say these seminars carry the force of revelation. Attendees have been known to stand and cheer like converts at a tent meeting. But critics, careful always to applaud Efficacy's central objective of raising expectations, wonder whether the $1 million Baltimore spent on the program--equivalent to the starting salaries of 40 teachers--was money wisely used. "It's an example of what is wrong with urban education," says the Abell Foundation's Embry. "It was put in without any evidence of its working--without any evidence even expected."
The contours of Baltimore's school-funding debate have begun to change. There are still cries for more money, but Baltimore's schools are at last being forced to acknowledge that money alone can't turn a failing system around. Its schools are in the first phase of a major reorganization, the result of a deal struck last spring between the city, the state and Baltimore's federal court that reflects an increasing belief in the power of good management to improve both financial and academic performance. The deal provides the school system with an additional $254 million over the next five years--but requires sweeping changes in the way it does business. As part of the deal, for example, the city dismissed the school board and replaced it, requiring that at least four of the new members have "a high level of expertise" in a Big Business, nonprofit organization or government agency. Most striking, the plan holds the new board "directly accountable for improving academic achievement."
The plan also eliminates the job of superintendent, replacing it with the post of chief executive officer and making the ceo's continued employment "contingent upon demonstrable and continuous improvement." (The board is now searching for a candidate to fill the post.) In short, the plan demands a level of accountability never before required of anyone within the Baltimore system.
But the new plan only puts into writing what reformers have increasingly come to recognize: that good managers can make a huge difference, no matter how much money they have to work with. Leonard Hamm, the new chief of Baltimore's school police, says he has seen firsthand how a talented principal can reverse the decline of a school. "I'm an overly simplistic guy," he says, "but man, it's not rocket science. It takes one person saying, 'This isn't going to happen.'"