By David Nakamura
Washington Post Staff Writer
Thursday, October 4, 2007
D.C. public schools would receive $81 million in additional revenue to fund a sweeping restructuring of the central office and help cover a projected budget shortfall, under a plan announced yesterday by Mayor Adrian M. Fenty.
Fenty (D) and School Chancellor Michelle A. Rhee characterized the funding proposal as a one-time cost that would allow them to streamline the system, improve programs, including food service, and maintain surplus school building space.
The additional spending comes in concert with a proposal Rhee is drafting that would ask the D.C. Council to suspend the city's personnel law so that she could terminate staff members. The chancellor said yesterday that she intends to cut about 200 of the central office's 914 positions and would use some of the additional dollars to offer severance packages to employees. She declined to elaborate.
The money for Fenty's plan would come primarily from a pot of $100 million in unexpected tax revenue identified last month by Chief Financial Officer Natwar M. Gandhi, the mayor said. At the time, Gandhi said the windfall came from continued growth in the city's residential and commercial property markets, and Fenty quickly pledged to use much of the tax money for schools.
The plan marks a sharp shift for Fenty. When he campaigned for mayor last year, Fenty said repeatedly that the school system did not need more money. In the spring, he took direct control of the struggling 50,000-student school system and set its budget for fiscal 2008 at about $800 million in local funds, approximately the same level as last year.
"We still believe the current budget is what is needed for the day-to-day operations," Fenty said at a news conference on the steps of the John A. Wilson Building. "But there are issues, including layoffs and other emergencies, that need to be taken care of right away."
The funding plan requires approval from the D.C. Council, and Fenty appeared to have support of a solid majority of the 13-member body. Seven members stood with him at the news conference and two others sent letters of support.
"I have confidence the mayor and chancellor will use this money wisely," said Jack Evans (D-Ward 2), chairman of the Committee on Finance and Revenue.
Chairman Vincent C. Gray (D) did not attend the news conference, but Fenty said he had been briefed. Marion Barry (D-Ward 8) sent Fenty a letter chastising him for announcing the plan publicly before fully briefing him.
"This is disrespectful and politically damaging," Barry wrote.
Mary Levy, a longtime D.C. schools advocate for the Washington Lawyers Committee for Civil Rights, had said that Fenty would probably find he needs to spend more before being able to fix systemic problems in areas such as human resources and financial systems. Yesterday, she said she wanted to know more details about how the new money will be spent.
"I'm waiting for more precision," Levy said.
The school system's overall budget is $1.054 billion, including federal dollars. In the summer, Fenty hired consultants from New York-based Alvarez & Marsal to examine the budget more closely and include expenses associated with the restructuring plan Rhee was devising. The consultants determined that when all the costs were added up, the school system was on track to overspend by $155 million, officials said yesterday.
The consultants also discovered $74 million that could be saved if school officials implement changes for fiscal 2008, according to the aides. Those savings would partially offset the projected shortfall, but the system would still need an additional $81 million, Rhee said.
Rhee said the school system routinely approves too many programs and hires too many employees, only to cut back in the middle of the school year. Rhee added that consultants discovered the system owed millions of dollars in back pay to employees.
"The situation is more dire than we thought," Rhee said. "The quality control for spending is nowhere near where it needs to be."
Jeff Smith, a former school board member who heads the education advocacy group D.C. Voice, attended the news conference and disputed that characterization. The school system had a balanced budget each of the past two years, he said.
"There is no reason to believe we were not going to do it again," said Smith, who resigned from the board in the spring, shortly before Fenty took control of the schools. Smith suggested that the Fenty team incurred additional costs during the takeover by the mayor's office and now wants to pay for it "retroactively."
Staff writer Theola Labb¿ contributed to this report.