Rhee Questioned Over Higher Deficit Projection

By Nikita Stewart
Washington Post Staff Writer
Friday, November 30, 2007

D.C. Council members grilled Chancellor Michelle A. Rhee yesterday about a projected $100 million-plus deficit in the school system, the full scale of which they said they learned about only that day.

The confrontation came a day after members said that Rhee and Mayor Adrian M. Fenty (D) had left them out of a proposal to close 24 schools.

At an oversight hearing, the council's chairman, Vincent C. Gray (D), unveiled a memorandum from Pamela D. Graham, the chief financial officer for the schools, who urged Rhee to implement a hiring freeze and create a plan to reduce spending by Dec. 7 because of the potential shortfall.

Graham attributed some of the deficit to what she called Rhee's improper hiring and promotion of 132 employees. "The practice of overriding process and procedure in hiring new employees must not continue," Graham wrote in the Nov. 21 memo.

Council members questioned Rhee's management and what they termed her secrecy.

"These are the very problems you talk about, and you turn around and do the same thing," Gray said.

In October, Fenty and Rhee asked the council to approve a one-time expenditure of $81 million to cover a projected $35 million shortfall and the cost of restructuring the central office.

Yesterday, Rhee told council members that she had not informed them that the shortfall had increased by $66 million because she does not agree with Graham's analysis and wanted to meet with her before giving the information to the council. "We don't believe that a lot of that information was accurate," she said.

Yesterday's hearing was supposed to be routine, but council members readied for a showdown after Rhee and Fenty announced a plan on Wednesday to close two dozen schools and to rebuild the system into one offering more gifted and talented programs, special education services and art and music classes.

Council members received notice the evening before the announcement, sparking accusations that the mayor continues to make them the last to know about significant education decisions. The plan for school closings heightened tensions that have been building. Earlier this year, council members did not find out that Rhee would be appointed until the night before Fenty's announcement.

"People don't do well when they are blindsided," Gray said. "I would strongly urge that this dynamic change."

The plan for school closings dominated the beginning of the hearing as parents and others testified, arguing that some schools were ill-chosen, given student performance and future development that could increase the population of neighborhoods.

Council member Jack Evans (D-Ward 2) urged Rhee to keep Shaw Junior High School open because of its long history.

But the hearing's focus shifted when Rhee testified. She opened her testimony by abandoning her 12-page written statement, which mostly outlined problems in the central office. Instead, she said she was ready to "engage in the hard discussions."

Gray asked Rhee about Graham's warning, and council members followed with questions about the shortfall and why they were just learning about it. "What we need from you is reliable information, specific data, numbers that we can count on to be true," said council member Mary M. Cheh (D-Ward 3). "Then we can act."

The council is scheduled to vote Dec. 11 on a supplemental budget to distribute surplus revenue to earmarks, including the $81 million for the schools.

Graham said only $35 million of the projected $100 million deficit is covered in the original $81 million request. That leaves a $66 million hole. School officials have not requested additional money.

Noah Wepman, an education program manager who works for City Administrator Dan Tangherlini, spoke on behalf of Rhee and the administration, saying in an interview that they were disappointed that Graham prepared her memo without the administration's input.

The $66 million is inflated, Wepman said. For example, he said, Graham's projections include $6 million in fixed costs, which he said are mostly for utilities at schools already covered by the $81 million. "We believe there are elements of the supplemental budget that can be applied," he said.

The projections made since the schools takeover can be confusing. In October, consultants said that the school district would run a $155 million deficit but that $74 million could be saved if changes were implemented for fiscal 2008.

That left the system with its $81 million request. But Graham told council members yesterday that the school district has not instituted the changes, which involve such things as hiring practices and reducing the staff.

Council member David A. Catania (I-At Large), a critic of the city's Office of the Chief Financial Officer, focused on Graham, saying she failed to anticipate spending. He said he did not understand why her letter showed that $15.3 million would be spent on pay negotiations when the number could be more than double that.

After Graham said consultants recommended that the smaller amount be placed in the budget, Catania said: "I don't want to hear about consultants anymore. That's like the dog eating the homework."

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