Gov. Robert L. Ehrlich Jr. would appoint the majority of a management panel to overhaul the cash-starved Baltimore school system under a compromise reached yesterday that Mayor Martin O'Malley said relegates the city to "junior partner" status for nearly two years.

Ehrlich would name three members, including the chairman, of a proposed five-member oversight panel - giving state representatives the dominant role in financial restructuring designed to eliminate a $58 million school system deficit and a cash-flow crunch.

O'Malley said his two appointments would be city residents. The powerful new Baltimore City School System Authority would run the school system until at least December 2005.

"We would be a more junior partner for this temporary period," a resigned O'Malley told city lawmakers yesterday, capping off more than a week of negotiations. "Being Irish, I would much rather take a static position and fight to the death. I honestly believe this is the best we can do."

The mayor and governor agreed during a telephone conversation late Thursday that a consensus choice for the panel would be George L. Russell, a lawyer who became the first black judge on Maryland's Circuit Court in 1966, and was later the city's first African-American solicitor and president of the Baltimore City Bar Association.

Ehrlich said Russell, 74, declined the appointment yesterday morning, noting time demands. The former judge's decision set off a barrage of telephone calls from prominent Maryland politicians urging him to reconsider.

Ehrlich demanded a stronger state oversight role for city schools in exchange for a $42 million loan that will pull the system through the remainder of the school year. Without the money, paychecks could begin bouncing next month.

"This is the first major step toward reconstructing a broken system," Ehrlich said. "It's a system broken on the fiscal side and a system broken on the academic side as well."

City majority

A proposed law implementing the changes would require Ehrlich to appoint a city resident, meaning most of the five-member board would come from Baltimore. The bill also would prevent teacher layoffs and pay cuts through June 30, the end of the fiscal year - although labor contracts could be reconsidered after that.

The General Assembly must approve the legislation, not available late yesterday, and some city lawmakers criticized a deal they said was struck without their input.

"We have to be at the table because this is our city and these are our kids," said state Sen. Lisa A. Gladden, a Baltimore Democrat.

The final agreement gave state schools Superintendent Nancy S. Grasmick a less influential role on the oversight panel than the governor had wanted by making her a nonvoting member.

Neither Ehrlich nor O'Malley would disclose their selections for the new authority. O'Malley had wanted state Treasurer Nancy K. Kopp, a former state delegate, to serve in a tie-breaking position, but the governor objected to the choice.

With Kopp out of the picture and Grasmick to the side, it seemed as if all of Annapolis was calling on Russell, a lawyer with the law firm of Peter G. Angelos, to take a leadership role in the city schools crisis.

"I think he would be ideal," said Rep. Elijah E. Cummings, chairman of the Congressional Black Caucus. "He will make sure there is accountability for every penny that flows into that system."

Cummings said yesterday that he was going to "beg" Russell to take the job.

"I'm going to call George and beg him to do this. It would be too cheap to ask him," Cummings said. "There are certain times that cry out for certain people to do a certain job, an important job. This is a time that cries out for George Russell."

Russell did not return telephone messages yesterday.