Maintaining school progress

Our view: While local governments face serious financial hardships next year, proposed reforms to a critical school funding formula merit a cautious approach

December 20, 2009

Maryland has long required local government to spend as much on school operating budgets on a per-pupil basis as they did the year before. The so-called maintenance-of-effort law has been a cornerstone of public education for a quarter-century and has ensured predictable and stable funding for schools.

But in an economic downtown of historic proportions that has caused tax revenues to drop precipitously and sent Baltimore and Maryland's 23 counties scrambling to patch budget deficits, the usefulness of the law has been called into question.

This year, three counties sought waivers from the maintenance-of-effort requirement on the grounds of economic hardship. None was granted by the Maryland State Board of Education, a decision that proved particularly disastrous for Montgomery County.

The affluent county is now facing a potential loss of $46 million in state aid for failing to meet its obligation this year - even though it has spent more than $420 million above and beyond its maintenance-of-effort target on its K-12 schools since 2003, the most of any Maryland county by a factor of three.

State lawmakers are likely to demonstrate some sympathy for the counties, particularly in an election year, and withdraw any penalties. But they might well go beyond that and pass legislation making it easier for local government to be granted a waiver this year and in future years.

The time might be right for at least a temporary loosening of the requirement. After all, when public education represents 50 percent to 60 percent of county spending, it means budget cuts hit other functions of government, from police and fire to health and social services, at least twice as hard.

But legislators might want to think twice about embracing permanent change. Earlier this year, a legislative task force proposed doubling the criteria by which a waiver could be granted.

The new criteria include some that are sensible (a broad economic downturn or a significant reduction in state aid) and at least one that is not - agreement between a school system and local government that a waiver is deserved. After all, the latter may demonstrate only that a county executive or Baltimore's mayor has sympathetic appointees on the local school board.

Montgomery County's situation, while regrettable, is also largely the county's fault. Clearly, local officials never considered the possibility that they were driving up their maintenance-of-effort obligation to a level that might not be sustainable in a serious economic downturn.

With the state facing a $1.8 billion budget deficit next year, it's understandable that counties are worried about education funding at every level. The primary source of revenue for local government is property taxes, and the collapse of the real estate industry - as well as the foreclosure rate - means revenues will be down significantly.

Clearly, some reform of the education funding rule is necessary. Otherwise, what incentive will counties have to fund education above the minimum obligation if they believe a waiver will never be granted, even in the face of the worst downturn in decades?

It's laughable that the current criteria for waivers does not include a broad economic downturn and instead requires some extraordinary event unique to the county, such as a major employer shutting down. A recession can be just as bad as any localized disaster.

But other changes likely to be put on the table are not as attractive. While the state school board might not possess the most sympathetic ear to county executives and councils, the possible alternative of filing an appeal with an administrative law judge or the Board of Public Works instead of the Circuit Court could prove as problematic.

Reducing the penalties for jurisdictions that fail to meet the maintenance-of-effort standard is another area where lawmakers should be reluctant to tread. As wrong as it might be to reduce state funding for schools to penalize stingy counties, at least it's a ruler no one wants to get hit with.

Strong financial support for public education is a major reason why Maryland's schools have prospered relative to school systems in other states. If lawmakers opt to make it too easy to circumvent the maintenance-of-effort requirement, that progress could easily be lost.

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