Opposite views on the O'Malley budget bill
Reporting on an issue as complex and political as Thornton funding, it's hard to please anyone.
In response to my story Monday, the governor's office wanted to point out 1) that Maryland's public schools got record funding increases from the state for the current academic year, raising the bar for all future funding and 2) that Governor O'Malley's budget package exceeds a "hold harmless" provision for education requested in a letter last month by Baltimore Mayor Sheila Dixon. A hold harmless provision would ensure that schools don't receive less than they did this year, and the governor's staff says the budget bill goes beyond that by guaranteeing at least a 1 percent funding increase for the next two years.
On the flip side, education advocates say my story didn't go far enough to make the case that the 1 percent increase really doesn't mean anything because most of the money goes toward teacher retirement, which the state must fund anyway (for now).
I'm printing below a letter that landed in my inbox, written by David Merkowitz, executive director of the Prince George’s Business-Education Alliance, and sent to members of the General Assembly. While written specifically about the impact that the governor's budget bill would have on Prince George's County schools, it essentially summarizes the concerns I'm hearing from educators around the state. The letter says that Prince George's Superintendent John Deasy has instructed his staff to prepare an alternative budget for the 2008-2009 school year preparing for a worst-case scenario, in which that district would see $65 million of cuts. I wonder how many other superintendents have started engaging in such an exercise. (The letter is reprinted with Merkowitz's permission.)
November 2, 2007
Dear Delegate:
Within the next two weeks, you will be making a series of critical decisions that will affect the lives and educational prospects of students in Prince George’s and the future economic health of our community. The outcome of the special session of the General Assembly not only will determine the fiscal 2009 state budget; it will reverberate for years to come in terms of opportunities provided or foregone for the children of Prince George’s County.
The Prince George’s Business-Education Alliance consists of the leaders of many of the county’s most important businesses, the Prince George’s County Public Schools (PGCPS), and Prince George’s Community College. Our purpose is to ensure that the children of our county receive an excellent education, from kindergarten through college, that prepares them to compete in the nation’s economy and participate fully in the civic life of our society.
While evaluating the budget and tax proposals before you, negotiating a final package to address the projected revenue shortfall, and ultimately casting your vote, we urge you keep the interests of Prince George’s children and schools foremost in your considerations. In that respect, I ask that you pay special attention to several issues that will have a substantial impact on their future success:
The frozen foundation. The Budget Reconciliation Act (House Bill 1) would freeze state education aid under the Bridge to Excellence in Public Schools Act (Thornton) at fiscal 2008 levels for the next two years. This would cost PGCPS alone more than $40.6 million in fiscal 2009, compared with projected funding under current law. That cut would be compounded in fiscal 2010, resulting in a net loss over two years of more than $120 million.
IPD vs. CPI. H.B. 1 also would change the Bridge to Excellence Act so that, beginning in fiscal 2011, the annual increase in school aid would be set using the Consumer Price Index, rather than the implicit price deflator for State and local government expenditures. Over time, this change may not be significant; in the 1990s, the CPI was higher than the IPD, while more recently, the IPD has been greater. But whatever index is used beginning in 2011, its application to a substantially lower base will impose a permanent penalty on Prince George’s County students and schools.
The 1% non-solution. Section 2 of the Budget Reconciliation Act would establish a supplemental grant that guarantees at least a 1% increase in state education aid in 2009 and 2010 to those county boards of education that otherwise would not receive at least that amount over the previous fiscal year. As detailed in Exhibit B1 of the Fiscal and Policy Note to House Bill 1, this provision would benefit only six jurisdictions. It would be of no assistance to Prince George’s County. The supplemental grants are designed only to hold harmless those school systems that would not receive additional funds from the expected phase-in of the Geographic Cost-of-Education Index.
Where’s “F”? Governor O’Malley promised during his campaign to fund the Geographic Cost-of-Education Index. Although that did not happen during the 2007 regular session of the General Assembly, he reiterated that promise during the rollout of his deficit elimination plan. Section 2 of H.B. 1 would insert new language in the Bridge to Excellence Act, as Subsection (E)(1)(II), referring to “funding received under the GCEI Adjustment Grant Program under Subsection (F) of this section.” However, there is no F in H.B. 1. In effect, the Budget Reconciliation Act calls for a “phantom” GCEI phase-in—one that apparently does not yet exist. One assumes that the Governor plans to propose language for Subsection (F) eventually. However, at this point, without such language, it is impossible to determine what the phase-in schedule for the GCEI might be: over how many years it would be implemented, at what rate, and how much the affected school systems, including Prince George’s, would receive each year.
No fix for the NTI. H.B. 1, as currently written, would do nothing to repair one of the major flaws in the current formula for determining state education aid: the inconsistency between the date Maryland uses for measuring each jurisdiction’s relative wealth, or net taxable income, (September 1) and the deadline for late filing of federal income tax returns (October 15). This discrepancy, which developed in 2005 when Congress changed the automatic income tax filing extension date, rewards counties with many upper income taxpayers, who are more likely to file their tax returns near the deadline, and penalizes jurisdictions with more lower and middle income families. As a result, PGCPS lost $23 million in state aid it otherwise would have received in the current fiscal year.
HSAs: High stakes and high costs. The Maryland State Board of Education this week reaffirmed its intent to require students to pass the High School Assessments to graduate in 2009 and added a “Bridge Plan” that would allow students who fail the tests repeatedly despite remediation to complete a project demonstrating that they have gained the equivalent knowledge. The HSA requirement was not in place in 2002 when the Thornton Commission developed its recommendations and the General Assembly passed the Bridge to Excellence Act, and thus was never considered in calculating funding needs and formulas. Nonetheless, PGCPS, which is disproportionately affected by the requirement, has been devoting a major portion of new Bridge to Excellence funds to remediation for students at risk of failing the HSAs. Superintendent Deasy has indicated that implementing the Bridge Plan will impose a substantial new burden on school staff and require significant expenditures that had not previously been budgeted.
Retirement contributions: The big shift (and shaft). Absent adequate new revenues or sufficient spending cuts, one alternative that has been discussed to achieve a balanced budget in fiscal 2009 is shifting a substantial portion of retirement contributions for teachers and some other public employees from the State to the counties. This notion, embodied in House Bill 50, would cost Prince George’s more than $37 million, most of it for school system personnel. The possibility of such a shift prompted Superintendent Deasy to instruct his staff to prepare an alternative fiscal 2009 budget with cuts totaling $65 million: $37 million from loss of the inflation adjustment plus $28 million to cover retirement contributions, with no provision for new funds from the GCEI.
The challenge you face in the coming weeks is enormous, and I know that you already are being subjected to incredible pressure by various interest groups with a stake in the outcome of your decisions on tax increases and spending cuts. However, I urge you to remember that the sole mandate the Maryland Constitution imposes on the State government is to establish “a thorough and efficient system of Free Public Schools; and… provide by taxation, or otherwise, for their maintenance."
It was the failure of the State to fulfill this mandate that led to the establishment of the Thornton Commission and to the enactment of its recommendations. Substantial and permanent cuts to education funding would put Maryland once again in violation of its own Constitution, with the greatest burden falling on Prince George’s County and its young people.
You now have a once-in-a-generation opportunity to reform Maryland’s tax code to ensure that the State has adequate revenues to meet its constitutional obligations. It’s an opportunity that requires courage, boldness, and a determination to act in the best interests of those who represent the future of our county.
Prince George’s students and schools have made significant progress in recent years—progress that will be jeopardized by cuts of the magnitude being proposed. Your constituents are looking to you to prevent such an outcome and will, to a great extent, judge your performance in office on that basis.
If I can be of assistance, or provide additional information, please do not hesitate to contact me.
Sincerely,
David Merkowitz
Executive Director
Prince George’s Business-Education Alliance
