Senate Committee Hears Testimony on School Board Private Financing

Today Maryland’s Senate Budget and Taxation Committee heard testimony on a bill that would allow a school board to seek private financing for facility projects and capital leases without county government approval. SB 924 was presented by Senator Serafini, its sponsor, who stated that as a result of concerns expressed by education stakeholders, he wanted to ask MACo and the Maryland Association of Boards of Education to study the idea, rather than pass the bill as drafted.

In his testimony, Senator Serafini shared how alternative financing by county school boards could reduce overall costs of school construction projects in the western region of the state in his powerpoint.

A recent article in the Herald-Mail described,

With about three weeks left in the 2015 General Assembly session, chances of the measure making any progress are far from certain. The Maryland Association of Counties has not taken a position on the bill, in part, because the bill was introduced so late, said Michael Sanderson, executive director of the organization. “The bill would strike some new ground,” Sanderson said.

As described by the Department of Legislative Services,

This bill [as drafted] authorizes local school boards to seek and obtain private financing to cover all or part of the costs associated with any public school facility project or capital lease for equipment, without the approval of any State agency or entity or any other proceedings or conditions. The aggregate principal amount of private financing outstanding may not exceed 5.0% of the board’s annual operating budget, and projected annual debt service may not exceed 2.5% of its annual operating budget. The term of any private financing may not exceed 10 years.

For more information, view the powerpoint used by Senator Serafini here, information about the bill here and the full article from the Herald-Mail here.

MACo Asks Maryland’s Congressional Delegation to Protect Municipal Bonds

US Representative Dutch Ruppersberger of Maryland’s 2nd district has drafted a “Dear Colleague” letter to House of Representatives leadership in support of the tax exemption for municipal bond interest.

MACo is asking all of Maryland’s US Representatives to join the letter, which urges House leadership to maintain the current tax exemption on municipal bond interest. According to the National Association of Counties (NACo), Representative Delaney of Maryland’s 6th district has already co-signed.

Tax-exempt municipal bonds are the most important tool in the United States for financing state and local infrastructure including schools, hospitals, water, sewer facilities, public power utilities, roads and mass transit. As described in a letter from MACo’s President Montgomery County Executive Isiah Leggett to Maryland’s Representatives,

Without a tax exemption for municipal bonds, Maryland’s state and local governments would face greatly increased costs for these essential investments. NACo estimates that in Montgomery County, we would have had to pay $40.2 million in additional interest costs in 2012 if municipal bonds had been fully taxable in the previous fifteen years. These shifted costs to counties would fall primarily upon their main general revenue source – the property tax. This would further burden an already struggling real estate market, and impose a regressive and unpopular tax scheme onto taxpayers.

Read one of the letters from MACo’s President, Montgomery County Executive Isiah Leggett on the importance of municipal bonds here.

Read one of the letters from MACo’s Executive Director urging Maryland’s US Representatives to sign the “Dear Colleague” letter on municipal bonds here.

Presentation Explains Pension Funding Plan Passed by the House

A recent presentation by the Department of Legislative Services provides further explanation of the pension funding proposal adopted by the Maryland House of Delegates last night.

As described in the presentation,

Under the House proposal, the pension fund is projected to reach the 80% funding level by fiscal 2023, the original goal established by the 2011 pension reform legislation, and saves $2.6 billion in unnecessary supplemental payments through fiscal 2028.

The Maryland Senate will now consider the pension budget proposal.

For more information, see the presentation here.

Maryland General Assembly Considers Time Spent on Student Testing

As described in the Maryland Reporter, Maryland’s legislature is considering several bills raising concern with the amount of time spent on standardized testing.

From the article,

Senators unanimously passed SB 497, sending it to the House Wednesday morning. The bill creates a 19-person commission, including two delegates and two senators, dedicated to studying the effectiveness of Maryland assessments and standardized tests in public schools. . . The commission would report back to the General Assembly any findings of the tests being “duplicative or otherwise unnecessary,” according to the Department of Legislative Services.

Another bill, HB1137, seeks to address the amount of time spent on testing in pre-Kindergarten through 2nd grade. According to the Department of Legislative Services,

This bill requires the State Board of Education to place a moratorium on State standardized assessments in prekindergarten through grade 2 from the 2015-2016 through the 2016-2017 school years. During the moratorium, the State Board of Education may pilot a State standardized assessment in kindergarten in conjunction with a required report.

Though the bill’s crossfile received an unfavorable report in the Senate, teachers and education advocates spoke in support of HB1137 at its hearing today in the House Ways and Means Committee.

For more information, see the full story from the Reporter here.

Budget & Taxation Subcommittee Concurs with Restoring Education Aid

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HB 72, The Budget Reconciliation and Financing Act of 2015, Department of Legislative Services Fiscal Note

The Senate Budget and Taxation’s Education, Business, and Administration subcommittee held a decision meeting today on the budget. The subcommittee concurred with many of the decisions made in the House, including a restoration of approximately $65.8 million of k-12 school funding through the foundation formula.

In their budget decisions last week, the House Appropriations Committee made two moves with regard to the State’s K-12 education funding for FY16. First, the Committee rejected one of the Governor’s major budget reductions, a proposal to freeze the per-pupil funding factor of the foundation formula, voting instead in favor of allowing education funding to grow with an inflation factor. According to the Decision Document, this choice will cost the State $65.8 million more in the FY16 budget. Second, the Committee adopted the Governor’s proposal to slow the phase-in of another funding factor, the net-taxable income. That proposal amounts to a reduction in funding for several jurisdictions. According to the Decision Document, this choice will save the State $12.1 million in the FY16 budget. Today, the Senate Budget and Taxation’s Education, Business, and Administration subcommittee concurred with both of those decisions, with one modification – a 1.5% cap on inflationary increases in the per-pupil funding formula in years FY17-FY20.

While there is no accompanying county-by-county data on the effect of these decisions, a reference point is the fiscal note prepared by the Department of Legislative Services for the Budget Reconciliation and Financing Act. The first two columns of Appendix C show the effects of the Governor’s proposals with regard to the per-pupil factor and net taxable income.

For more information, see our previous posts and the Department of Legislative Services’ Fiscal Note on HB 72.

Prince George’s Budget Proposal Prioritizes Education

Prince George’s County – annually among the very first to release a proposed budget plan – has done so for Fy 2016, with a major emphasis on investments in education, and narrowing the lingering “achievement gap.” In its FY 2016 budget proposal, the Prince George’s County Executive’s budget relies on a provision of state law that allows property taxes to be raised above the county charter’s limit to pay for increases in education funding. An article from the Washington Post describes, 

Baker’s proposal would fully fund a $1.9 billion spending request from the county schools chief that would significantly increase per-pupil spending in hopes of bridging the gap in academic performance between county students and those in neighboring jurisdictions.

From the budget proposal describes the property tax increase that would be used for education revenues,

Major General Fund revenue highlights include: Property taxes ($855.1 million)

  • Real Property Taxes ($776.5 million) — an increase of $127.0 million or 19.6% primarily due to the FY 2016 education revenue proposal which recommends a $0.15 increase in the real property tax rate from $0.96 to $1.11 per $100 of assessable value in FY 2016. The County is authorized to increase the real property tax rate based on Chapter 6 of the 2012 laws of Maryland (Senate Bill 848). This law allows the County’s property tax rate to be set higher than the rate authorized under the County’s charter. The bill requires that any additional revenue generated as a result of the higher property tax rate is for the sole purpose of funding the approved budget of the local school board. The rate adjustment is expected to generate an additional $104.9 million for the school system.

Senate Bill 848 stated,

Notwithstanding any provision of a county charter that places a limit on that county’s property tax rate or revenues. . . a county governing body may set a property tax rate that is higher than the rate authorized under the county’s charter  or collect more property tax revenues than the revenues authorized under the county’s charter for the sole purpose of funding the approved budget of the county board.

For more information, read the County Executive’s proposed budget here and this article from the Washington Post.

Senator Seeks to Protect Gambling Revenue for Education

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Senator Joan Carter Conway

As reported in the Washington Post,  a bill introduced by Senator Joan Carter Conway, Chair of the Senate Education, Health, and Environmental Affairs Committee draws attention to the effect of casinos switching from slot machines to table games on the State’s education funding.

As described by the Post, from December 2014 through January 2015, three casinos were given approval by the Maryland State Lottery and Gaming Control Commission to replace hundreds of slot machines with table games. Under current law, 20% of table games revenues are distributed to the Education Trust Fund and while in some cases almost 30% of video lottery terminal revenues are distributed to the State’s Education Trust Fund. According to the Department of Legislative Services, Senator Conway’s bill, SB 495, would alter the distribution of table game proceeds such that 30%, instead of 20%, of table game revenues are distributed to the Education Trust Fund.

From the article,

[Senator] Conway says she introduced the bill because she’s worried that as the casinos dump slot machines and add table games, the difference in the tax rates will limit the revenue for the state, the vast majority of which is directed to the state’s Education Trust Fund.

For more information, read the full story here.

Post Editorial Critiques State Pension Move

The Maryland legislature is currently considering a proposal from the Department of Legislative Services that would alter the way the State funds its employee pension system while freeing up additional funds for the current budget year.  A recent editorial from the Washington Post critiques the proposal and asserts potential long-term negative effects on the pension system.

From the article,

By grabbing pension dollars to plug immediate budget holes, lawmakers would risk the state’s future knowing that most of them will no longer be in office when the bill comes due.

Read the full editorial from the Washington Post here.

For more information on the proposal, see our previous posts, Maryland Legislature Considers New Pension Funding Proposal and Recommendation Repeals State Pension’s Corridor Funding Method and Supplemental Contribution.

 

Community Colleges Fill a Training Gap for Welding Jobs

A recent article in The New York Times described the anticipated increase in the number of welding jobs in the United States over the next couple of years, and the key role that community colleges are playing in training for this well-paid skill.

Quoting nationwide statistics for expected demand for welders, the story focuses on Texas where, as described,

The insistent hunger for welders in the Gulf Coast region has created an unusually close partnership between the energy industry and local community colleges to train people for disappearing skills.

Community colleges have received grant assistance from businesses seeking workers, and curriculum advice from human resource agencies, according to the article. As described, courses can be scheduled around 12-hour shifts of construction workers, some beginning at 4 am or running from 10 pm – 2 am.

For more information, read the full story from The New York Times here.

House Appropriations Committee Restores Some Community College Funding

The House Appropriations Committee met today for decisions on the fiscal 2016 budget. With regard to community college funding, the Committee voted to restore $4 million in funding that was cut in the Governor’s proposed budget.  The Governor’s proposed budget reduced community college funding by approximately $13 million as compared with the amount that would have been provided based on statutory funding formulas.

While the Department of Legislative Services recommended a reduction of approximately $11 million, the Education and Economic Development Subcommittee modified that proposal and recommended the $9 million reduction, providing $4 million back to community colleges. The House Appropriations adopted the subcommittee’s recommendation.

According to the Maryland Association of Community Colleges, in FY2015, the State originally appropriated $226 million of operating funding to community colleges, but this funding was reduced to $219 million in January 2015 due to revenue shortfalls. The House Appropriations Committee action’s would provide $222 million to community colleges for FY 2016.

The next step in the budget process will be in the floor debate in the House, and then, when passed by the House, the Senate’s consideration of the budget.