MOE Bill Escalates School Funding, Needed or Not

One provision of the fast-tracked Maintenance of Effort bill HB 1412 with curious effects is the “escalator” clause, located on page 16 of the bill.

The bill seeks to identify counties with low “education effort” (a defined term in the bill) and to compel those counties to increase their school funding levels. The bill identifies the statewide average education effort as the critically important magic number for better/worse treatment, with all county classifications hinging on it. So here, we’ll explore the effects on one such so-called “bad actor,” Worcester County.

Despite the presence of Ocean City and its unique demographics, Worcester County is by most accounts a low-wealth rural jurisdiction. According to the Bureau of Labor Statistics, the county has an unemployment rate of 15.6%. Even after adjusting for seasonal variations, this evidences the weakness in the local economy — far greater than either the nationwide or statewide figure for the same period. Worcester County, by the state’s own measure for the “disparity grant,” is only just barely above the threshold for receiving disparity grant support, on account of its limited local revenue raising ability. Another measure in the schools backs up this impression, as roughly two-thirds of the school lunches served in the system are to children eligible (based on family income) for free or reduced price meals.

Under HB 1412, Worcester County is treated as a “bad actor” (a phrase publicly used multiple times during the hearings and legislative discussions on the legislation). Here, we’ll evaluate the funding requirement on Worcester County, and see if it leads to a reasonable conclusion.

FY 2012 county funding to the school board was just shy of $72 million. That equates to $11,388 per full-time student enrolled in the schools, where the student population is roughly 6,300 students (equated to full time), making it one of the smallest systems in the state. This level of per-pupil local effort places the county #1 in the state, greater than that even from any far higher-income jurisdictions.

The local debate over school funding is an honest and fairly typical one. In Worcester County, the school board has submitted a budget asking for a $1.9 million increase in funding to roughly $73 million, and seeks to provide salary increases to school employees. The County Commissioners will examine that proposed budget and evaluate its affordability alongside issues like public safety, infrastructure maintenance, and public health.

However, the one-size-fits-all formula in HB 1412 says the magic number for local contributions is higher. Much higher. To reach the target number in the MOE bill, Worcester County would be obliged to fund a massive jump to $16,198 per student. That is roughly a $30 million increase in Worcester County taxes or reduced non-education services. What would Worcester County need to do to locate that extra $30 million? The county could “max out” its own income tax rate (a common barometer of county effort in Annapolis) but doing so would only yield perhaps another $18-20 million in local taxes. The remaining $10 million could be reached by reducing the county’s support for its library, sheriff, jail, state’s attorney, and volunteer fire companies — of course, in such a small county, it would take about a 50% cut in each of these programs to even approach the final $10 million envisioned by this pending legislation. In short, the MOE bill pending in the House of Delegates (and currently on its way through the Senate) would decimate the finances of Worcester County, its non-educational services, and its taxpayers. All in the name of forcing the #1 county in local support to move farther and farther ahead of the pack.

    Conclusion

MACo routinely testifies against statewide decision-making replacing the judgment of locally elected officials. HB 1412 represents an extraordinary example of this very problem. One oversimplified calculation, usually compressed to a single chart even while billion-dollar decisions are pending, can drive absurd policy results like the Worcester County story above.

To read MACo’s testimony on HB 1412, click here.

Michael Sanderson

Executive Director Maryland Association of Counties

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