Early Deadline for Submitting School Costs as “One Time”

State requirements for school funding allow a county to invest in one time costs without embedding that spending into the maintenance of effort base for future required funding. This limited process requires an application to the State Board of Education by March 31 – meaning counties need to evaluate this option soon to use it for this year’s budget. This article will detail the current process – Conduit Street will follow up next week with pending legislative changes seeking to make it work better.

Background and Process

When the General Assembly revised the education funding law defining the base payments that counties make each year to school boards in 2012, they maintained the exception for one-time expenditures to exclude them from the base payment calculation.  The intent of the law is that if a county invests in a new program or facility enhancement, that investment is a one-time cost that will not recur in the coming year.  One-time costs, according to the law, should be provided with a special exclusion so that they are not built into the base.

County governments seeking to exclude one-time costs, however, must follow a process with certain deadlines to make sure that one-time costs are excluded from their education base.  To receive a determination from the School Board that a cost qualifies as nonrecurring, a county or school board must submit a written request to exclude qualifying nonrecurring costs that are supplemental to the regular school operating budget.

As described in the regulations, the request must include an explanation of why the cost qualifies as nonrecurring and before submitting the written request, the county must confer with the local board and send them a copy of the request.  There is a certain timeline in which this all may happen, too: the request must be submitted to the School Board before March 31 of the prior fiscal year.

What Costs Are Eligible

The definition of one-time costs are limited.  Under  the Education Article, qualifying nonrecurring costs, shall include: (i) computer laboratories; (ii) technology enhancement; (iii) new instructional program start-up costs; and (iv) books other than classroom textbooks. Regulations under the law create more specific categories for non-recurring costs and define the procedure for a county to request a non-recurring cost determination. Under the regulations, qualifying nonrecurring costs are limited to:

(a) Costs to establish new computer laboratories that include the cost for equipment, furniture, wiring, hardware, software, space renovations, and the initial up-front cost for staff development, and training but not ongoing costs such as maintenance, staff salaries, staff development, and training;

(b) Costs for new technology that include the cost for equipment, furniture, wiring, hardware, software, space renovations, and the initial up-front cost for staff development, and training but not ongoing costs such as maintenance, staff salaries, staff development, and training;

(c) New instructional program start-up costs that include the cost for equipment, furniture, wiring, hardware, software, space renovations, textbooks, manipulatives, staff development, and training;

(d) Books other than classroom textbooks to establish a new library collection and new books required in new and renovated schools;

(e) Capital items with a useful life of 5 years or more that include the cost to acquire fixed assets other than land and buildings; and

(f) Other unique one-time costs that the local board and county mutually agree to be one-time expenditures.

After MSDE receives a request, the Department has 30 days to inform the county or school board if the Department approves the cost as nonrecurring.  The county or the local board may then appeal to the State Board within 15 days of the date of a decision to approve or reject a cost as nonrecurring.

This year, counties may anticipate additional costs from the implementation of common core and PARCC assessments, both of which could fall within the categories of nonrecurring costs.  Common Core is a new instructional program that may require start-up expenditures that include the cost for new textbooks, manipulatives (materials that support hands-on learning), staff development, and training. The significant technology requirements to administer the PARCC online assessment will likely also require new equipment, furniture, wiring, hardware, software, space renovations, and also staff training.

How To Proceed This Year

To be eligible for a nonrecurring cost approval, a county should work with its local school board to determine what costs might fit under this category and make application to the Maryland State Department of Education before the March 31 deadline. It is within the discretion of the Department to approve or deny a cost as nonrecurring.  For more information, contact Robin Clark at MACo, or the MSDE Local Finance Reporting Office.

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