City School Funding Dilemma Sparks Funding Formula Debate

Recent development in Baltimore City – much of it spurred by tax incentives meaning depleted new tax revenues – has triggered a drop in state school funding. Those expected reductions, especially when coupled with proposed formula and funding changes in the Hogan Administration budget, have City leaders concerned about both short and long term funding implications – and a strange disincentive to actively pursue even sensible development opportunities.

Maryland counties and Baltimore City share responsibility for funding K-12 education in the State of Maryland.  State funding provided for local schools is wealth-equalized, meaning that the state provides more funding to less wealthy jurisdictions in an effort to equalize the education opportunities available to students statewide.

State funding is distributed through formulas that weigh local property values heavily, as they are considered to be a potential source of local revenues that could be used for local school funding.  However, property values may be an inadequate measure of local wealth. As described previously by the Baltimore Sun, the proposed state budget for next year cuts aid to Baltimore public education by $35 million, in part due to the funding formula’s emphasis on property values.

With the development booming in Baltimore, the city’s property wealth grew by more than $1.3 billion last year — by far the fastest rate in Maryland. But those gains have come with a cost: deep cuts in state aid to city schools.

“The city’s growth outpaced the rest of the state significantly,” says Baltimore budget director Andrew Kleine. “Our growth strategies are working. Our property values are rising. That’s all good news. Yet we’re penalized under this formula. Even the fanciest formulas miss a lot of important facts.”

One of those important facts: Some of Baltimore’s most valuable buildings pay little or no property taxes to help close the gap.

House Appropriations Chair Maggie McIntosh, who represents Baltimore City’s district 43, has called for a conversation between the business community and stakeholders in school funding.  As reported by the Sun,

“We all have to come to the table to do the best we can do to restore some of these cuts,” McIntosh said. “There has to be a four-way conversation: the city, the state, the teachers’ unions and the business community.”

The influence of property values on state aid for education is a concern for the Maryland Association of Counties (MACo).  MACo advocates for a review of wealth formulas using to determine state funding to be a part of the Study of Adequacy of Funding for Education in the State Of Maryland.  MACo’s Executive Director Michael Sanderson sits on the Study’s Stakeholder Group.

For more information, read the full story from the Baltimore Sun here.

For more information about the Adequacy Study, read their preliminary reports, and other information here.

For more information about the foundation formula for state funding for public schools, see the Maryland State Department of Education’s Preliminary State Aid Calculations for FY2016.