Will a Trend Away From Debt Affect Maryland’s School Construction?

A recent article in Governing questions whether state and local governments are missing opportunities to address critical infrastructure needs for fear of taking on more debt. As described,

As states and localities have adjusted to a slow-growth economy, one of the main casualties of the shift has been investments in infrastructure and other long-term programs. In other words, governments aren’t taking on new debt these days.

From the Review of the Capital Improvement Program, September 17, 2014

In Maryland, school construction is a major source of capital funding demand, begging the question of whether a trend away from debt will lead to less school construction. In the past several years, while state and local borrowing for public school construction has continued, the investments have reportedly not kept pace with need. According to the Report of the Capital Debt Affordability Committee on Recommended Debt Authorizations for Fiscal Year 2016,

In fiscal year 2015, public school construction received $275 million from general obligation bonds. The Governor’s fiscal year 2015 Capital Improvement Program proposed to continue the $250.0 million annual funding commitment for public school construction through fiscal year 2019. It is important to recognize that escalation in building costs since 2004 has significantly raised the actual cost of the basic goal of the Public School Facilities Act – to bring all public schools up to minimum standards by fiscal year 2013. And while funding requests from local jurisdictions have generally declined in the last five years, school construction needs continue to exceed the anticipated level of State funding.

In addition to state funding, recent county government spending totaled $981M for capital projects in K-12 education in FY 2014 alone. And, in this year’s General Assembly, several counties advocated for  SB 490 / HB 923 Capital Grant Program for Local School Systems With Significant Enrollment Growth or Relocatable Classrooms would provide additional funding to counties with school systems experiencing significant student population growth or counties with a significant number of relocatable classrooms. Under the bill, local school systems in Anne Arundel, Baltimore, Howard, Montgomery, and Prince George’s counties are eligible to share $20.0 million in additional State funding for school construction in FY 2016; to the extent these counties receive funding, they must provide matching funds. Dorchester County is projected to become eligible for funding beginning in FY 2017. The bill passed and funding was placed in the budget for its purpose.

For more information about the national trend away from debt, read the whole story from Governing here.

For more information about school construction in Maryland see the Report of the Capital Debt Affordability Committee on Recommended Debt Authorizations for Fiscal Year 2016, our 2015 End of Session Wrap Up: School Construction, and MACo’s data on county capital budgets.