A look at the elements of the Governor’s fiscal 2020 capital budget proposal for public school construction.

The Governor’s 2020 capital budget includes a new program for school construction funding — the Building Opportunity Fund — and a pledge to provide $3.5 billion in five years to school construction.

School construction is a major element of county capital budgets, who partner with the state to provide Maryland’s students with superior learning environments.

The State provides capital funding for school construction through several grant programs. Most of these are grant programs established by legislation, however the Building Opportunity Fund represents a new initiative of this Administration.

Here is the breakdown of the $438 million total announced in the Governor’s budget proposal for FY 2020:

• Aging Schools Program $6,109,000 (established by legislation in 1997)
• *NEW* Governor’s Building Opportunity Fund $45,000,000 (with funds from casino gaming revenues)
• Healthy School Facility Fund $30,000,000 (established by legislation in 2018)
• Local Share of School Construction Costs Revolving Loan Fund $20,000,000 (from Special Funds; established by legislation in 2018)
• Nonpublic School Safety Improvements $3,500,000 (first provided in fiscal 2019)
• Public School Construction Program $280,000,000 (annual program)
• Public School Safety Improvements Grant Program $10,000,000 (established by legislation in 2018)
• Senator James E. “Ed” DeGrange Nonpublic Aging Schools Program $3,500,000 (established in 2014)
• Supplemental Capital Grant Program $40,000,000 (established by legislation in 2017)

The largest school construction funding source is the capital improvement program. As described in the Governor’s 2020 proposed budget,

This program provides matching grants to local educational agencies [school boards] for the construction and renovation of public school facilities in Maryland. Included in this program are funds used for major projects, systemic renovations to existing school facilities, the movement and installation of State-owned relocatable classrooms, science facility renovations, and kindergarten and pre-kindergarten projects.

The Governor’s 2020 budget proposal includes $280 million new bond funding for the Capital Improvement Program for school construction annually through 2024. The fiscal year 2019 budget proposal and budget as enacted allocated $314 million to the capital improvement program. The 2019 budget proposal also proposed funding the program at $280 million going forward.

Data from the Interagency Commission on School Construction submitted to the Capital Debt Affordability program shows new allocations to the capital improvement program year-by-year, along with allocations. It also show the spending mandated by legislation for schools with high enrollment and a high number of relocatable classrooms – that is the EGRC program.

The Building Opportunity Fund represents new funding dedicated to school construction in addition to the traditional programs. As described by the Administration, the Building Opportunity Fund will be funded by casino gaming revenues and aims to provide funding to cover more than 90 percent of the projects requested by local school systems from 2020 to 2024, if accompanying legislation is enacted.

There is consistently a gap between school construction funding requests and allocated funding. In fiscal year 2019, there is a more than $300 million difference between requests and funding. At the same time, the Public School Construction Program is seeking to determine facility improvement needs through a statewide assessment separate from the funding request process.

The Building Opportunity Fund is part of a five year plan to boost investment in school construction. As described the by Governor’s Office,

This proposed new funding is in addition to the $1.6 billion in public school construction funding currently included in the state’s five year Capital Improvement Program, bringing the total proposed state investment to more than $3.5 billion over five years.

A funding increase is much needed to account for cost increases in construction over the past decade that have hindered progress on modernizing Maryland’s aging school stock. While the Knott Commission recommended a $400 million annual goal for school construction, the Governor’s commitment to $3.5 billion over five years would be $700 million annually — closer to the amount aligned with construction cost inflation and increase in school size to accommodate contemporary education requirements. As described by the Public School Construction Program to the Capital Debt Affordability Committee in 2017,

The Public School Facilities Act of 2004 established $2 billion or eight-year at $250M
State funding goal. Adjusted to actual cost of construction, but excluding increases in
gross square feet (GSF), this number today would be approximately $4.4 billion, or
about $546 million per year. If GSF escalation were also included, the total necessary
annual today would be $671 million (1.6% growth factor compounded for 13 years =
23% increase)

For more information about the 2020 Capital Budget, see the Capital Improvement Program Budget for School Construction and the Maryland Department of Budget and Management.

For more information about the Building Opportunity Fund, see Hogan Announces $3.5 Billion “Building Opportunity Fund” School Construction Initiative.