Wealth Formula Changes Cast Aside as School Funding Workgroup Continues

The Kirwan Commission’s Formula Funding Workgroup continued its work, seemingly deciding to leave the current “wealth formula” intact as they continue unraveling components of current and potential school funding.

The workgroup formed by the Kirwan Commission to delve into the complex matters of interjurisdictional formulas and the eventual state/local split of cost responsibilities continued its work with a day=long meeting on August 22. While most of the meeting focused on more information, staff presentations, and general questions and dialogue, the workgroup did seem to reach one particular conclusion of interest to many counties – the wealth formula will remain intact through their recommendations.

For more background on the wealth formula and its central role in school funding, see previous Conduit Street coverage:

School Funding Workgroup Sharpens Focus on Wealth Formulas (from July 24, covering their early deliberations)

WealthBrevisedFollowing a presentation by the legislative staff and State-hired consultants, the workgroup members spent time discussing policy options with the wealth formula. After that discussion, the legislative staff offered its recommendation: that the wealth formulas remain unchanged. They pointed to the jurisdictions atop the list of the “winners and losers” illustration – Garrett and Kent counties — and noted that both were near the top of the state in the wealth per pupil calculations. The workgroup seemingly subscribed to this thinking – that altering the wealth formula to weight income more heavily could subvert the “equity” goals of the overall funding effort.

Incidentally, the two jurisdictions that are most frequently noted as outliers in this calculation – Worcester and Talbot Counties – are both so far from the state average in wealth per pupil that they are subject to specific “floors” in state funding. Even with the most aggressive change being considered by the workgroup to change the income/property balance in the formula, both counties would remain at the statutory floor for state funds, and would be unaffected. Thus, the zeros under the “Difference” column in the exhibit shown above.

Some Opening Fireworks

The workgroup meeting opened with some extended commentary by the Chair, Dr. Brit Kirwan. He recalled the recent session at the MACo Summer Conference, and chastised the Governor for his comments on the plan, citing cost concerns and labeling the plan as “half baked.” Several workgroup members offered thoughts on the dialogue, before settling and focusing on the day’s agenda. Read coverage on Maryland Matters for more of the policy/political exchange.

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A Roadmap For “Decision Points”

A roundup of major matters to be determined by the workgroup started the August 22 meeting, and served as something of a map for decisions lying ahead. The workgroup did not actively seek to resolve any other matters that day (beyond reaching a tentative result on the wealth formula) but the presentation was illustrative of the matters that still lie ahead.

Updating and Explaining the Commission’s Cost Estimates

TotalKirwanCostsAug19Most of the morning involved the staff and consultants reviewing the components of the Kirwan Commision’s full recommendations, and explaining the multiple interplays among them. Embedded in this presentation was a sense – drawn from the 2019 “Blueprint for Maryland” legislation, that the Commission (and perhaps the funding workgroup) is being urged to alter the phase-in of the multiple components of the full framework, to enhance affordability. No decisions were made, or even suggested, in that regard — but it clearly remains a major item on the workgroup’s “to do” list.

One note of interest – County Executive Barry Glassman (a member of the workgroup) asked about pension costs associated with the new investments in teachers and other staff. The legislative staff response indicated there was an ongoing effort to refine their assessment of these as potential new costs – thus far not included in the overall projections of $3.8 billion upon full phase-in. (Funding responsibility for pension costs is statutorily split between the state and local school boards – whether hiring or increasing pay for many teachers would trigger new state costs is the matter under consideration)

Who’s Doing What? Who’s Funding What?

WhoPaysMatrixThis additional one-page matrix illustrates the various components of the Commission recommendations, with detail on how each component would be funded and overseen. The bulk of the programs detailed are within the large “box” to the center left of the table, marked as “assumed to be wealth equalized with local jurisdictions.”

While no final decisions have been made on this, this matrix offers a framework for the overall thinking of the staff and consultants – that most of the new program funding (much like the current foundation and compensatory education programs) would become split responsibilities between the state and counties.

Looking at Local Revenues

The workgroup took a deep look at local revenue structures and decisions, gaining further understanding of county budgets and trends.

The varied discussion touched on local taxing authority, lasting effects from the “great recession,” stability in tax bases, and other matters.

Maintenance of Effort – History and Implementation

The workgroup discussed, for the first time in any depth, the current law governing local funding for education. While the state nominally has a two-part funding requirement (including that each county fund its full share of the foundation program) – it is truly the state’s Maintenance of Effort law that practically guides current school budgets.

Under MOE, each county must fund the schools at least as much, per pupil, as the prior year. The staff presented details on the waiver process – including information about its use during the great recession period, and its subsequent reform and “strengthening.” Since the 2012 changes, which essentially created an absolute mandate that each county fund its MOE target absent a waiver, the waiver process has gone completely unused.

The “escalator” provision, also inserted into the law in 2012, was also profiled. County funding history, dating to pre-recession years, was shown as illustrations of the county commitment to funding schools. Counties each year have supported schools substantially above the MOE requirement.

The state’s “effort” index, calculating the share of local wealth committed to school budgets, reinforces this impression. The county “effort” even when scaled to the growth in local revenue has steadily increased in each of the last several years. County funding actions from FY 2020 – not shown in this summary – will surely expand that growth trend, as multiple jurisdictions made substantial new education investments.

The Path Ahead

The workgroup will meet again on September 5, likely for another all-day meeting.

The current schedule calls for the workgroup to conclude its work in October, and for the full Kirwan Commission to receive its recommendations later that month. They are charged with issuing a final report by year’s end, which will certainly develop into proposed legislation to implement its remaining findings.

Materials:

Kirwan Commission materials are all available on the Commission website.

The August 22 meeting is also available to stream online.

 

 

 

Michael Sanderson

Executive Director Maryland Association of Counties
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