Kirwan Funding Work Group Releases Preliminary County-by-County Numbers

The school funding formula workgroup, nearing its end, distributed and discussed several analyses that illustrate the potential effects of the plan on county finances – but more work and refinement awaits, in time for next week’s decision meeting.

KirwanMaterialsOctober8
Materials from the October 8 meeting, courtesy of Senator Bill Ferguson’s twitter feed. “Off we go.”

A busy day for the Kirwan Formula Funding Workgroup on October 8 saw the members discuss and debate a variety of numbers and analyses relating to the ambitious spending plan. They made some incremental, mostly technical decisions, but still have large questions remaining about the program’s phase-in and the resulting county funding obligations. Their final decision meeting is set for Tuesday, October 15 – after which their report will be submitted to the full Commission on Innovation and Excellence in Education, who will meet until the end of the calendar year.

All the materials from the October 8 meeting are available at the Commission webpage.

The Conduit Street Podcast has a complete breakdown of the preliminary county-by-county numbers.

What’s the County Share of All This?

Okay, we know that’s what counties have been itching for. We got some insight, but nothing final, today. We have two pages from the many used today that help to illustrate where the work group seems to be heading.

First – understand the framework of how the workgroup, and likely the Commission, are going to require counties to fund the new program. Currently, the state holds counties to two funding requirements. The well-known “Maintenance of Effort” law requires counties to maintain the per-pupil funding level year to year, with lower-effort counties receiving an “escalator” requirement. Less known, since it is not practically relevant, is a law requiring that the county fund at least its share of the “foundation” funding program – the centerpiece funding to each school system, in which the state contributes a wealth-equalized share. The state required each county to at least complete the funding for that one program, but does not require counties to fund their share of the other categorical programs for Compensatory Education, Special Education, and Limited English Proficient students.

The Work Group has strongly signaled its intention to extend that funding obligation to all state funding programs, and reaffirmed that direction today. This will be the essential cost driver of the Kirwan plan on county governments – the various state programs will increase in their scope and cost, and the local share of each of them (after the State makes its contribution through formulas) will be a legal responsibility of the county.

The analyses below should not be viewed as final – but they illustrate the framework the workgroup is using as they hone in on their final recommendations.

2019_10_08_LocalSharevsMOEScenarios

The table above shows the basic numbers, expressed in FY 20 dollars. Focus on the two highlighted columns, for the most straightforward analysis if the county effects in this preliminary picture.

The BLUE BOX column shows the funding requirement IF each of the program changes being considered were adopted and fully phased in. But instead of FY 2030, the proposed end of the phase-in, they are calculated based on today’s FY 2020 data. So – the blue column is the state’s funding expectation on each county if all these changes were already in place for this year’s budget.

The GOLD BOX column shows actual county appropriations for FY 2020. Comparing the two, eight counties are already funding at or above that level, while 16 would need to increase current funding levels to meet that goal. The difference between these two numbers would, effectively, be the “ask” of each county, over the phase-in period.

For example, Anne Arundel County currently funds $733 million to its schools. The full Kirwan formula changes proposed would have obliged an additional $62 million in FY 2020 were they already in place this year.

2019_10_08_3StateAid_LShare_AppsExhibits_Page_5-edit.png

The table above includes comparable data, that can be used to look at FY 2030, the final year of the phase-in. This, to some workgroup members, seemed to be a clearer analysis.

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We sort of know where this is going… but it’s obviously not yet a masterpiece. Patience.

The GOLD column shows current county spending, adjusted forward for the next decade by an assumption that recent county funding trends, including the decisions to fund above State requirements would continue in the absence of a new State mandate. The BLUE column shows the FY 2030 local share of all the fully phased-in programs. In both cases, the FY 2030 numbers are in 2030 dollars, and based on 2030 enrollment and inflation projections.

To look at Anne Arundel County again, its anticipated funding floor for FY 2030 is currently $895 million. Requiring the county share of each new phased-in state program would push that number to $984 million – roughly another $90 million in annual costs.

County stakeholders should wait to see the final decisions of the workgroup before reaching conclusions about the recommendations. Consider these to be like artist sketches in advance of a major work.

While the two columns differ by $900 million, a broader consideration is probably necessary to come up with the implied county funding requirement. If the current MOE is retailed (likely) then a county like Calvert would not be enabled to cut back its spending, even if it exceeds the county share of the full list of State programs. So, if each county were obliged to fund the greater of these two numbers, the county funding minimum would be approximately 9.4 billion in FY 2030 – essentially $1.4 billion more than currently required.

Refining and Revising

The Work group heard from its staff and consultants on a number of other matters, many technical, as they continue to build the formulas and models that will ultimately drive all the much-anticipated figures.

Among them:

  •  An update on the Base & Weights Tables, detailing the various components and cost drivers translating the Commission’s recommendations into facets and components of the new formula envisioned. This is the most recent iteration of a similar document that has guided the last three meetings of the work group.
  • A first look at the county-by-county numbers for both the State and Local Funding Model. As members reviewed this, they spent considerable time on the Concentration of Poverty program, and weighed potentially removing that program from the ranks of the state/local shared ranks. The Work Group will receive options at its next meeting to either make that program fully State-funded, or perhaps make that alteration for certain classes of counties like those eligible for the Income Tax Disparity Grant program (the lowest-wealth counties).
  • A set of options to alter Maintenance of Effort, including whether to incorporate the same “greater of current FTE or a three year average” for MOE funding requirements, as it will be incorporated into the state wealth formula. The work group discussed this matter briefly, and did not event take up the other section of the presentation, on eliminating the “escalator” clause for low-effort counties.
  • An analysis of pension costs attributable to the proposed increase in teacher salaries and positions, showing roughly $27 million in added annual costs by the end of the 10-year phase-in. Under current law, these costs would be the responsibility of the local Board of Education. The multiple assumptions and calculations to derive this outcome are explained in the 7-page document.

The Workgroup concluded its work in the mid-afternoon. Commission staff advised that it would do all it could to develop materials for the next and final meeting of the work group, but anticipated that some materials may not be complete by that time. County Executive Barry Glassman, a member of the Work Group, expressed concern at being asked to cast a final vote on matter that had not been fully estimated or explained. The staff expressed a willingness to deliver materials as early as possible, to promote the best input and information for the work group members.

Note: an earlier version of this article mis-represented the meaning of certain data in the attached FY 2030 table. The error has been corrected in italics, based on staff explanations at the subsequent meeting.

Michael Sanderson

Executive Director Maryland Association of Counties
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