The “Blueprint for Maryland’s Future” legislation, implementing the full fiscal recommendations of the Kirwan Commission is available at last. Here, Conduit Street breaks down the main fiscal elements of the most consequential bill any of us have ever seen.

The Basics

-We don’t have a “fiscal note” yet, so it’s impossible to verify bottom-line numbers
-The various phase-ins and cost splits all match up with the existing summary reports
-The state/county funding splits are unchanged since October/November 2019 decisions
-12 counties get about $55m in state grants for a few years, then they taper off by 2030
-An approved “phase in” of county funding requirements does not appear to be in the bill
-Counties will be able to count “off budget” funding, but not debt service
-Local school boards must detail their budget by program and by school – more than now
-State law will much more actively direct local school board funding across their schools

(Please note – we’re not even trying to summarize and compress all the numerous non-fiscal policy items in the bill – just the fiscal matters)

For reference, the bill has been introduced as SB 1000 and HB 1300. We will make references to the Senate Bill, but the two are identical page for page. The text of the First Reader (originally introduced) Senate bill is online as a pdf document. Our hyperlinks below will direct your browser to the relevant page of the online Senate Bill text.

Readers seeking a broader summary of all the Commission recommendations, and the context for them, would be advised to review the Department of Legislative Services’ 48-page summary presentation, shared with each standing committee of the General Assembly this January in advance of the bill’s completion.

Added note: MACo staff is still measuring the time the nearly 200-page bill has been released in hours, rather than days. It is possible there are matters in the bill, especially related to timing, that we have not fully understood. We will update here as our information evolves, and will note any place where we make substantive corrections to our working analysis.

A New “Transition Grant”

One item in the bill essentially without explanation is a new Transition Grant, distributed by the State to 12 counties for the years of the phase-in. The bill text offers no detail on its intended use, nor its source other than “the State,” nor any sense how this particular set of counties was created. The relevant sections, from pages 20-21, are shown below:

The implementing language clarifies that each listed county board would receive the full grant amount shown from FY 2022 through 2025, then they gradually phase out by FY 2030. Note that this distribution is direct from the State to the county board, so it would not serve to offset or abate any of the new funding obligations the legislation places on many of the named counties.

Edit: the details about this grant have since become clear. It represents a phase-out of two current education grant programs, the Supplemental Grant and the Net Taxable Income Grant, both recommended to be replaced and “embedded into” the Kirwan funding plan. Essentially, this is just smoothly phasing out these legacy items as Kirwan funding is being phased in.

No “County Phase In” After All

When the Kirwan Commission’s subordinate Funding Formula Workgroup met over the summer and fall, it considered most of the fiscal details embedded in the final legislation. Their discussion of the county funding obligation was huddled at the end of its deliberations, but proved to be challenging. At their final meeting, where the body rendered its decisions, that Workgroup accepted and approved a motion “that the local share be phased in,” and then (after a five-year timetable had been suggested) decided to “articulate that [the local mandate] should be phased, but let that play out.”  The motion was then re-stated as “the ramp up of the local contribution should be phased…we could leave the phase-in of the local share to be determined.” This motion was approved by the body.

The video of this meeting is available online, the discussion is toward the end of the first segment of the October 15 discussion.

The DLS Summary of policy components of the Commission and its Funding Workgroup referenced this matter, but did with with a conditional mention:  “Commission noted that the new local share requirement may need to be phased in  for counties with large required increases”

However, MACo’s review of the introduced legislation finds no such phase-in. That seems to require dramatic funding increases in multiple jurisdictions as soon as FY 2022 and 2023.

In-Budget/Off-Budget Won’t Matter (Except for Debt Service)

Another item decided during the October 15 Workgroup decision meeting has faithfully appeared in the Blueprint bill, albeit with one major exception.

In the bill, counties may count dollars toward their required school obligation regardless of the source or means by which they provide them. The essential issue here is that counties are inconsistent with offering certain services within the school budget – school nurses and resource officers are the most often-offered examples, where the county may fund those services through the County Health Department or Sheriff/Police, rather than in the school budget per se. Until this over-arching funding obligation takes hold, that difference is immaterial – but without including those costs, counties providing such “in kind” funds would be at a funding disadvantage.

The result? In SB 1000 (pages 50-51), the path won’t matter, only that the county supported schools with the funding:

The elimination of debt service (while the direct cost of school buildings and major renovations is also excluded as an education appropriation) may result in a continued lack of parallel in funding structures, the otherwise broad language reduces that concern dramatically.

One technical note – the exclusion of “State Appropriations” may (inadvertently) serve to deny counties receiving Disparity Grants as a complement to their own income tax effort – funding currently authorized as unrestricted local funds – from crediting that local contribution toward their State funding requirement. A technical amendment may be needed to remedy this.

No Major Funding Policy Changes Embedded

Based on an initial review of the 172-page bill (page counts seem to have varied based on the software being used in preliminary drafts, not based on ever-changing content), there are no other major changes to the funding formulas, since the work done in October. This is noteworthy, in large part, because many stakeholders had speculated that the plan might be subject to some re-framing following the public digestion of the funding requirements placed onto counties – specifically relatively low-wealth counties.

Part of the reason low-wealth counties are asked to increase funding dramatically is the calculation of “wealth” when evaluating those programs. The state/county funding split for programs like Compensatory Education (added funding for students receiving free or reduced-price meals through means testing) depends on an assessment of the wealth per student in that county, relative to the State. This nominally scales to school population – but contradicts the essential truth that an unweighted student population does not adequately reflect student funding needs. The wealth formula’s failure to incorporate the funding associated with these extra categories of students presents a curious conundrum for certain counties — currently labeled as “high effort” and immediately compelled to generate massive new local funding.

Most stakeholders now expect that an evaluation of effects such as these will take place in the General Assembly. The bill, as introduced, does not appear to incorporate a new basis wealth calculation, nor any caps or guardrails for its outcomes.

A More Detailed School Budget

A component of the “accountability” measures in the legislation is more detail provided by each board of education with its annual budget documents. The opening section of the bill spells out the detail to be provided, in multiple component areas contained within the Commission policy recommendations and the funding formula changes.

The items listed above will be required to be presented, for the current and prior year, by each board of education beginning with the FY 2023 budget. The State Department of Education is tasked with developing an accounting/budgeting system capable of managing these reports by that time.

State Takes Far Greater Role In Intra-County Funding

One fiscal/oversight element in the bill likely to gain attention is its extensive language regarding the funding provided by a local school board to each of its schools. This shows up in multiple places, all tying to an over-arching definition.

First- in each program restated or created in the bill, there is now a three-part funding implementation. For the centerpiece “Foundation” funding, it reads as follows:

Current law doesn’t have any analogous provision on this third element – funding the county board must provide each school. But here’s the definition of “minimum school funding amount” defined in the later section:

So – each county board must have 75% of most state program funding apportioned out to each school by affected population. Then, two specific programs — the newly fashioned “concentration of poverty” grants, plus pre-kindergarten early education funding — are to be apportioned dollar for dollar to the targeted schools (or providers) within the district.

This represents a substantially stronger role for the State in overseeing the spending envisioned under this plan.

The public hearings for the bills have been announced for Monday, February 17, at 1pm. The Senate and House Committees will apparently hold one joint hearing.