Why Does the State’s School Enrollment Count Matter?

How Maryland counts full time students enrolled in the state’s public schools has long factored into how the state funds public education, namely at a per pupil required funding minimum.

The Blueprint for Maryland’s Future — Maryland’s major education policy reform initiative — altered the school enrollment count and subsequent funding processes, namely how we determine the state/local split in public education funding. Here, we provide an overview of that process, how it impacts funding, and what is to come.

Current law on enrollment and per pupil funding 

Maryland conducts an annual enrollment or “head count” of all students enrolled at a full time equivalent (FTE) in the state’s public schools on the same day every year — Sept 30. That head count is important not only to inform statewide education policies and data, but also for counties as a major funder of our public schools.

The enrollment count plays a crucial role in school funding formulas in Maryland and is ultimately one factor in determining how much funding local school districts will get in the state’s budget via “per pupil” spending. This happens through the Foundation Program Formula — the main program in general education aid and accounts for about half of state-funded aid.

Also known as the “Foundation Formula,” it ensures a base level of funding per pupil via the basic formula:

per pupil foundation amount X local enrollment

The Foundation Formula is designed to have the state pay about 50 percent of public education program costs, with some adjustments depending on local wealth. Maryland uses two factors to determine each county’s “wealth” – a blended value of the county’s property assessments, and the total net taxable income for county residents. The intended result is pretty common sense funding values:

  • Wealthier jurisdictions receive less in state school funding, less wealthy counties receive more.
  • That said, there are guardrails in place in law to ensure that regardless of local wealth, no jurisdiction will receive less than 15 percent of state share for total educational program costs.

In a nutshell: up until The Blueprint, state aid to education was based on two factors: full time enrollment and local wealth — and that was true for a very long time.

The Blueprint altered how we consider enrollment and school funding

The Blueprint changed enrollment math in several ways, including revamping the State’s funding formula by altering how we calculate enrollment and adjusting the local wealth calculations used in the Foundation Formula:

  • The foundation formula grant under the Blueprint now requires that the count of students, or per pupil count, to be the greater of either:
    • the prior year full-time equivalent (FTE) enrollment, or
    • the three-year rolling average of FTE enrollment
  • The Blueprint also adjusted the local wealth calculations of the Foundation Formula to better reflect the actual wealth of county residents by:
    • using the November net taxable income and incorporating a tax increment financing (TIF) exclusion in property wealth calculation

Additionally, The Blueprint established new funding formulas for specific purposes and programs, such as the concentration of poverty grant and publicly funded full-day prekindergarten programs. Furthermore, in the 2021 “Blueprint Revision Bill,” the legislature actually adjusted per pupil state spending to also include some factors related to the COVID-19 pandemic, including the per pupil need for additional technology during virtual and hybrid schooling.

The Blueprint set Fiscal Years 20-22 as transitional years for the new formulas, with local shares beginning this year, in FY ‘23.

What happens when school enrollment drops? Even temporarily?

If school enrollment drops, even presumably temporarily, like during the COVID-19 pandemic, the total share of state aid to education also drops — because of that per pupil funding requirement described in the previous sections of this post.

What about county funding requirements?

Despite a drop in enrollment, counties have to fund education at Maintenance of Effort, or MOE, meaning. This means that despite having less students in classrooms and subsequently less in state per pupil funding, counties have to fund at least the same level as the year before — when there were more students enrolled and therefore greater state aid. Counties, in short, do not “get off the hook” in these situations.

Not only are counties legally required to fund at those same levels, but, there are also fixed costs to consider associated with operating and overhead expenses of school buildings and facilities, like utilities and personnel costs that do not have the same corresponding reduction in usage. In essence, schools still have to keep the lights on and the water running, regardless of whether there is 10 students or 25 students in a classroom.

Bottom line: if enrollment goes down, the locals are still stuck not only maintaining prior year funding, but also making up the gap resulting in decreased per pupil state funding.

How Maryland has patched over pandemic declines thus far 

When last year’s school enrollment numbers were again suspiciously low, the Governor’s proposed FY ‘23 budget included no safeguards in the form of declining enrollment “hold harmless” state funding.

The legislature has attempted to address the issue in immediate past legislative sessions, however.

In 2021, the General Assembly approved of a legislative fix in which counties were “held harmless” for what were assumed to be temporary blips in enrollment related to the pandemic. The Blueprint “revisions” bill passed that year took into account the COVID-related enrollment dips and amended the Foundation Formula definition of “enrollment” to basically not include the 2020 head count with the understanding that low enrollment was an aberration and likely temporary. It also provided a one-time adjustment to county funding MOE requirements.

In 2022, the legislature approved of a similar fix, but it was a bit more complicated that the previous year’s. That one-year patch legislation dictated that:

  • Counties whose share of Blueprint programs is greater than their calculation of MOE local contributions will be unaffected;
  • Counties with enrollment declines (Sept 2021 count, versus Sept 2019 count) who would have otherwise been able to reduce overall funding would be required to at least fun the same total dollars as in FY 22; and
  • Counties affected by this mandate would have that required extra funding backed out of their per-pupil funding base when next year’s funding requirement is calculated, which avoids the one-year patch for enrollment drops to become a permanently mandated amount.

Where does that leave us today?

With the legislative fixes of ’22 and ’21, this is where counties landed with the current fiscal year state aid to education:

Whether students that left public schools during the pandemic have returned is still up in the air. Some counties expect to see enrollment counts at near pre-COVID levels, while others expect continued decline. Still, some expect bumps in enrollment. While this year’s September 30 count data will be unavailable for some time, it is clear that policy leaders are starting to — and need to — have conversations about where those numbers might leave us for the 2023-24 school year.

Stay tuned to Conduit Street for more on this issue and other related to school funding.