This article is part of MACo’s Policy Deep Dive series, where expert policy analysts explore and explain the top county policy issues of the day. A new article is added each week – read all of MACo’s Policy Deep Dives.
Funding for school construction in Maryland is a shared responsibility between the state and county jurisdictions. The Maryland Interagency Commission on School Construction (IAC) is the primary entity at the state level that partners with local education agencies (LEAs, meaning the school systems) and county governments to meet the local renovation and new construction needs. They are responsible for assessing projects for local school construction and capital improvement needs and then approving and allocating eligible state funding based on these requests. This policy deep dive will unravel how the agency is structured, the process for determining the allocations, and how current total resources compare to school needs.
When Did the IAC Get Started?
Established in 1971 and restructured in 2018 and 2023, the IAC is tasked with overseeing the planning, funding, and execution of public school construction projects across Maryland including allocating the State’s share of costs. Originally the bulk of the work done by the IAC focused on work groups, studies, and recommendations as well as administering some funding for projects. This role has grown significantly over the last seven years.
Changes made in 2018 primarily were to officially shift the majority of the State’s school construction responsibilities from the Board of Public Works to the IAC and, therefore, their work expanded substantially. Five years later, changes were made in 2023 which established the agency as an independent unit of State Government. It had previously been an independent unit within the Maryland State Department of Education (MSDE).
The IAC has a staff of 44 employees and 9 appointed members:
- 2 appointees of the Governor – Michael Darenberg, one vacancy
- 2 appointees of the Senate President – Edward Kasemeyer, Gloria Lawlah
- 2 appointees of the House Speaker – Linda Eberhart, Brian Gibbons
- State Superintendent – Dr. Carey Wright
- Secretary of Planning – Rebecca Flora
- Secretary of General Services – Atif Chaudhry
How is the IAC, and School Construction, Funded?
The agency itself is funded through the State’s operating budget. For FY26 the IAC operating allowance totals $96M. Most of the funding for the actual school construction is allocated separately in the State’s capital budget, with a few exceptions for some of the IAC’s smaller funding programs that have funds allocated in the operating budget. The allocation for FY26 from the state capital budget is just shy of $825M, with specified amounts allocated per program as shown below for the coming fiscal year.
- Built to Learn Act – $371M (special, targeted funding driven by special infusion of casino revenues)
- Capital Improvement Program- $300M
- Supplemental Capital Grant Program – $53.8M
- Aging Schools Program – $6.1M
- Public and Nonpublic School Safety Grant Program – $10M
- Healthy School Facility Fund – $90M
- Nonpublic Aging Schools Program – $3.5M
- Public School Facilities Priority Fund – funding starts FY27
The Built to Learn Act (BTL) and the Captial Improvement Program (CIP) are the largest programs administered by the IAC. The CIP offerings have been around for decades and BTL program was launched in 2020.
How Are Local Funding Allocations Determined?
Depending on which program a project is being considered for, the factors to determine state funding eligibility can vary, but for the two largest funds – BTL and CIP – the agency follows a formula in order to establish the eligible level of state participation. Essentially, the State mathematically determines the size of a school required for the population served, based on a formula written into law, and contributes its proportion of those “eligible costs,” which were recently expanded and are listed in state law.
The agreed upon eligible enrollment is multiplied by the gross area baselines (GAB) that are used to determine square footage of a project that is eligible for state funding. Essentially, this is the amount of space per student that becomes eligible for state funding. Any portion of a project that exceeds the GAB is not eligible for State funding and must be paid for by the local school system. There is some flexibility in this calculation if an LEA is able to demonstrate the baseline is not sufficient to support the required educational programs.
Next the GAB is multiplied by the cost per square foot. The IAC adopts this amount every year based on recent bid numbers and industry trends. The current cost per square foot is $416 for building only and for building and site development the cost is $495. Annual fluctuations in this amount can be viewed back to 2006. New numbers for FY26 will be adopted in the coming month.
Once the product of the prior calculations is known, it is then multiplied by the state cost share percentage. This is established for each LEA every two years. Factors in this calculation include:
- local foundation amount
- percentage of free and reduced price meal participation
- median household income and unemployment rate
- enrollment growth
- outstanding debt
The current percentages of state and local coverage by jurisdiction are available at the IAC website.
A cursory review shows that State support through the Capital Improvement Program has failed to keep pace in “real dollars” with the actual costs of construction. FY 2025 costs per square foot are roughly double what they were in FY 2013, but the amount funded through the workhorse program has remained roughly flat: $349 million in FY 2013, and $300 million for FY 2025. State CIP dollars are not building as many schools as they did in recent memory.
Is Funding Keeping Up With School Needs?
As previously covered on Conduit Street, going into the 2025 legislative session, IAC Executive Director Alex Donahue shared some alarming statistics on the growing construction needs statewide and the resource limitations of the commission. He noted the financial gaps LEAs are facing might be the greatest the agency has ever seen. Presentation materials for the House Appropriations and Senate Budget and Tax Committees show the additional pressure the Blueprint for Maryland’s Future has put on capital resources for development costs necessitated by the education reform plan that are not included in the existing school funding formulas.
In adjusting to the challenges the IAC has been put in a position of needing to approve less projects and extend project timelines. They also have reiterated that their ability to continue funding projects that have already begun is contingent on receiving the anticipated amount of those commitments from the State in the annual budget process. The budget process this year resulted in many funding cuts and some new revenue measures, but the long-term outlook is still precarious. Like many other State agencies, the IAC budget and funding will likely be a part of those continued discussions and potential adjustments that could make cost sharing even more of a challenge, leading to greater pressure on local budgets.
In some instances, county governments have been able to step in to cover the cost gap and “forward fund” in order to advance a project that the State has not yet allocated its own funding, but that process does not always guarantee reimbursement from the state. Other less-resourced jurisdictions do not always have the capacity to forward fund without state participation. Despite the challenges, IAC leadership has made an effort to find unique and customizable solutions for different jurisdictions to minimize the strain and continue progress despite limitations. The coming FY27 budget deliberations will be an indication of how the IAC and locals are able to move forward in order to meet the general need but also state mandates that require more capital improvements.
Check out the IAC website for project updates and meeting materials.
