Pry Back the Door on School Construction Funding

The Capital Debt Affordability Committee enters a discussion of State and County school facility funding as they work towards a recommendation on the State’s debt levels. 

The second of three meetings of the Capital Debt Affordability Committee included questions and comments from the committee’s membership, which include State Treasurer Kopp, and State Budget Secretary Brinkley, and State Comptroller Franchot.

The Committee heard presentations from the Department of Budget and Management and the Director of Public School Construction. In an overview, the Department of Budget and Management described how school construction continues to be the largest slice of the State’s capital debt pie.

The Director of Public School Construction, reporting for the Interagency Commission on School Construction, described the challenges presented by rising school construction costs in recent years.

“The cost of school construction has been outpacing capital improvement program spending for a number of years” – Maryland Interagency Commission reports to the Capital Debt Affordability Committee

The Director of Public School Construction requested a total fiscal year 2020 capital allocation of $419.6 million. That figure includes $310 million for the capital improvement program and additional funding for construction programs targeted to address school overcrowding, school safety, indoor air quality, and improvements for aging schools. The Director also shared his goal to refine estimates for school construction cost needs in future years through use of a statewide facility assessment.

The discussion of the Committee, which will make its recommendation for State debt levels at its next meeting, revealed their interest and insight in the dynamics of the shared state and county responsibility for school construction. This dynamic is somewhat unique to Maryland as local school boards do not have a separate authority to raise revenue in our State.

Topics raised by the Committee included:

  • Eligible costs as a limiting factor in the State’s school construction participation;
  • Comparable commitments of county governments and the State toward school construction funding;
  • Whether Maryland provides more school construction funding than other states; and
  • The absence of a State fund dedicated to school maintenance costs.

For more meeting background, see September 12, 2018 Meeting Materials of the Capital Debt Affordability Committee.

MACo Legislative Committee Hears Update on School Safety

John Woolums, Director of Government Relations, Maryland Association of Boards of Education (MABE), briefed MACo’s Legislative Committee Wednesday, September 12, 2018, on school safety initiatives.

SB 1265, Maryland Safe to Learn Act of 2018, passed the General Assembly on the final day of the 2018 legislative session and has been signed into law by Governor Larry Hogan. The legislation creates a variety of statewide standards and guidelines on school safety.

Along with presenting a comprehensive overview of the bill’s requirements, Woolums stressed the importance of intergovernmental collaboration and coordination in developing and implementing public school safety and security programs.

“MABE looks forward to many successful collaborations between local boards of education, local government agencies and elected officials, local law enforcement agencies, state officials, and other interested parties committed to improving school safety throughout Maryland.”

Members of the MACo Legislative Committee include representatives from Maryland’s 23 counties and Baltimore City. The committee meets regularly on Wednesdays at the MACo office during the general assembly session. During the interim, the committee meets quarterly to develop legislative priorities for the coming year.

Useful Links

Previous Condit Street Coverage: Maryland Safe to Learn Act of 2018: What You Need to Know

MABE Summary of the Maryland Safe to Learn Act of 2018

Luckily, It’s Not in Latin

The Maryland Interagency Commission on School Construction holds its first meeting, making decisions on school safety grant funding, local projects, and its new letterhead.

As a result of the 21st Century School Facilities Act, which was made law through a veto override of the General Assembly this year, a new Commission on Public School Construction was created.

The Commission held its first meeting today and they handled everything from mundane technical decisions, such as approval of a new letterhead and meeting schedule, to hot topics, like school safety grant funding.

On reviewing the letterhead seal, Commissioners joked whether they would also have to write all of their letters in Latin.

Luckily, the Commission did not conduct its meeting in Latin. In fact, the proceedings, which are all now simulcast live through a town hall link on the Public School Construction website, were transparent and relatively easy to follow.

The Commission will inherit the responsibility of the former Interagency Committee on School Construction, and also has expanded authorities under the new law which include allocating project funding.

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The Interagency Commission on School Construction holds its first meeting.

The Chair of the Commission, State Superintendent Karen Salmon, described how Commission meetings are public, and how public comments will be accommodated and handled at the meetings. Salmon shared her goal of hearing public comment while maintaining the Commission’s ability to complete its work.

“There could be hundreds of people attending these meetings once we start allocating project funding.” — State Superintendent Karen Salmon

Today, the Commission approved the FY 2019 Capital Improvement Program allocations and planning projections and approved the proposed educational facility sufficiency standards for the assessment of public school facilities required by the 21st Century School Facilities Act. The facility assessment will be completed by July 1, 2019.

On school safety, the Commission approved the use of a combination of pupil populations and school square footage to guide the allocation of the first $10 million of the $20 million School Safety Grant Program created last year.

The Commission also approved various facility status changes, including:

  1. A lease of a school property by Carroll County Board of County Commissioners, with a pro rata share of lease payments to be referred to the State;
  2. A transfer of property from the Kent County School Board to the Kent County Commissioners, with the county assuming the State’s remaining debt service on the property;
  3. A sale of a former job development center site, a property previously transferred by the school board to the Washington County Board of County Commissioners; and
  4. A transfer of 11 acres adjacent to an elementary school to the City of Hagerstown for use as a public  golf course.

In the presentation of local projects, staff noted that they are working to streamline approval process for school boards and county governments.

Open session was adjourned at 10:10 am.

For more information, see the IAC Meeting Agenda and materials and the Video of the IAC Meeting. If you are a Google Chrome user and the video is not loading, try loading it with Microsoft Edge.

 

 

 

Governor Hogan Closes 2018 Summer #MACoCon Talking Education, Environment, and Highway User Revenues

 

Governor Larry Hogan

Maryland Governor Larry Hogan provided the closing remarks to the 2018 MACo Summer Conference on August 18, 2018. Hogan highlighted several issues important to county governments during his speech, including economic development, education, the environment, health, and transportation.

Hogan thanked county leaders for their dedication to Maryland and their local communities. “Real leadership isn’t about making empty promises, it is about making tough choices,” Hogan stated. He praised the MACo Summer Conference for both its education and networking opportunities.

Economic Development

Hogan noted that one of his primary goals was to “make Maryland more affordable for all Marylanders.” He stated that his Administration has cut taxes and fees by $1.4 million and repealed an estimated 850 regulations to spur job and small business growth. The Maryland Department of Housing and Community Development has created opportunity zones throughout the state to encourage economic growth. The Governor said that during his term, Maryland has gained 100,000 jobs, the best growth rate in over 15 years.

 

Education

Hogan stated that his Administration has spent a record $25 billion in K-12 education over the last four years. The Governor also highlighted bringing increased accountability to public schools and strengthening school safety by adding more school resource and mental health officers.

Health

Citing the importance of bipartisanship, Hogan stated that he worked with Senate President Thomas V. Mike Miller and House of Delegates Speaker Michael Busch to protect health insurance coverage for Marylanders and limit rate increases.

Environment

On the environment, Hogan focused on the Chesapeake Bay, noting that his Administration has spent $4 billion on Bay initiatives, including fully funding the Chesapeake and Atlantic Coastal Bays Trust Fund and Program Open Space. As Chair of the Chesapeake Bay Executive Council, Hogan promised to continue to push upstream states to do their fair share of restoration work.

Transportation and Highway User Revenues

MACo President Jerry Walker

Hogan stated that his Administration has spent $8 billion on transportation projects in every county throughout the state and repaved half of all state roads during his 4-year term. The Governor noted his support for the restoration of highway user revenues and cited the doubling of county highway funds during the 2018 Session as an important success. “We now have a path forward to fully restore highway funding,” Hogan said.

Hogan concluded his remarks by stating, “Working together we have changed Maryland for the better.”

MACo President and Anne Arundel County Council Vice Chair Jerry Walker opened the session and introduced the Governor. Walker thanked Hogan for specifically addressing county issues while in office, such as local autonomy, land use decisions, unfunded mandates, and highway user revenues.

The MACo Winter Conference will be from January 2-4, 2019, at the Hyatt Regency in Cambridge, Maryland.

 

 

The Buildup to Maryland’s New School Construction Structure

The Interagency Commission on School Construction, created by law this year, will have enhanced powers with regard to the State’s capital funding for K-12 school building projects.

The 21st Century School Facilities Act of 2018 contained many provisions relating to specific elements of the State’s school construction program, and dealt with topics including energy efficiency, alternative financing, and prevailing wage laws.

It also contained language that re-ordered the State’s own structure for distributing its $300+ million annual appropriation for local K-12 construction projects. This controversial element of the legislation, which became law through a legislative override of the Governor’s veto, created a new body call the Interagency Commission on School Construction.

The Commission includes several appointees from the General Assembly and the Governor’s Office, and, much like its predecessor, the Interagency Committee on School Construction, it includes members of the Governor’s Administration including representatives of the Departments of Planning and General Services.

The Commission will have enhanced responsibility for school construction funding, as compared with the Committee that preceded it. The Interagency Commission is an independent commission that functions within the Department of Education. The Commission’s purpose is to develop and approves policies, procedures, and regulations on state school construction allocations to local jurisdictions in an independent and merit-based manner. For more information, see the legislation that created the Commission.

Here is the list of members of the Commission and upcoming meetings dates, according to the Public School Construction Program’s website,

Members – Interagency Commission on School Construction 

  • Karen Salmon, Superintendent of Schools, Chairperson
  • Robert S. McCord, Acting Secretary of Department of Planning; Member
  • Ellington Churchill, Secretary of Department of General Services; Member
  • Barbara Hoffman, Appointee of the President of the Senate
  • Gloria Lawlah, Appointee of the President of the Senate
  • VACANT, Appointee of the Speaker of the House
  • Brian Gibbons, Appointee of the Speaker of the House
  • Denise Avara, Appointee of the Governor
  • Michael Lombardo, Appointee of the Governor

The chair of the Commission will be selected jointly by the Governor, President of the Senate, and Speaker of the House of Delegates.

Meeting Information – Interagency Commission on School Construction

All IAC meetings will be held at the Maryland State Department of Education Headquarters, 200 W. Baltimore Street, Baltimore, MD 21201.

This additional information on upcoming meeting dates is provided by the Public School Construction Program:

  • Aug. 30, 2018, 9 am – noon, 7th Floor – State Board Room (Livestream)
  • Sep 12, 2018, 9 am – noon, Room TBD
  • Nov 15, 2018, 9 am – noon, Room TBD
  • Dec 11, 2018, Time TBD, Room TBD

Review the Fiscal 2019 Capital Budget for Projects in Your County

The Summary of the FY 2019 Capital Budget as Enacted produced by the Department of Legislative Service provides accessibility to the details of the State’s capital funding.

State agencies receive funding though the State’s capital budget, and their funding is sometimes specifically allocated to projects or operations in particular counties. County governments also received capital funding from the State for specific projects.

The Summary of the FY 2019 Capital Budget as Enacted is easier to read than other documents associated with the capital budget, and may be searched for a particular county or type of project.

The need for school construction funding to keep pace with education requirements and the need for resources for local jails and detention centers struggling with the opioid epidemic are two focus areas for Maryland’s counties focus.

The FY 2019 capital budget provides line-by-line detail of $7.3 million capital funding for local jails and detention centers and $313.9 million in capital funding for the Public School Construction Program, in addition to other public school construction grants.

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This excerpt from the Summary of the FY 2019 Capital Budget as Enacted shows a breakdown of capital funding for local jails and the beginning of the list of state school construction funding.

For more, see the Summary of the FY 2019 Capital Budget as Enacted.

Treasurer of Maryland to Address County Elected Officials

A veteran of the General Assembly and the only woman serving in a state constitutional office, Treasurer Nancy Kopp will address female county leaders at the Maryland Association of Counties Summer Conference Women of MACo Luncheon.

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Nancy Kopp is Maryland’s 23rd State Treasurer, having been elected in 2002, and re-elected to successive full four-year terms in 2003, 2007, 2011, and 2015.

Treasurer Kopp will join the Summer MACo Conference as the special guest speaker at the Women of MACo luncheon, where she will offer remarks about her career to Maryland female county government officials.

Treasurer Kopp chairs many state finance committees, including the Capital Debt Affordability Committee and the Commission on State Debt, and provides leadership on fiscal issues facing the state. One of these more visible leadership roles includes Treasurer Kopp’s position on the Board of Public Works, which oversees a substantial portion of the procurement contracts of the State, with the Governor and the Comptroller of the State.  The Treasurer is also the Chair of the Board of Trustees of the Maryland State Retirement and Pension Systems. Roughly half of Maryland’s counties participate in the State Pension System.

Treasurer Kopp represented the Bethesda, Maryland area in the Maryland House of Delegates for 27 years prior to her election as Treasurer. As a Delegate, Treasurer Kopp chaired the Joint Committee on Spending Affordability, as well as the Appropriations Subcommittee on Education and Economic Development. She also served on the Capital Budget Subcommittee, Subcommittee on Pensions, and Joint Committee on Budget and Audits, and, at various times, as Deputy Majority Leader and Speaker Pro Tem. During her legislative career, Treasurer Kopp was also an active member of the Women’s Legislative Caucus, serving as its President from 1996-1997, and was named by her colleagues as the most effective woman legislator and one of the ten most effective members of the House of Delegates.

The Women of MACo luncheon will be held on Friday, August 17, 2018  at noon. The luncheon is open to conference attendees.

Learn more about MACo’s Summer Conference:

A Look at the State’s 2019 Capital Budget

The Maryland Department of Legislative Service’s 90 Day Report, a review of legislation passed during the General Assembly’s last term, includes an overview of the capital budget which is relevant to Maryland’s county governments.

The Department of Legislative Service’s annual review of legislation passed during the General Assembly’s most recent term is a handy tool for understanding policy changes. It is also a quick way to keep up-to-date on the State’s capital budget.

The State’s capital budget is relevant to county governments in at least two ways. First, county governments are the recipients of state capital funding. These include funds for  local projects identified by the General Assembly, and school construction dollars.

A second reason for county interest in the State budget is that the State’s capital budget reveal the State’s ability and/or willingness to take on debt to invest in infrastructure projects. The State’s financial health and fiscal policies may be an indication of economic trends that have been or will be experienced also in Maryland’s counties. And, a sense of the State’s capital budget expenditures can help counties predict whether local capital funding may be increased in future years, or threatened.

School Construction Capital Funding

The General Assembly passed a fiscal 2019 capital program totaling $4.622 billion, according to the Department of Legislative Services. Less than $100 million of the capital budget is directed toward local projects, and about $440 million is provided for school construction.

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Maryland Department of Legislative Services’ 90 Day Report, “FY 2019 Capital Program Uses.”

The school construction capital funding includes the following:

For public schools:

  • Public School Construction Program $313,900,000 (where most state contributions to K-12 school construction come from)
  • Aging Schools Program: $6,109,000 (generally for smaller repair-type projects to keep older schools up-to-date)
  • Supplemental Capital Grant Program $68,200,000 (a special program to help school systems with high enrollment and a high number of relocatable classrooms)
  • Public School Safety Improvements $20,000,000
  • Heating, Ventilation and Air Conditioning Improvements $15,000,000

For Private Schools:

  • Nonpublic Aging Schools Program $3,500,000
  • Nonpublic Schools Safety Improvements $3,500,000

State Capital Budget Spending

The fiscal 2019 capital program totals $4.622 billion, slightly more than the fiscal 2018 capital program, which totaled $4.579 billion. In both years, the Capital Debt Affordability Committee (CDAC)  recommended that no more than $995 million in new general obligation bonds be issued for each year in the five year planning cycle. As described by the Department of Legislative Services with regard to the CDAC’s 2017 report,

The recommendation, the same recommendation made by the committee in its previous two annual reports, is intended to slow the growth in debt service costs and provide additional debt capacity in the out-years. –Department of Legislative Services 90 Day Report

In both years, the General Assembly’s Spending Affordability Committee acknowledged this advisory recommendation, but instead of limiting new issuances to $995 million, the General Assembly implemented a 1% cap on new issuances, using the fiscal 2016 level of $1.045 billion as the starting point.

As described by the Department of Legislative Services, the Spending Affordability Committee (SAC) was concerned about limiting debt growth considering the increased cost of construction – something also experienced firsthand by county governments building schools.

While supporting the objective to slow the growth in debt service costs and reduce the debt service to revenue ratio, SAC was concerned that the CDAC recommendation to freeze the authorization level through the planning period would reduce the purchasing power of the capital program due to the impact of construction inflation. –Department of Legislative Services 90 Day Report

 

The Maryland Consolidated Capital Bond Loan program for fiscal 2019 implements the 1% cap adopted by the Spending Affordability Committee.

See the 90 Day Report’s Capital Budget Summary for more information about the State’s capital budget for 2019.

 

Summer Brings New Rules in School Construction

The General Assembly passed landmark legislation in school construction this year, which included many reforms counties have sought for years. With the law in effect June 1, which county will be the first to make a move?

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School is almost out for summer. While students are on vacation, many school systems dig in to facility updates and renovations for the coming year and review long-range plans for school construction.

The earth is shifting below those school systems, this summer, with new rules in school construction, passed by the General Assembly this year, having taken effect on June 1. The 21st Century School Facilities Act makes many changes to school construction law. One of the areas of change is in the State’s rules for private-public partnerships.

Public-private partnerships in school construction have long been an area of interest of county governments. Counties struggle to ensure that school system needs are met, even as costs are increasing and the amount of available State funding is limited.

P3s may hold promise as a cost-effective method for school construction, a way to stretch public funding to meet the needs of Maryland’s students. While current State law already allows P3s for school construction, very few have gotten off the ground. MACo has pointed to hurdles in state law that make these arrangements difficult to achieve, and has urged State support for piloting these programs.

The legislation the passed this year, which was developed through a Commission that included county government representation, answers many of those concerns, by expanding authorities for county governments and school boards, reducing regulation of alternative financing, and creating a P3 pilot program.

MACo has assembled is a chart describing some of changes in school construction public-private partnership laws that will take effect June 1, 2018. View the chart of changes to alternative financing that will begin on June 1.

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Excerpt from MACo’s chart on changes to alternative financing laws that took effect June 1.

MACo is currently working with one county government seeking to employ some of these new provisions for upcoming construction projects, and will continue coverage as counties take advantage of their new flexibility.

For more information about the bill, see The 21st Century School Facilities Act and the Department of Legislative Services’ fiscal and policy analysis.