K-12 Funding Consultants: Spend $2.6B More, Huge Winners/Losers

Consultants hired to review Maryland’s education funding structure released a draft final report that includes major re-distributions in state aid and new local funding mandates. 

These recommendations will inform the work of the major school funding commission empaneled to develop legislative changes in time for the 2018 session.

The Adequacy Study Stakeholder Group met in Baltimore today for a presentation of the draft final report prepared by APA, the State’s consultants in the follow-up to the Thornton Commission. In the hearing room of the State Board of Education, stakeholders heard a report from the consultants and asked many questions.

The report calls for an infusion of $2.6B in additional annual education funding, a 25% increase from current funding levels. The consultants recommend splitting the increase between state and county governments.

  • The total State share for major state aid programs, excluding transportation, would increase from $4.9 billion to $6.8 billion – an increase of $1.9 billion or 39 percent – over current fiscal year 2015 state aid.
  • While the local increase in funding required is only an estimate, the consultants state that using comparison data, the local share would increase from $5.7 billion to $6.4 billion, an increase of $710.5 million or 12 percent.

The consultants also recommend a change to the distribution of funding for education by raising the base amount provided per student, and lowering additional amounts provided to education students with limited English proficiency and compensate for other educational needs.

According to the consultants, this change would follow the trend of other states and is a way of bringing all students up to today’s higher education standards. In the words of the consultants, the shift represents

. . . more instructional supports and social supports for all students, with additional resources above that amount for some students.

The report totals 140 pages with an additional 199 pages of appendices. Following are a few recommendations in the report of particular interest to county governments, with links to the draft report.

Eliminate State Aid Minimums – Zero Fund Three Counties

The consultants recommend elimination of state aid minimums for education funding.

As a result of this recommendation and others, projections show that three districts in Maryland would not receive any state education funding. From the report,

Click for original chart.

Maryland’s current funding programs provide minimum state funding guarantees for the foundation and special needs state aid programs. . Eliminating the state aid minimums will free-up State funding dollars which could be used to provide additional support to those districts with lower local wealth and higher needs.

Mandatory Local Share of Special Education Funding

The consultants state in their draft final report that school districts are not currently required to provide a local share towards special needs education funding and recommend that such a contribution be made mandatory.

From the report,

. . . districts are not required to provide a local share for any of these special needs total program formulas. . . .the study team recommends that all districts should be required to appropriate the full local share for all of the special needs funding programs.

This recommendation did not appear in any of the preliminary documents or discussions before the stakeholder group, and prompted several questions by stakeholders regarding the way the requirement would be implemented considering the current maintenance of effort funding law. The consultants stated that they had not considered the maintenance of effort law in developing this report,but would put it on their to-do list for final revisions.

For more information, see a discussion of the minimum state share and special needs recommendation (charts follow the discussion).

Declining Enrollment

The study team recommends adjustments to cushion effects from declining enrollment. These issues have arisen in several parts of the state in recent years, raising questions about “fixed costs” and immediacy of funding changes. Maryland has reacted to these concerns with a patchwork of recent statutory efforts.

From the report,

The proposed methodology would use three years of enrollment information in the calculation of the total enrollment figure, allowing districts to absorb the loss of funding related to the loss of students over time. A district would receive the greater of two counts:

  1. the prior year’s enrollment count or
  2. the average of the three prior years’ counts.

As described, the calculation holds districts with growing enrollments harmless from a decrease in aid.

Cost of Education (GCEI)

The study recommends using a rolling three-year average of the Comparable Wealth Index  (CWI) to replace the current Geographic Cost of Education Index (GCEI). This represents a far broader component than the current GCEI, with effects on every jurisdiction – all based on non-education salary data.

As described,

  • The study team further recommends all formula funds (foundation, compensatory education, Limited English Proficiency, and special education) be adjusted by the CWI.
  • The study team also recommends that adjustments be made for districts with CWI figures above and below the statewide average, which would result in funding increases for regions with higher than average costs and decreases for regions with lower than average regional costs.
  • Finally, the study team recommends the CWI adjusted total funding figures be used as the basis for calculating state and local share, meaning the costs of the CWI adjustment would be borne by the state and local jurisdictions.

See how the CWI index would shift funding under the new model and see the state/local cost share breakdown of the CWI.

Calculating Wealth

The study team recommended changes to the wealth calculation — creating indeces of both property and income tax bases and multiplying the two — that would magnify its impact. Concern regarding this approach was raised by stakeholders and staff to the Commission. The consultants shared that this approach had been recommended to other states, but none had implemented it.

From the report,

Combining Assessed Property Values and NTI. Currently, Maryland includes both property and income wealth in its measurement of a district’s local wealth. The study team recommends continuing to include both of these components but recommends an alternative approach to combining them into a single local wealth figure. Instead of using the current additive approach for combining property and income wealth, in which a county’s assessed property value and NTI are added together, the study team recommends using a multiplicative approach. Using this approach, each county’s assessed property wealth is adjusted by multiplying by the ratio of the county’s NTI to the state average NTI. This method gives NTI a greater weight in the overall wealth calculation than is the case using the current method.

See an illustration of the way this change would affect wealth calculations.

Universal Pre-K

The consultants recommend universal high-quality pre-Kindergarten for 4-year old students in Maryland, with the expectation that 80% of 4-years old will enroll in pre-K programs. With approximately 77% of Maryland’s 4 year-olds currently enrolled, this recommendation focuses on improving the quality of existing programs, and making them full-day. The consultants stated,

The most bang for the buck is high-quality universal pre-K for all 4-year olds.

The report states,

Screenshot 2016-10-18 16.33.00.png
Consultants recommend including pre-K students in enrollment counts with a weight of 0.29.

Maryland currently provides funding for prekindergarten students who meet specific qualifying criteria related to the income of the child’s family. The study team recommends a goal of providing high-quality prekindergarten for up to 80 percent of four-year old students. The recommended program is six-and-a-half hours long in a public or private setting that has earned an EXCELS rating of level 5, and is nationally accredited or is a public school program.

The ACLU’s representative on the Stakeholder group, Bebe Verdery asked the Commission to provide cost and policy information on also providing pre-K to 3-year old children from disadvantaged backgrounds in their final report.

Next Steps

The consultants asked stakeholders to provide them with any comments on the draft report as they prepare to deliver the final report to the Kirwan Commission in November. The Kirwan Commission will have until the fall of 2017 to prepare legislative recommendations based on the report and other findings.

For more information, read the Adequacy Study: Draft Final Report






Take Charge of Your Retirement Security with Nationwide Retirement Solutions

This week, October 16-22, is National Retirement Security Week. Nationwide Retirement Solutions (NRS) gives tips and steps for improving your retirement security.

In just 10 minutes you can do one of these:

  • Understand if you are contributing enough using My Interactive Retirement Planner
  • Increase your contribution, even if just a small amount
  • Call for your complimentary Personalized Account Review with a Nationwide Retirement Specialist
  • Watch short videos about retirement planning

Hear Peyton Manning’s thoughts on retirement planning:

Learn more from Nationwide Retirement Solutions or contact Scott Wamboldt at wambolr@nationwide.com. NRS is a MACo Gold Corporate Partner.

$62 Million Keeps Marriott In Montgomery

After receiving a commitment from the state and Montgomery County for up to $62 million in subsidies, Marriott International, the largest hotel company in the world, announced yesterday that it plans to keep its headquarters in the county when its current lease term ends in 2022. Marriott plans to move its 3,500 employees to a new complex near the Bethesda Metro station. County Executive Leggett said that he expects Marriott to produce $1.8 billion in economic activity over 20 years, reports The Washington Post

Marriott’s incentive package includes:

  • a $20 million grant from Maryland’s Sunny Day Fund, provided Marriott maintain at least 3,500 employees and invest $600 million in the new headquarters;
  • a $2 million grant from the Maryland Economic Development Fund;
  • a $22 million grant from Montgomery County; and
  • $18 million in tax benefits, two thirds of which come from the county.

County incentives are still subject to County Council approval.

An incentive package proposed by the Hogan Administration to keep Northrup Grumman in Maryland, including a $20 million forgivable loan from the Sunny Day Fund and $37.5 million in aerospace tax credits, is comparable in size – but the Maryland General Assembly has stalled voting on granting that loan after Hogan refused to release $80 million in funding for other projects.

In March 1999, Marriott received up to $4.3 million in grants and tax breaks from the state and county – the largest incentive package ever offered to a company considering moving at the time, reports the Baltimore Business Journal.

Shore Regional Health Takes Next Step for New Talbot Hospital

A modified certificate of need application was submitted by University of Maryland Shore Regional Health to the Maryland Health Care Commission for their new hospital facility that is planned for Talbot County.

The application primarily updated the plans for the delivery of inpatient health care services. The process to review the certificate is anticipated to take a year and the new hospital, which will replace the old facility in Easton, is anticipated to open in 2022.

As reported in The Star Democrat:

Shore Regional Health’s new hospital is planned for three miles north of Easton between the Talbot County Community Center and the Easton Airport/Newnam Field, west of Longwoods Road.

The new hospital, estimated to cost about $350 million, is planned to house 109 beds — 95 acute and 14 acute rehabilitation — all of which will be in private rooms. There are also plans for 10 observation beds, state of the art patient care units and support services, 28 emergency department treatment rooms and six operating rooms.

The new hospital’s scope of services includes all present Easton services, plus a new PCI program — percuntaneous coronary intervention, or heart blockage diagnosis and intervention/stenting.

The history of a new hospital venture began before 2007, when the county council offered to buy 78 acres and donate it to what was then Shore Health System.

Read the full article in The Star Democrat to learn more.

Wicomico Considering Repealing Impact Fees To Foster Growth

The Wicomico County Council is considering waiving impact fees on new construction as a way to boost housing growth. Reports delmarvanow:

The fee was adopted in 2006 in the middle of a housing boom. All new residential construction was required to pay $5,231 for a single-family house and $1,524 per unit for multi-family housing.

But as new construction halted following the economic crash in 2008, county officials began looking at ways to stimulate the industry. Council members first approved relief to builders of single-family homes in the form of grants. They later approved a moratorium on the impact fee for all new residential construction, but it expires on Dec. 31.

Wicomico County Executive Bob Culver proposed the repeal after being inspired by Governor Hogan announced his repeal of septic regulations at MACo’s Summer Conference.

While the council supports removing the fee, members are currently weighing options on how to go about it – i.e., whether the keep existing language in the code but zero out the dollar amount, or remove the language entirely.

State Audit: Maryland Airports Leave Millions On Table

A Department of Legislative Services audit released yesterday found that the Maryland Aviation Administration (MAA), a modal administration of the Maryland Department of Transportation that operates BWI and Martin State airports, has for years been recovering millions of dollars in expenses from airline landing fees instead of seeking applicable federal reimbursement. From the Legislative Auditor’s cover letter:

Our audit disclosed that MAA had not fulfilled certain Federal Aviation Administration requirements relating to its noise compatibility program and, as a result, $4.6 million in expenditures were not reimbursed with federal funds set aside for this purpose. As of September 30, 2015, MAA had $12.4 million in an escrow account for the noise compatibility program; however, no program costs had been reimbursed from this account. Instead, MAA advised that these costs were recovered through airline landing fees.

MAA also did not always competitively procure vehicle and equipment maintenance services or use an available Statewide contract. Finally, our audit noted control and record keeping deficiencies relating to cash receipts and purchasing transactions.

The Capital Gazette reports that MAA indicated that only $1.9 million was even eligible for reimbursement from the Federal Aviation Administration. That reimbursement was denied because the state did not perform the required noise-level testing.

The audit report is available here.

‘Not My Child’ Anne Arundel Launches Anti-Heroin Campaign

Anne Arundel County has launched a new campaign in county schools educating students on the dangers of substance abuse through the voices of those that have been impacted by addiction.

As reported on WBALtv:

A new video highlights the stories of those dealing with drug addictions, people who could be friends, neighbors or your children.

“Not my child” has turned into a battle cry in Anne Arundel County, and it is the title of a new campaign to stop substance abuse. The campaign is in schools like South River High School in Edgewater.

According to Anne Arundel County police, 32 people fatally overdosed on opiods in the county in 2015. A total of 94 fatal overdoses have been reported in 2016 through early October, 73 being from heroin or fentanyl-related overdoses.

“The solution is education: Don’t start,” Anne Arundel County Executive Steve Schuh said. “Understand the dangers of these drugs before you start and don’t start. That’s how we’re going to solve the heroin crisis in Anne Arundel County.”

Visit WBALtv for more information.

Washington County Designated High Intensity Drug Trafficking Area

The Office of National Drug Control Policy has added Washington County to the Washington/Baltimore High Intensity Drug Trafficking Area (HIDTA).

The program helps coordinate federal, state, and local law enforcement resources and intelligence to tackle drug trafficking and other public safety impacts of substance abuse. Washington is the 11th County in Maryland to be designated under HIDTA.

The Herald-Mail reports:

The designation allows those counties — 11 of which are in states that are part of the HIDTA Heroin Response Strategy, including the Washington/Baltimore region — to receive federal assistance to improve coordination and development of drug-control efforts among all levels of law enforcement.

“The High Intensity Drug Trafficking Areas program is an important part of this administration’s work to expand community-based efforts to prevent drug use, pursue ‘smart on crime’ approaches to drug enforcement, work to reduce overdose deaths, increase access to treatment, and support millions of Americans in recovery,” [Michael] Botticelli [Director of the Office of National Drug Control Policy] said in the release.

Other jurisdictions in the Washington/Baltimore region include: Loudoun, Arlington, Fairfax, Prince William, Alexandria, Henrico, Chesterfield, Hanover, Prince George and Roanoke counties in Virginia, as well as the cities of Richmond and Petersburg; Harford, Baltimore, Howard, Anne Arundel, Montgomery, Prince George’s, Carroll, Charles and Wicomico counties and the City of Baltimore in Maryland; and Washington, D.C.

For more information read The Herald-Mail

Work Group Investigates Residential Clean Energy Loan Program

MACo participated in what is likely the final meeting of the House Bill 387 Residential PACE Study Work Group Meeting last Thursday, October 13 in Annapolis. The work group, convened and chaired by the Maryland Clean Energy Center, consults with the Center as it fulfills its obligation to “conduct a study to determine optimal design and implementation strategies for a residential clean energy program in the State” under House Bill 387 (Chapter 593), Clean Energy Loan Program – Residential Property – Study.

What is PACE?

Property Assessed Clean Energy Finance (PACE) is a loan program used to finance property improvements that facilitate clean energy and conservation measures, and counties can collect the repayments for these loans through a surcharge on the property owner’s tax bill. The unpaid surcharge is treated as a lien on the owner’s property and is given first priority for repayment in the same manner as the local property tax. Maryland law has enabled counties to establish PACE programs for commercial properties since 2009, and currently Montgomery County has an active commercial PACE program. Under the above-mentioned Act, enacted last session, The Maryland General Assembly tasked The Maryland Clean Energy Center with investigating the potential for extending this program to residential properties.

Residential PACE Concerns

Many mortgage lenders and the Maryland Bankers Association object to the concept of allowing Residential PACE loans super-priority over a home’s mortgage, meaning that the mortgage lender would recover less in the event of foreclosure because the residential PACE lender would recover first. In fact, the Federal Housing Finance Agency, which regulates Fannie Mae, Freddie Mac and the Federal Home Loan banks, bars Fannie Mae and Freddie Mac from acquiring mortgages on a property with a residential PACE lien. Since Fannie Mae and Freddie Mac purchase, guarantee or securitize such a large percentage of single family mortgages, this severely limits the ability of a property owner to sell or refinance a home carrying a residential PACE lien. For this reason, the Maryland Realtors Association also expressed concerns with the program.

As part of the Obama Administration’s Clean Energy Savings for All Initiative, the U.S. Department of Energy (DOE) released best practice guidelines for Residential PACE programs on July 19, 2016. The guidelines suggest:

In states where non-acceleration of the assessment is standard for other special assessments, it should also be standard for PACE assessments. After a foreclosure, the successor owners are responsible for future assessment payments. Non-acceleration is an important mortgage holder protection because liability for the assessment in foreclosure is limited to any amount in arrears at the time; the total outstanding assessed amount is not due in full. In cases of foreclosure, priority collection of delinquent payments for the PACE assessment may be waived or relinquished.

For Maryland counties, non-acceleration of the assessment may be difficult or wholly infeasible.

Next Steps

The Maryland Clean Energy Center is due to release its report to the Maryland General Assembly on November 15, 2016.


Attend Eastern Shore Land Conservancy’s “Food Fight” Conference – November 10, 2016

The Eastern Shore Land Conservancy (ESLC) has released the agenda for its 17th Annual Planning Conference, “Food Fight! Healthy? Sustainable? Realistic?”. The all-day affair, to be held on Thursday, November 10th at the Chesapeake Bay Beach Club in Stevensville, MD, boasts an impressive list of national and regional speakers. Attendees should expect to be engaged in interactive sessions with the goal of helping to discover what an optimal food system based on Eastern Shore agriculture would look like in the future.

Woodberry Kitchen’s Spike Gjerde, Baltimore’s first winner of the James Beard Award for Best Chef (Mid-Atlantic), was recently confirmed as a speaker at the conference. Gjerde’s presentation, entitled “From My Perspective – My Take on Healthy, Local, and Sustainable”, will provide an informed view of what a celebrated chef in a major metropolitan restaurant goes through on a daily basis in order to prepare and serve healthy, locally-sourced food.

International speaker Dr. Solomon H. Katz, Director of the Krogman Growth Center & professor of Anthropology at the University of Pennsylvania will speak at the conference, presenting “A Biocultural Perspective on Food, Food Waste, and Beyond.” Other speakers include American University Professor T. Garrett Graddy-Lovelace, Chesapeake Bay Foundation Scientist Beth McGee, FRESHFARM Co-Founder Ann Yonkers, and many more.

Home to some of the region’s richest soil, the Shore produces a substantial portion of Maryland’s wheat, soybeans, and corn, as well as poultry. Whether you operate a farm, food-related business, or simply do the food shopping for your family and would like to know more about where it comes from, this conference will leave attendees better informed to make decisions that can positively affect our region’s overall health and sustainability.

One issue that will be examined during “Food Fight!” is that of food waste. Whether in the production, distribution, consumption, or waste management aspects of its lifespan, the millions of pounds of wasted food our system produces has deservedly become a hot topic.

“It’s shocking to learn that a region with so much agriculture has such severe food access issues,” says ESLC Program Assistant and conference organizer Rachel Roman. “Approximately 40% of the food that is produced goes to waste before it even reaches the grocery store. Dr. Katz will talk extensively about this problem as it often goes unnoticed in our daily lives.”

Interested attendees can register online at eslc.org/events. Students are encouraged to attend the conference with a discounted ticket price of $25.

ESLC has included free admission to a screening of the food-based documentary “In Defense of Food” (based on the book by Michael Pollan) with each conference ticket, which will be held the evening prior to “Food Fight!” at the Eastern Shore Conservation Center in Easton, MD. Tickets to the film screening may be purchased separately for $10.

For more information about the conference, please contact ESLC’s Program Assistant Rachel Roman at 410.690.4603 (x156) or rroman@eslc.org.