Category Archives: schools

No-Win Situation: Council Angers Two Influential Groups at the Same Time

By Adam Pagnucco.

Suppose you’re a County Council incumbent gearing up for the next election.  There are eight months to go.  The economy isn’t great.  A big, unpopular tax hike was passed a year ago.  Seventy percent of the voters just voted for term limits.  Dozens of challengers with all kinds of messages carrying the powerful weapon of public financing are fanning out through the county.  So what do you do?

There may not be a lot of good options these days, but antagonizing two of the more powerful groups in the county would not be a high priority on anyone’s list.  And that’s what happened last Tuesday.

The pebble in the council’s shoe this time was debt service.  Much of the county’s six-year capital budget is financed by bonds, and of those, the biggest single financing source for projects is General Obligation (GO) bonds.  GO bonds are not tied to specific revenue sources as some other bonds are; rather, they are backed by the full faith and credit of the county.  The county is rightly proud of its AAA GO bond rating, the highest rating offered by credit agencies, and kept it even through the terrible years of the Great Recession.  But maintaining a AAA rating, which allows the privilege of paying the lowest interest rates on the market, is difficult.  When a local jurisdiction carries too much debt relative to its resources, it risks a downgrade and higher interest rates.  County leadership is justifiably careful about this and has acted to protect its bond rating in the past.

Recently, County Executive Ike Leggett requested that the council cut the level of GO bonds issued in future years, saying that the current amount is excessive and might be regarded as a credit risk.  Last Tuesday, the council unanimously voted to cut the six-year issue of GO bonds from $2.04 billion (the level in the last capital budget) to $1.86 billion.  On an annual basis, GO bond issuances would decline from $340 million in FY18 to $300 million in FY22-24.

The concerns of the Executive and the council about GO bonds are legitimate.  Bonds are paid off through debt service, which is part of the operating budget and competes with other types of spending.  But debt service is a different kind of spending than any other county expenditure.  Once bonds are issued, they MUST be paid one way or the other or the alternative is default.  Below is the recent history of county debt service payments in comparison to the total tax-supported budget.  Debt service roughly doubled between FY05 and FY18.  As a percent of the tax-supported budget, it fell from 7.3% in FY04 to 6.0% in FY09, but has since risen to 8.5% in FY18.  If it keeps rising, it will eventually squeeze out money for public schools operations, public safety and a range of valuable services.

Much of the increase in debt service has been driven by school construction.  The county’s six-year capital budget in FY05-10 included $786 million in local funding for school construction.  By the FY17-22 capital budget, that total had risen to $1.4 billion.  That’s real money, folks!  And while the state kicks in school construction money too, it could do a better job of it.

The council’s cut of GO bonds is normally the kind of action that occurs after an election, not right before one.  Now the county’s elected officials are in trouble with two influential groups.

The PTAs

The Parent Teacher Associations (PTAs) have one of the largest networks in the county.  Almost every one of the county’s 200 or so public schools has a PTA.  Most have groups of officers and many have volunteer committees.  Perhaps most importantly, most have listservs with parents on them.  No one really knows exactly how many parents are on the PTA listservs, but it is at least in the thousands.  The PTAs don’t endorse candidates, but they have a large latent communication capacity to inform parents about the actions of politicians.  Accordingly, they are one of the great sleeping giants of county politics.

Perhaps the number one issue for the PTAs is school construction.  Last year, they strongly supported a recordation tax increase proposed by Council Member Nancy Floreen that was marketed at the time as being mostly intended to pay for more schools.  The size of that tax hike (roughly $200 million over six years) is close to the size of the present cut in GO bond issuances ($180 million over six years).  That suggests that the tax hike will be at least partially supplanted and – after capital money is moved around – will now be effectively used to reduce future debt service, not to finance additional school construction as the council promised.  That is not going over well with the PTAs.

The Realtors

The Realtors are one of the most active political players in the county, especially inside the business community.  They spent $45,000 on direct contributions to county-level candidates in the 2014 cycle – including to County Executive Leggett and eight winning council candidates – and spent tens of thousands more on mailers promoting their endorsees.  Nonetheless, they were targeted by the recordation tax increase and fiercely resisted it.  If the increase were marketed as paying down debt service, which now could be the case through the backdoor, the PTAs would never have come out to support it and it would probably have died.  Now the rationale used to defeat the Realtors – school construction – has been put in question by subsequent action of the council.

The PTAs and the Realtors may have disagreed about the recordation tax hike, but they may now both see it alongside the GO bond cut as a bait and switch.  One big group got a tax increase it didn’t want.  The other big group may not get the spending increase it did want.  Neither group is happy.

So here’s the question.  What happens next?

Share

When You’re In a Deep Hole

By Gaithersburg City Council Member Neil Harris.

In a recent meeting with the capital improvements team at MCPS, I suggested that it would take $1 billion in extra capital funding to provide enough classrooms and to fix dilapidated schools. The staff responded that the number was more like $2 billion or more. Ouch.

My guess was based on the basic cost for classroom space of $40K per student. So, an elementary school for 750 kids would cost $30 million. And we have 9,000 kids in portables ($360 million worth of classrooms) and we’re adding 2,500 new students each year ($100 million). I guessed at double that for renovations, but apparently that number is way worse than my rough guess.

In transportation, the situation is even worse. Not only is our system the most congested in the country, but in 25 years the congestion is projected to be 72% worse! In the past 15 years, we’ve added several hundred thousand new residents to the mid- and up-county, and the population will grow by 20%. We’re not keeping up.

The National Capital Region Transportation Planning Board (TPB) made projections based on the regional long-range plan, which includes all the projects proposed and expected to be funded. The TPB recently looked at the 500 projects proposed but not expected to be funded, and building all of them “only” makes congestion 28% worse. I repeat: building every project proposed still makes congestion 28% worse!

One problem for the TPB is that the projects on their list are proposed by local jurisdictions: the states, counties, and cities, and are most often focused on local needs. There is no central authority over regionally significant ideas that will serve to improve transportation for everyone.

Another challenge is that there is such a huge focus on new transit that it crowds out roads. If you build a new Transit-Oriented Development (TOD) on a Metro Station and 60% of the new residents use Metro, then there are still 40% of the new residents in cars. One mode is not enough, and the current plans look like they are out of balance, with the vast majority of trips by auto in 25 years but most funding going to transit and not highways. To be clear: in 25 years with $100 billion spent on transit in our region, we increase ridership by 2% for work trips, with a huge increase in auto trips and little improvement in our road network.

The TPB bravely took it upon ourselves to develop a list of 10 “potentially game changing” projects, programs, and policies to study, to learn if there are ways to actually reduce congestion instead of surrendering to it. This has been a controversial process thanks to inclusion of a new northern Potomac crossing, but the TPB has recognized that desperate times require desperate measures.

So, where would the money come from to fix these problems, assuming we find good answers and the political will to address them?

For transportation, Northern Virginia has taken the lead. The Northern Virginia Transportation Authority collects a small surcharge on some taxes to create $330 million in new funding to reduce congestion. Under this new program, the state and the local jurisdictions are not allowed to reduce transportation funding, so the money goes directly to new programs.

For schools as well as transportation, Adam Pagnucco suggested that Montgomery County’s annual revenue grows by about $140 million each year due to increased income and property tax revenue. How about dedicating all this growth to infrastructure for the next few years, instead of operations? In five years or so, we could be all caught up.

These aren’t the only ways to get out of the hole. We could build schools like the Monarch Global Academy in Laurel, which cost one-third to one-half what MCPS spends on each school. That would stretch our dollars. We could look at the cost-effectiveness of transportation projects already in the pipeline and refocus on ones that make more of a difference.

I hope with the big election year in Montgomery County next year, we can direct the candidates to solve these big challenges as their top priority. We need to understand what projects will actually help and then find ways to pay for them.

Whatever we do, we know one thing – when you are in a hole, first stop digging.

Neil Harris is Vice President of the Gaithersburg City Council and a voting member of the Transportation Planning Board and TPB’s Long Range Plan Task Force.

Share

Five Facts About MoCo School Construction Funding

By Adam Pagnucco.

School construction has been one of the hottest issues for years in Montgomery County.  Enrollment in Montgomery County Public Schools (MCPS) has been increasing by close to 2,000 students a year for a decade with no sign of stabilizing.  The result is crowded schools throughout the county.

According to the Superintendent’s FY18 Recommended Capital Budget, 109 of MCPS’s 197 schools were over capacity in the 2016-2017 school year.  Of those, 35 had enrollments of at least 120% of their capacity.  Even if the Superintendent’s request is fully funded, by the 2022-2023 school year, 87 schools will be over capacity and 29 will be at least 120% capacity.  Overcrowding will continue because construction will not keep pace with enrollment, which is projected to grow by nearly 10,000 students over that period.  MCPS is using 388 relocatable classrooms this year, a number that has not changed much over the last five years despite significant spending on school construction.

Over 80 percent of MCPS school construction costs are paid by county taxpayers with the remainder coming from state aid.  Here are five facts about school construction that all MoCo residents should know.

  1. MCPS enrollment is growing faster than the rest of the state COMBINED.

According to the Maryland State Department of Education, September enrollment in MCPS grew by 15,036 students between 2005 and 2014.  Over that period, public school enrollment in the rest of Maryland SHRANK by 543 students.  MCPS’s absolute increase and its growth rate (11%) were both first in the state.  Other systems are growing too (notably Howard and Anne Arundel) and all counties have maintenance requirements.  But in terms of new capacity needs, MCPS is in a category of one.

  1. MoCo gets less school construction money from the state per student than all but a handful of other counties.

Over the five-year FY13-17 period, MoCo received $201.7 million in state aid for school construction, just ahead of Baltimore County and tops in the state.  That’s a substantial amount of money.  But relative to its September 2014 enrollment, MoCo’s construction aid per student ($1,306) ranked 18th of 24 jurisdictions.  MoCo had 18% of the state’s public school students but received just 13% of state construction dollars, the biggest gap in the state.

  1. The state’s funding formula discriminates against school construction in MoCo.

The state finances a percentage of eligible costs for school construction projects approved for state aid with the local jurisdiction paying the rest.  MoCo is one of seven jurisdictions for which the state covers 50% of funding for school projects approved by the Board of Public Works, the lowest rate available.  Other jurisdictions including Prince George’s (63%) and Baltimore City (93%) receive much higher cost splits.

  1. State legislators from the City of Baltimore extracted a billion dollars from the state for their school construction program.

In 2013, Governor Martin O’Malley and the General Assembly’s presiding officers made passing a revenue increase for transportation a high priority.  Despite the fact that one of the projects to be funded was Baltimore’s $2.9 billion light-rail Red Line, city legislators withheld their votes until they got more money to rebuild their aging schools.  (City school enrollment fell between 2005 and 2014.)  The result was a new seven-year billion-dollar state aid program for city schools that greased the wheels for the transportation funding hike.  The city delegation’s work shows that significant progress can be made on this issue.

  1. MoCo residents are now paying a new tax hike in part to fund school construction.

Last May, the Montgomery County Council approved a recordation tax increase on home sales projected to raise $196 million over six years.  The council justified the tax hike on the grounds that $125 million of the money was supposed to be spent on school construction.  No recent media reports indicate that any other Maryland county has raised local taxes for the explicit purpose of financing school construction.

Disclosure: Your author’s son attends Flora Singer Elementary School in Silver Spring.  Despite opening just four years ago to relieve overcrowding at nearby Oakland Terrace, the school is already over capacity.

Share

Senate Votes $15 Million in Private School Vouchers

The Maryland Senate tacked in a conservative direction last week when it voted 25-18 to allow corporations to write off their taxes 60% of donations to authorized private school voucher programs. The Department of Commerce can award up to $15 million in credits to qualifying businesses per year.

The Department of Legislative Services estimates that it will cost an additional $140,355 to implement the program and then $108,400 annually to administer it beyond the ongoing $15 million in revenue lost to the State’s General Fund.

Democrats Split

All Senate Republicans voted for the bill. Among Democrats, 19 voted against the bill while 11 supported the legislation. Democrats who voted for the bill are:

Miller (D-27, Prince George’s, Charles and Calvert)
Astle (D-30, Anne Arundel)
Brochin (D-42, Baltimore County)
Currie (D-25, Prince George’s)
DeGrange (D-32, Anne Arundel)
Mathias (D-38, Somerset, Worcester and Wicomico)
McFadden (D-45, Baltimore City)
Middleton (D-28, Charles)
Muse (D-26, Prince George’s)
Peters (D-23, Prince George’s)
Zirkin (D-11, Baltimore County)

The bill is supported by Governor Larry Hogan and Senate President Mike Miller. The Maryland State Education Association (MSEA) strongly opposes it.

Who Will Get the Extra Funding?

The short answer is not the public schools. MSEA also points out that the program allows corporations, rather than parents or school boards, to decide which schools get the donations. It remains unclear whether the money will allow more poor kids to attend private schools, as advocates claim, or help subsidize kids who already attend them at the expense of public schools.

At this point, the bill’s fate is up to the House of Delegates.

 

Share

PTA, MCPS Place Leventhal in Time-Out

MoCoCouncil

Montgomery County Council President George Leventhal has been pressing very hard for the Council to approve $31 million for needed upgrades to the County Council office building.

Reaction by MCCPTA Leaders

PTA members were not jumping for joy at the prospect in light of MCPS’s severe school construction needs. Cheryl Peirce, Chair of the Montgomery County Council of Parent-Teacher Associations (MCCPTA) Capital Improvements Program (CIP) Committee, sent out one alert regarding the proposal:

In light of our recent testimony to the County Council on February 24th for funding for our school buildings and systems, as well as efforts we (MCCPTA, MCPS, County Council, state delegation) have undertaken this year and last in Annapolis, a decision to consider a $30M+ renovation of the County Council offices has raised questions among Board of Education members and many MCCPTA leaders.

Other online critics have been less diplomatic, suggesting that the Council can use portables.

Reaction from the School Board and the County Exec

As Bill Turque reported in the Washington Post, School Board Member Pat O’Neill had already expressed opposition to the proposal:

“We have 9,300 children in [classroom trailers],” O’Neill said. “We have children sitting in some classrooms with coats on” because of poor heating systems.

County Executive Ike Leggett opposed the plan and did not include the funds in the budget he submitted to the Council.

Leventhal on Critics

Leventhal punched back hard:

“In the school system’s view, 100 percent of the budget should be available for school construction,” he said. “Their plan is that any available dollar should go to school construction.”

Earlier comments–that seemingly include colleagues who failed to line up behind the plan–expressed equal regard for opponents:

Leventhal, with some sarcasm, said the council could elect to “remain in this outmoded, falling-apart decrepit building forever.”

On Tuesday night, Bill Turque reported that the renovation plan had been “set aside.”

My Take

Leventhal is absolutely right that the council building needs renovation. The heating and A/C are terrible–you really don’t want an office on the sunny side in summer. It may even be, as George said, “odiferous,” though I’ve never noticed it on my visits.

But it ultimately is a question of priorities. Thousands of students are learning in portables and school buildings also have similar problems with the heating and the A/C. Our new governor does not seem real keen on funding school construction, so the County cannot depend on money raining down from the State.

George Leventhal is not a happy person today. Fortunately, both MCCPTA and MCPS have lots of experience in handling ill-tempered people of all ages. The effectiveness of both organizations during this episode signals that neither should be ignored over the next four years.

Share