Tag Archives: MCPS

Team MoCo

By Adam Pagnucco.

Yesterday, we wrote about the recent history of MCPS and it was not a pretty picture.  The recession, new state laws, political conflict and the erosion of a once-strong consensus around the public schools resulted in MCPS getting lower funding increases than most of the rest of county government, especially when measured in local dollars.  But the good news here is that change is coming to MoCo with the sheer number of open seats in county elected offices.  There is a better way forward.  And today, we will plot out what that way can be.

First, let’s steal a page from the playbook of former MCPS Head Coach Jerry Weast and recognize this: nothing brings folks together like a common enemy.  The Axis powers brought together America and the Soviet Union.  The New England Patriots brought together nearly all NFL fans without ties to the Greater Boston area to root for the not-quite-as-bad Philadelphia Eagles.  And Donald Trump may just bring together the feuding members of Crosby, Stills, Nash and Young, who hate Trump more than they dislike each other.

The various factions of MoCo’s education family do not have a common enemy, but they do have a common challenge: dealing with Annapolis.  The state capital poses three problems for MoCo’s public schools.  First, the state has a Governor who has cut education funding before (especially state aid for MoCo) and is doing it again.  Second, while the state has improved recently, it still short changes MoCo on school construction money and the county cannot keep up with capacity needs on its own.  And third, a consultant advising the state’s Kirwan Commission on education reform has recommended massive cuts to state operating aid to MCPS.  If all three of these things proceed in a baleful direction, MCPS’s funding issues will get a lot worse and the entire county – parents, students, school employees, residents and businesses – will pay a steep price.

When you get past the details of MCPS’s recent money problems, one root cause stands out: political division in the wake of Weast’s departure.  The County Executive, the County Council, MCPS leadership, the MCPS unions and the PTAs all have different priorities and different views on MCPS funding, and they often go in different directions.  That has to stop or things won’t change.  We need a Team MoCo.  And here’s what that looks like.

County Council

The council has one job when it comes to the schools: funding them.  And since the schools are both a critical public policy priority as well as a big political priority for the voters, their funding situation must improve from the last eight years.  The council largely got this right in its FY18 budget, which gave MCPS a modest (roughly $20 million) increase over the state’s Maintenance of Effort requirement.  The policy of regular, modest per pupil local dollar increases that will – at the very least – keep pace with MCPS’s costs and needs should continue.

The council must not get involved in sensitive internal MCPS issues, especially in pressuring the system on its collective bargaining agreements.  Blowing up the union contracts in 2016 was a major mistake and caused a serious breach of trust.  Let MCPS management and the unions decide what the agreements look like in the context of their total budget.  If the council does not stay out of this, Team MoCo will crumble and the entire arrangement will fall apart.

Superintendent and Board of Education

If the council gives MCPS leadership the funding it needs, then MCPS leadership must reciprocate by giving the council what it needs: fiscal stability.  The state’s Maintenance of Effort (MOE) law, which was rewritten in 2012, sets each year’s local dollar per pupil funding as a base for future years.  Every time the base goes up, it becomes a new base and can only be lowered by a waiver from the State Board of Education.  This is a major concern for the council and was partially responsible for several years of per pupil cuts and freezes.  Given the immense implications of this for the county’s budget and AAA bond rating, the council is right to be wary of going too far above MOE.

Fortunately, § 5-202 (d) (9) of the state’s education law specifies that the State Board of Education shall grant an MOE waiver “in the amount that has been agreed on by the county and county board that is attributable to reductions in recurring costs.”  In other words, if the county falls into another big recession and it has to cut costs in the school system along with all the other agencies, it can get a waiver if the school board agrees.  This deal must be honored by MCPS: if the council extends its trust by funding them, MCPS must agree to reciprocate by helping to relieve the county of financial stress in dire circumstances.  Both sides must stick to this or relations will revert to the bad old years.

MCPS Unions and PTAs

MCEA and SEIU Local 500 are two of the most powerful players in county politics.  The PTAs do not endorse candidates, but they have listservs that include thousands of parents and therefore – at least in theory – have a big voice.  These organizations should function as the muscle of Team MoCo.  They will be getting regular funding increases and, in return, they should help the Team pressure Annapolis to get what is needed for the county.

MoCo Delegation

If Team MoCo gets its act together and strikes an equitable deal for local funding for the schools, the remaining challenges lie in Annapolis.  Rockville does not understand Annapolis.  It does not fully appreciate the obstacles faced by the delegation in pursuing county priorities: the perception of MoCo by the rest of the state as paved in gold; the competing priorities of other population centers in the state; the constraining effect of the legislature’s leadership; and the fiscal constraints of the state’s own tight budget.  Given those hurdles, it’s a heavy lift for the delegation to bring back Big Bacon to MoCo.  But it can be done: witness the Baltimore City delegation’s victory in getting the state to pump a billion dollars into the city’s school construction program.  The city legislators are not smarter than MoCo’s legislators (although they are more parochial).  A big reason for their win was that the entire city stuck together, from the Mayor to the City Council to the city legislators to the folks back home who wanted the money.  Team Baltimore got a billion dollars.  We need a Team MoCo to do something similar.

The role of the county leadership and its constituent groups is to set a mark for the delegation and do everything possible to help them stay organized and succeed.  This is not easy; the other jurisdictions and the presiding officers won’t just roll over for us.  Every member of Team MoCo has to tell our delegation with one unified voice, “We have your backs.  We know it’s a lift, but if you come through for us, we will celebrate you like the heroes you are.  You will never have to buy a drink for yourselves in Rockville ever again.  And if you don’t come through, you will not be served a drink in Rockville ever again!”  Good performance must be rewarded.  Bad performance must be met with accountability.

One more thing: the delegation has an ace card.  Senate President Mike Miller and Speaker Mike Busch are not going to run the General Assembly for much longer.  Successors to their thrones are making the rounds and lining up votes, however quietly.  The MoCo legislators should tell all of them that whoever gives the county the best deal on schools will lock up all their votes.  It’s huge leverage that should not be wasted, but it will only be used if it pays off in political terms.  Team MoCo’s job is to make sure it does pay off so the Big Bacon gets served.

County Executive

This is the most critical person in this entire endeavor.  Every team needs a Captain.  In MoCo, that has to be the Executive.  This individual is the county’s spokesperson and the one everybody else will inevitably look to for leadership.  The Executive must be a troubleshooter who works out periodic squabbles between the different members of the family, charts out a general course on budgets and state action and makes sure everyone gets the credit they deserve.  Most of all, the Executive must be a LEADER.  The lesson from the aftermath of Weast is that without central leadership, everything can fall apart.  If we pick the right Executive, that won’t happen and Team MoCo can succeed.

And so if everything works out, everyone wins.  The county gets its fair share from the state.  MCPS stakeholders get the funding they need.  MCPS employees get fair compensation and the resources they need to do their jobs.  The elected officials get to be heroes.  And the county as a whole will maintain its status as one of the best places to live on Planet Earth.

We can do it, folks.  Yes we can!  If you agree, ask the candidates how they intend to play on our team and keep it in mind for Election Day.  Team MoCo will only come together if the voters demand it.

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Where Will the Apple Drop?

By Adam Pagnucco.

Many moons ago, when your author was young and blissfully new to the county, we wrote our very first blog post on the mighty Apple Ballot.  It was unimaginatively titled, “The 800 lb Gorilla of MoCo Politics.”  Then as now, the Apple was one of the most coveted endorsements in MoCo.  But my oh my, so much has changed.

Back in the Age of the Golden Apple, the Montgomery County Education Association (MCEA) was the centerpiece of a powerful political organization created by then-Superintendent Jerry Weast.  Weast was not a pro-union progressive by nature, but he understood that politics is a team sport and it was necessary to play it to get money.  So the Weast Machine included the education unions (MCEA, SEIU and the principals), the PTAs, the Washington Post editorial page and the school system’s internal Ministry of Propaganda.  (That was not its title, but you get the point!)  Weast traded real input in the MCPS budget for stakeholders in return for absolute loyalty in joint combat against the outside – especially the County Council.  Anyone who messed with the school system didn’t take on Weast alone – they had to go against the entire Machine.  Weast capitalized on his organization as well as productive relationships with County Executive Doug Duncan and County Council Education Committee Chair Mike Subin to get substantial and regular budget increases.  The whole system was greased by strong revenue growth and occasional tax hikes.

The District 18/Silver Spring version of the Apple Ballot from 2006.  This is the document that began your author’s career in blogging.

Those days are long gone.  Three major changes have occurred over the last ten years.

First, Weast jumped the shark – not once, but twice.  His first big sin was calling union leaders to his house to ask them to endorse Nancy Navarro in the 2008 Council District 4 special election.  That attracted criticism from multiple Council Members as inappropriate conduct by an appointed non-partisan administrator.  His second big sin was threatening to sue the county over a budget disagreement two years later.  These kinds of behavior helped convince Weast’s adversaries that he was not merely an irritant, but an actual threat, and prompted some to brand him a Rogue Superintendent.  That set the stage for the bitter budget battles to come.

Second, the county and regional economies were greatly weakened in the wake of the Great Recession.  The chart below shows growth in county revenue (excluding intergovernmental aid) over the last twenty years.  Red bars indicate years in which major tax hikes were passed.  From FY98 through FY09, a generally prosperous economy helped county revenues grow by an annual average of 6.2%.  But from FY10 through FY18, the days of the Great Recession and beyond, county revenues grew by an annual average of 3.1%.  (That does not include the recent $120 million budget shortfall.)  There is simply not as much money to go around as there used to be.  Accordingly, revitalizing the economy should be a huge policy objective for all of the county’s employee unions and everyone else who cares about funding local government.

Third, the local money that was available was not as directed to MCPS as it once was.  There are many reasons for that: the Holy War that broke out between the County Council and the school system in Weast’s final days; dissatisfaction with changes to the state’s Maintenance of Effort law; the state’s execrable decision to shift part of the teacher pension burden down to the counties, which is costing MoCo tens of millions of dollars every year and stifling funding for other priorities; and the growth of many other needs in the county’s budget.  Council Member Nancy Floreen defended the county’s record on MCPS funding and your author offered a reply.

Whatever the reasons, MCPS has not received operating fund increases commensurate with most of the rest of the government in recent years.  The chart below shows budgetary growth by major department and agency from FY10, the peak year before the Great Recession, through FY18.  The effects of the recently approved mid-year savings plan are shown at right.  Note that the time period includes the recession itself, the recovery years afterwards and the FY17 9% property tax hike which was marketed as a boost for education.  MCPS’s total funding increased by 13% over these eight years, roughly half the 25% increase for the total county government.  Non-local funding for the schools, the huge majority of which is state aid, went up by 33%.  But local funding for the schools went up by just 6% as the county spent its own money disproportionately on other activities.  Meanwhile, MCPS’s enrollment went up by 15% during this period.

The Weast Machine has been shattered.  Its demise was due to the decline of the economy, conscious policy choices by county decision makers and, ironically, because of the school system’s own leadership as well.  The key moment came in the spring of 2016, when the County Council conditioned its offer of a substantial increase in MCPS funding on a requirement that it go to reducing class size and not to increasing teacher compensation.  The Weast Machine would have resisted that condition, but the system’s leadership agreed to it.  And so the council voted unanimously to instruct the school system to shift $37 million from employee compensation to class size reduction and the school system reduced teacher raises to comply.  The legacy of this moment is that there is no longer a united front between MCPS leaders and their unions – a major loss of leverage in the school system’s dealings with county electeds.  The end result was not so great for the council either as voters, displeased by the big tax hike that year and not mollified by the compensation changes, went on to overwhelmingly approve term limits.

MCEA runs a Facebook ad against the $25 million mid-year cut to MCPS.  The union flooded a town hall meeting with the County Executive to protest it but the County Council approved the cut unanimously.

MCEA will be deciding its 2018 endorsements for county office in the weeks to come.  In the contested races for County Executive, Council At-Large and Council Districts 1 and 3, the mighty Apple Ballot could play a huge role.  Where will the Apple drop?  That depends on how MCEA answers the following two questions.

What to Do With the Incumbents?

Incumbents usually win and MCEA has endorsed the majority of them, including ones who were lukewarm on their issues, in the past.  But in this case, most of the incumbent Council Members voted for multiple very tough budgets, all of them supported reducing teacher raises as a condition of approving more MCPS funding and all of them just voted for a $25 million mid-year cut to MCPS.  Can those strikes be offset by other considerations?

How to Find Someone Better?

Let’s be fair to the incumbents: the recession, the new Maintenance of Effort law and the partial shift of teacher pension funding to the counties created very hard choices.  No matter what they did, the incumbents would have offended someone.  Would the legions of challengers now vying for the Apple’s attention really have done better?  Which ones among them understand the very real and very complicated budget issues that face policy makers?  Which ones will aggressively pursue economic revival, which is necessary for financing all county services – not just MCPS – and supporting justified raises for county employees?  Which ones have the competence to deliver and the character to fight for teachers, parents and students alike?

When those questions are answered, we will know where the Apple drops.

End Note: For those who wish to study MCPS’s funding history, we reprint the following graphic from the County Executive’s recommended FY18 budget below.

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A Reply to Nancy Floreen on MCPS Funding

By Adam Pagnucco.

Thanks to Council Member Nancy Floreen for writing about MCPS funding in recent years in response to my blog post.  First, a note of appreciation.  While we may disagree about MCPS, we agree wholeheartedly on the issue of economic growth, which is the anchor for the county budget.  The political winds on growth shift back and forth in county politics over the decades, but Floreen has consistently pushed an economic development agenda.  She was for jobs before jobs were cool!  All the things the county has done right in economic development – and there have been a few of them – have Floreen’s fingerprints all over them.  It’s one reason why your author admires her and is sad to see her leave the County Council.

Let’s begin with areas of agreement.  First, Floreen is absolutely right about the terrible days of the Great Recession.  The county had not faced anything like it since the 1930s.  Everything had to go on the table in those days – spending cuts, layoffs, furloughs, broken collective bargaining agreements and an energy tax hike – because the alternative was default.  Floreen was Council President in 2010, the worst year of the recession.  She, the County Executive and her colleagues saved the county from fiscal disaster.  That achievement should not be forgotten.

Second, Floreen mentions the state’s teacher pension shift as a stress point on county finances.  Again, she’s absolutely right.  For many years, the state’s payment of teacher pension benefits was the one state program that disproportionately benefited Montgomery County.  That’s because our high cost of living as well as our prioritization of schools leads us to pay higher teacher salaries than the rest of the state, which results in higher pensions.  In 2010, nearly all of MoCo’s state legislators running for election promised not to shift pension costs to the counties.  But in 2012, Governor Martin O’Malley pushed a plan to do exactly that and most of our state legislators voted for it.  The result is that Montgomery County pays roughly $60 million a year for teacher pensions now, more than any jurisdiction in the state.  Compare that to the size of last year’s property tax hike, which was $140 million a year.  No matter what is said about the county, the state should not be let off the hook.

Now to the areas of disagreement.  It’s interesting that Floreen says our blog post is misleading but does not actually refute any of the data on which we rely.  She simply picks other data and disagrees with our characterizations.  We are sympathetic to her problem: it’s hard to refute data that happens to be true!  One thing she contests is our choice of FY10 as a base year for comparison.  We picked FY10 because it was the peak year of overall county spending before the Great Recession fully kicked in.  So comparing FY10 to FY16, the year before the tax hike, is valid because it’s a peak-to-peak comparison that includes both the cuts to departments in the early part of the period as well as the restoration that occurred afterwards.

She also disagrees repeatedly with our referring to MCPS as going through austerity.  Our basis for doing so was the county’s local dollar spending per pupil, which comes from county budget documents and was not contested by Floreen.  In nominal terms, here is the county’s local spending per pupil from FY06 through FY17.

The data shows that the county cut its local per pupil contribution to MCPS for three straight years and froze it for four straight years.  This period greatly exceeds the length of the Great Recession.  The local per pupil contribution went up after last year’s property tax increase.

Last year’s per pupil bump looks significant, but here is the same data adjusted by the Washington-Baltimore CPI and presented in real terms using 2017 dollars.  (We estimated 2017 inflation at 2.02%, the average rate of the preceding years in the chart.)  Clearly, even with the tax hike, the county’s local-dollar commitment to schools is not what it once was.  And the CPI underestimates major cost drivers for the schools, such as the costs of serving rising numbers of students who live in poverty and need language services.

Floreen then talks about the county departments that were cut during the recession.  She’s right: they were cut.  But after the recession ended, most of them were restored to levels exceeding what they were before the recession.  Meanwhile, county dollars for MCPS were cut by $33 million between FY10 and FY16.  Floreen doesn’t deny that, but she notes that local dollars aren’t the only source for MCPS’s budget.  The schools get plenty of state money too.  Floreen says this:

What really matters is the total MCPS budget, not the State share versus the local share. The higher State spending for MCPS in recent years reflects that the State’s funding formulas, at long last, are starting to recognize our students’ actual needs, as shown in our higher ESOL and FARMS populations. The State aid increases, which were long overdue, enabled us to provide continued strong support for MCPS during the Great Recession without further decimating every other function of government.  Why is that not a good thing?

Floreen is conceding a central point of our original post which is reinforced in the per pupil data above: the county depended on state aid to keep MCPS afloat while it restricted its own contributions to the school system.  Meanwhile, MCPS enrollment grew from 140,500 to 156,514 between FY10 and FY16, an 11% increase.  The Great Recession by itself can’t be cited as a justification for restricting county dollars for schools because the restrictions continued long after the trough of the recession had passed.  Indeed, fifteen other counties increased their local per pupil contributions after the recession ended, including nine controlled by Republicans.  The message here is, “The state was paying for our schools so we didn’t have to increase county per pupil spending on them.”  Is that “continued strong support for MCPS” as claimed above?  Is it satisfactory for parents and voters?  Let the readers decide.

Finally, Floreen repeats her longstanding point that last year’s 9% property tax hike was intended to support MCPS.  That’s true: MCPS did get a big share of that money.  But so did the rest of the government.  Last year, we laid out how the county could have cut the tax hike in half, still given MCPS all the money requested in the County Executive’s budget and done it without spending cuts to other agencies.  County Executive Ike Leggett, who originally proposed the tax hike, asked the council to cut the rate increase in half after the General Assembly passed a law easing the county’s liability from a U.S. Supreme Court decision on income taxes.  But the council chose to keep every penny of the original tax hike and spread it across every agency instead.  That’s not an Education First budget – it’s an Everything First budget.  The result of the tax hike was a tremendous boost for the 40-point triumph of term limits at the ballot box.  Even the council’s own spokesman at the time now says the tax hike was unnecessary and is vowing to stop another one if he is elected to Floreen’s open seat.

Look folks.  We get this is tough medicine.  We understand that elected officials don’t like to be criticized, especially around election time.  And we understand that Nancy Floreen, a Council Member we respect, would like to go out on top.  But it’s important to understand the past to prepare for the future.  The schools need small, steady increases in per pupil funding to deal with their challenges.  There can no longer be wild swings between extended periods of per pupil cuts and freezes followed by huge tax hikes intended to undo the effects of those cuts and freezes.  To fund MCPS fairly without raising taxes, the county will have to restrain the overall growth of the rest of the budget to pay for it.  There cannot be any more Everything First budgets.  With four Council Members leaving and the Executive race wide open, it will be up to the next generation of county officials to chart a better way forward.

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Setting the Record Straight on MCPS Funding

By Council Member Nancy Floreen.

Adam Pagnucco’s recent post on the County Council’s budgeting work made an astoundingly misleading claim: “The County imposed seven years of austerity on MCPS [in FY10-16] while lavishing double-digit increases on nearly every other function of government.”  While I ordinarily ignore this kind of online misrepresentation of Council activity, this goes too far over the top to let pass.

As Council President in 2016, I plead guilty to leading the charge for two tax hikes to support MCPS.  The FY17 property tax hike enabled us to reduce class size and focus on the achievement gap; we exceeded the State-required Maintenance of Effort level (MOE) for the MCPS operating budget by $89 million.  The recordation tax hike enabled us to fund key school construction projects that would otherwise have languished.  We did this in a historic partnership with the Board of Education, which agreed to channel more of its funds to the classroom, and, bravely, less to employee compensation.

Were the preceding seven years really a period of “austerity” for MCPS and “lavish” times for others?  Consider the facts.

1. The choice of base years matters. FY10 was an anomaly. From FY01-09, we had funded MCPS at a total of $576 million ABOVE the MOE level, thus creating a much higher required spending base.  But no good deed goes unpunished.  When revenues sank like a stone during the Great Recession, this higher base became an impossible burden, even after we approved a property tax increase in FY09.

2. During the worst years of the recession, FY09-12, only two agencies – MCPS and Montgomery College – saw increased funding. To be sure, the increases were small (1.8 and 3.2 percent, respectively) and relied on higher State aid. But during this same period, vital County functions like Police, Fire and Rescue, and HHS were down 3.4, 5.0, and 14.7 percent, respectively.  Recreation was down 23.5 percent, and Libraries was down 29.2 percent.  These deep cuts were without precedent.  The new spending base we were forced to create was so low that any later increase seemed disproportionately large.  We consistently prioritized funding for MCPS and the College during this period.  As the Rolling Stones would say, they didn’t get what they wanted, but they got what they needed. This we could not do for the rest of County government.  I was Council President in that awful time.  There were furloughs for all County employees, including first responders.  MCPS furloughed no one.

3. The “austerity” claim fails to account for massive additional County funding for MCPS that is not included in the MCPS budget or in MOE.  So, for example, in FY18, we approved total expenditures for MCPS that include $2.37 billion for the MCPS operating budget PLUS $317.5 million more in the County budget.  This pays for debt service on school construction bonds, pre-funding MCPS retiree health benefits, support services ranging from Linkages to Learning to crossing guards, and MCPS technology modernization.  In FY13-16 alone, this additional County support totaled $1.08 billion.  These dollars are not technically included in the MCPS budget, but they should be. To put the FY18 additional County support in perspective, this amount is larger than the total FY18 budget for Police, Fire and Rescue, or HHS.  Again, this massive support for MCPS is all ABOVE the MOE level. And not counted.

4. Is the flip side of this alleged “austerity” for MCPS in FY10-16 really “lavishing double-digit increases on nearly every other function of government”?  Tell that to one of our most important and beloved departments, Public Libraries.  The libraries provide our one million-plus residents of all ages (including students from MCPS) with an ever-growing wealth of materials and technology.  But the department’s budget of $40.3 million in FY09 did not reach that level again until FY16, seven years later, even in nominal dollars.  The FY18 level, $42.7 million, is barely equal to FY09 in real dollars. “Lavish” indeed!

5. One key fact is that 90 percent of the MCPS budget is for the salaries and benefits of active and retired employees. MCPS’ benefits cost much more than the County’s. If MCPS’ employee share of health insurance costs was the same as the County’s, the savings would be $24 million.  Add to this the fact we alone in the State fund a supplement to MCPS employees’ State pension benefit. This alone cost $25.3 million last year.  The regular pension cost in FY18 is another $71.8 million, plus $56.8 million more for the State’s shift of teacher pension costs.  We also pick up the tab for pre-funding MCPS retiree health benefits (paid from the County budget, not the MCPS budget).  This set us back $74.2 million in FY18 and is now projected to cost $547.8 million in FY18-23.  Is that what you call “austerity”?

6. What really matters is the total MCPS budget, not the State share versus the local share. The higher State spending for MCPS in recent years reflects that the State’s funding formulas, at long last, are starting to recognize our students’ actual needs, as shown in our higher ESOL and FARMS populations. The State aid increases, which were long overdue, enabled us to provide continued strong support for MCPS during the Great Recession without further decimating every other function of government.  Why is that not a good thing?

7. In fact, a more complete and accurate comparison of FY10-16 tax supported operating budgets by agency shows that MCPS received a 12.9 percent funding increase compared to 13.0 percent for Montgomery County Government, 15.9 percent for Montgomery College, and 8.3 percent for Park and Planning. In addition, a significant portion of the FY10-16 increase of 803.9 percent in pre-funding retiree health benefits and 41.5 percent in debt service benefited MCPS!

As we go into an election year of hyperbole and catchy phrases, know that the Council, on which I have been so privileged to serve, is committed to thoughtful fact and policy based budgets, responsive to ALL our residents’ needs. We are also constantly mindful of the burden that our decisions place on our residents’ pocketbooks.  MCPS will always need more support.  Has it been singled out for unfair treatment – “austerity” for MCPS and “lavish” increases for everyone else?  The facts say otherwise.

Nancy Floreen has served on the Montgomery County Council since 2002.  She was Council President in 2010, during the Great Recession, and again in 2016.

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More on MCPS Funding

By Adam Pagnucco.

Word has reached Seventh State that the governing establishment in Rockville is displeased with our recent post on MCPS funding, questioning whether our data is accurate.  Let’s establish the data’s presence in the public record.

The assertion in our post generating the most unhappiness is that the county cut local support for MCPS while it gave most other functions of government double digit increases over the FY10-16 period.  Local funding for MCPS can be found in the County Executive’s recommended budget.  The table excerpted below shows a $33 million cut in local funding for MCPS between FY10 and FY16.  That happened at the same time that enrollment grew from 140,500 to 156,514, an 11% increase.  Another item of interest is how dependent the county is now becoming on state aid for school operating funds.  For much of the 1980s and 1990s, at least 80% of MCPS’s operating budget was financed with local funds.  Now, the local share is down to roughly two-thirds.

As for the other departments and agencies, actual funding for FY10 can be found here and approved funding for FY16 can be found here.  Those data points, along with the MCPS local funding history above, are assembled in the table below which shows how much of an outlier MCPS was during the FY10-16 period.  Three notes.  The Department of Environmental Protection’s big increase is due to a hike in the water quality protection charge, which is used to finance stormwater projects mandated by the state.  It does not reflect a significantly greater draw on property tax revenues.  The Department of Housing and Community Affairs’ budget drop reflects a significant one-time expenditure for the Housing Investment Fund in FY10.  It does not illustrate a slash in the department’s operating activities.  The Department of Transportation’s operating budget is not included in this data because it was subject to departmental restructuring in FY11, preventing an apples-to-apples comparison.

Data on the county’s local per pupil contribution to MCPS can be found in this Office of Legislative Oversight report appendix and in County Council budget packets like this one.  This information was the basis of our statements that the county cut per pupil local funding for three straight years and froze it for four straight years, as illustrated by charts we published a year ago.  The Maryland State Department of Education’s Fact Books are our source for the actions of other counties after the Maintenance of Effort (MOE) law was changed.  During the first three years of the new MOE law, most other counties – including ones controlled by Republicans – increased their local per pupil contributions while Montgomery County did not.

Let’s be fair.  There is an intellectually honest argument to explain these actions.  Here’s a statement from Hypothetical Council Member X, who has decided to level with constituents about the county’s history of funding public schools.

Yes, we cut MCPS during the Great Recession.  We had to.  Our reserves were being drained to zero and we were about to lose our bond rating.  We were raising the energy tax, breaking our collective bargaining agreements, furloughing county employees and laying some of them off.  State law prevented us from cutting MCPS like the other agencies, so we did what we had to do.  The state also shifted a portion of its responsibility for paying teacher pensions down to the counties and now we are paying $60 million a year for that.  But it’s true that we squeezed MCPS longer and harder than any other part of county government and that was a mistake.  We tried to reverse that with the 9% property tax hike.  Going forward, we should give MCPS small and steady increases so we don’t run into problems with our schools again and we will pay for it by restraining growth in the rest of the government.

There’s a reason why intellectually honest arguments are not often used in politics: they are not pretty!  But it’s time to be honest about where we have been and where we are headed.  That SHOULD be what the next election is about.

One more thing.  The establishment may choose to respond with a guest blog.  We welcome fact-based debate.  But we caution anyone who responds that they must acknowledge and address the data we present here that appears in the county’s own budget documents.  Failure to do so will be perceived as political pap and puffery by Seventh State’s discerning readers.

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Lessons Learned from the Giant Tax Hike, Part One

By Adam Pagnucco.

Unfortunately for those Council Members who voted in its favor, last year’s 9% property tax hike won’t go away.  The issue came up at the first County Executive forum, at which the three Council Members who voted for it defended it under heavy criticism from their Republican rival, Robin Ficker.  It is sure to be mentioned again as several County Council candidates, including some Democrats, are openly wary of more tax hikes.  And there is a general sense that the 40-point passage of term limits last year was driven at least partially by the tax increase.  All local politicians have taken notice.

There is no question that the Giant Tax Hike is widely unpopular, but it cannot be undone, so let’s learn from it.  Next year, the county will have a new Executive and at least four new Council Members.  All candidates taking office will assume responsibility for a county with needs that have not abated and a budget that remains challenging.  What lessons can these new office holders learn from the Giant Tax Hike?  In this series, we present three of them.

Let’s start with Montgomery County Public Schools (MCPS).  Tax hike supporters point to MCPS’s needs as a reason for the increase and they have a point.  MCPS has enormous and permanent needs.  The school system is a huge asset that requires continuous large investments to maintain.  But while all of that is true, the sad fact is that the county imposed seven years of austerity on MCPS while lavishing double-digit increases on nearly every other function of government.  Once MCPS’s problems became too large to ignore, then and only then was the tax hike passed.

MCPS’s funding issues began when the Great Recession started impacting the county’s budget in 2009.  The County Council has significant power to cut most parts of the budget but the school system is an exception.  MCPS is covered by the state’s Maintenance of Effort (MOE) law, which establishes local per pupil contributions to school districts as a floor for funding levels in future years.  The intent of the law is to prevent counties from supplanting state aid for schools by cutting their own local school funding and moving that money to other functions.  Under the old MOE law, when a county wanted to cut its own local per pupil contribution, it needed a waiver from the State Board of Education or it would forfeit any increase in state aid for public schools.  This penalty did not deter several counties from cutting local per pupil spending during the recession.

In Montgomery’s case, the county cut its per pupil contribution three times.  In FY10, the county’s cut was forgiven by legislation passed in the General Assembly.  In FY11, the county obtained a waiver for a cut from the State Board of Education, who warned the county not to cut again.  In FY12, the county cut its local per pupil contribution for a third time without even asking for a waiver.  Egged on by the teachers union, the General Assembly got fed up and changed the MOE law.  From now on, if a county tries to cut its per pupil contribution without a waiver, the state would send the county’s income tax revenues directly to its school system to make it whole.  There would be no more messing around with MOE.

This presented a budgetary challenge for counties.  From now on, increases to local per pupil contributions would be almost locked in and very difficult to escape without the cooperation of local school boards.  The new law was a risk factor that had to be managed.  MoCo’s County Council reacted by freezing the county’s per pupil contribution for four straight years after three years of cuts.  By FY16, the county’s per pupil contribution was $9,759 – well below the prior peak of $11,249 in FY09.  Factoring in inflation, in real terms, the county’s per pupil investment in MCPS was 24% lower.  That caused huge budgetary strain in the public schools.

The budget was only one reason for the county’s behavior.  There was also politics.  Over the years, former Superintendent Jerry Weast had constructed a machine combining the school unions, the PTAs and the Washington Post editorial board to aid him in obtaining budget increases.  Increasingly, the council viewed him as going too far.  That perception became more acute when he held a meeting with union leaders at his home in 2008 and directed them to endorse Nancy Navarro in the District 4 special election.  Further strains appeared when Weast threatened to sue the county over MOE and the council accused the school board of lying about its budgetary needs in Weast’s last year.  Weast’s successor, Josh Starr, was caught in the aftermath.  He was unlucky enough to serve during MCPS’s austerity years and the budget squeeze effectively sabotaged his tenure.

While MCPS starved, the rest of the county government was well fed.  Between FY10 and FY16, the county cut local funding for MCPS but increased it by double digits for most other government functions.  The police department, the fire department, the libraries and almost every other department recovered nicely from the recession.  The council itself enjoyed a 19% increase for its own operations.  MCPS was almost alone in austerity.  (Housing had a significant decline only because of a one-time large expenditure to the Housing Investment Fund in FY10).  This profligacy throughout county government made it harder to afford an increase for MCPS without raising taxes later on.

MCPS might have collapsed if it were not for state aid increases.  Over the FY10-16 period, the county cut local operating funds for the schools by $33 million, but state operating aid went up by $192 million.

Meanwhile, many other counties reacted to the new MOE law differently.  While MoCo froze its local per pupil contribution to its schools, fifteen other counties increased their contributions during the first three years of the new law.  Nine of these counties were controlled by Republicans.  That’s right, folks – supposedly progressive MoCo lagged Republican counties in increasing local support for schools.

After seven years of squeezing MCPS, the county finally relented and increased its per pupil contribution, but it did so with a 9% property tax increase.  And it wasn’t just the schools that got more money – once again, nearly every other department got a bump.  There’s a lesson here for the next generation of county leaders.  MOE does indeed present a risk for the county budget, but it’s a risk that can and should be managed.  Seven years of austerity for MCPS cannot be imposed without major strains on public school operations.  A far better approach is to implement small but steady increases to per pupil funding while moderating growth in the rest of the government to pay for it.  That’s the best way to maintain one of the county’s greatest assets without imposing giant tax hikes.

In Part Two, we will look at another lesson to be learned.

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Hell No!

By Adam Pagnucco.

A state commission charged with examining changes to Maryland’s public school funding formulas is sifting through recommendations for improvement.  And in the early deliberations, one big loser stands out:

Montgomery County.

The State of Maryland is a major player in public schools funding.  In FY17, the state will send $5.5 billion in operating aid to local school districts, about a third of its general fund budget.  MCPS gets 28% of its operating budget from the state.  Prince George’s County Public Schools gets 57% of its budget from the state.  In total, state aid accounts for 48% of Maryland public school budgets.

The state’s generous K-12 spending is driven by formulas dating back to 2002, when a state commission led by Howard University professor Alvin Thornton (commonly known as “the Thornton Commission”) proposed massive new investments in education.  These investments have helped rank Maryland’s public schools among the nation’s best.  Now another state commission chaired by former University of Maryland System Chancellor William E. Kirwan is reexamining the state’s funding formulas to see if they can be improved.  And here is where things are starting to go badly wrong for MoCo.

A consultant paid by the Maryland State Department of Education recently completed a two-year study on the state’s funding formulas.  In the interest of promoting “adequacy” in public school spending for students across the state, the consultant made several recommendations for changing the funding formulas which are now being examined by the Kirwan Commission.  One of them is that Montgomery County should get a 63% cut in state aid (a reduction of $354 million) while local taxpayers should pay 60% more (an increase of $842 million) towards MCPS.  Montgomery County Council Member Craig Rice, a member of the commission, said “that would be devastating” and termed the suggested local dollar increase for MCPS “impossible.”  Indeed, the County Council just levied a 9% increase in property taxes in part to increase funding for MCPS.  The consultant’s recommendations don’t just apply to MoCo: they would phase out all state aid for schools in Kent, Talbot and Worcester Counties while sending massive increases to St. Mary’s, Harford, Charles, Calvert and Prince George’s.

MoCo is already short-changed on state aid because of wealth formulas that disadvantage the county because of its high property values and high incomes but don’t recognize its high cost of living.  The result is that MoCo taxpayers get back just 24 cents for every dollar in taxes they pay to the state.  The state average for all residents is 42 cents.  Howard County, which has a higher average household income than MoCo, gets 30 cents.  Only Talbot and Worcester Counties get back proportionately less than MoCo.  If anything resembling the consultant’s report winds up being recommended by the Kirwan Commission and passed into state law, this imbalance will get a lot worse.

Your author has been told that the report is merely a “conversation starter” and thus is irrelevant.  But we are reminded of the last conversation the state had about public school funding.  For decades, the state covered the cost of teacher pensions as part of its commitment to K-12 education.  The program was particularly valuable to MoCo, which has higher teacher compensation costs than other jurisdictions because of its high cost of living.  A decade ago, state leaders began to have “conversations” about having the counties pay these costs despite the fact that Boards of Education, not county governments, set teacher compensation packages.  A spokesperson for the Speaker of the House said it was “a philosophical argument that we definitely need to have.”  In 2010, almost all MoCo state legislators promised to oppose a shift in their election campaigns.  But just two years later, Governor Martin O’Malley proposed a partial pension funding shift, backed by both the Speaker and the Senate President, and most MoCo lawmakers voted to support it.  The cost of the shift to the Montgomery County Government increased steadily from $27 million in FY 2013 to $59 million this year, with $6 million offset by the state.  This far exceeds the cost to any other local government and is more than a third of the amount collected by the county’s recent 9% property tax hike.  The county government now pays more for teacher pensions than it does for libraries, recreation, courts, IT, housing or environmental protection.  Its teacher pension payments easily swamp any money earned from the liquor monopoly, which will return $21 million to the general fund this year.

So goes these conversations.  Now that this new conversation has started, here is a suggested response from all of our state legislators and county leaders to this consultant’s report.

HELL NO.

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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.

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MoCo’s Giant Tax Hike, Part Two

By Adam Pagnucco.

The County Council is calling its recently passed budget an “Education First” budget since it included an increase above the state-required minimum level for Montgomery County Public Schools.  Let’s evaluate that claim.

The council and the school system have had strained relations for a decade.  The problems began under former Superintendent Jerry Weast, who antagonized several Council Members with his hard-charging, overdriven style.  Nevertheless, Weast won several major budget increases for MCPS during his tenure.  Then came the Great Recession, which forced the county to make substantial spending cuts across all of its agencies.  One obstacle to cuts at MCPS was the state’s Maintenance of Effort (MOE) law, which sets a local jurisdiction’s per-pupil contribution to public schools as a base which cannot be lowered in future years unless a waiver is obtained from the state’s Board of Education.  In Fiscal Years 2010, 2011 and 2012, the county cuts its per-pupil contribution to MCPS, and in 2012, it did so without applying for a waiver.  As a result, the General Assembly changed the MOE law to force counties to apply for waivers or else have their income tax revenues sent directly to school systems.  At the same time, the General Assembly shifted a portion of teacher pension funding responsibilities, once solely the province of the state, down to the counties.  The combination of these two changes provoked outrage from county officials, some of whom vowed to never support a dime over MOE for MCPS in the future.

The chart below, which shows the recent history of Montgomery County’s local per-pupil contribution to the schools, illustrates the effects of these events.  After rising through FY09, the per-pupil contribution fell for three straight years and then was frozen for four straight years.  This year, the Executive proposed and the council approved an increased per-pupil contribution.  (Roughly $300 of the increase is accounted for by the county’s payment of teacher pensions.)  This is why the County Council is calling its budget an “Education First” budget.

County Per-Pupil Spending on MCPS Nominal

But three items of context apply here.

First, the above chart does not include the effects of inflation, which erode dollar contributions over time.  The chart below shows per-pupil contributions in real dollars using 2017 as a base.  (Inflation in 2016 and 2017 is assumed to be 2.1%, the average of 2007-2015.)  Adjusted for inflation, the county’s current per-pupil funding is nowhere close to what it was before the Great Recession struck.

County Per-Pupil Spending on MCPS Real

Second, while MCPS was living under austerity, other county departments were receiving sizeable funding increases.  The chart below compares funding increases across several county departments and agencies including MCPS between FY10 (the pre-recession peak year) and FY16.  In terms of county dollars only, MCPS’s budget was cut from $1.57 billion to $1.54 billion over this period, a 2% cut, while many other departments enjoyed double-digit increases.  Can one good year make up for seven years of austerity for the public schools?

Change in County Spending FY10-FY16

Third, while county officials criticize the General Assembly for tightening the MOE law and shifting teacher pensions, it is the state that has been pumping substantial funding increases into MCPS’s operating budget.  The chart below shows that while county funding for MCPS was cut by $33 million between FY10 and FY16, state aid to MCPS rose by $192 million.

MCPS Local Money vs State Aid

The bottom line is that the new FY17 budget does add $110 million in local money to MCPS, an amount which exceeds the state-required maintenance of effort by $89 million.  But this one funding increase comes after seven years of reduced and frozen per-pupil contributions, a period during which the rest of the government enjoyed double-digit increases.  Council President Nancy Floreen has described the budget as “a historic partnership with the Board of Education” and “a plan for the future.”  Does that mean that the council will continue to exceed maintenance of effort and give the school system increases that match the rest of the government in future years?  Or will this be a one-year respite, after which austerity will return?

We will have more in Part Three.

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Sebastian Johnson Announces Wave of Endorsements

Former Student Board of Education Member Sebastian Johnson is  seeking an at-large seat in the 2016.

Advantages and Challenges

Johnson’s strongest asset is his impressive resume. After graduating from Montgomery Blair, Johnson received his B.A. in Economics and Government from Georgetown and a Master’s in Public Policy from Harvard’s Kennedy School. Johnson has already worked with kids in the classroom as a teacher and in the community. He’s done a lot at a young age.

Johnson’s biggest campaign challenge is that he is not an MCPS parent. As a result, he doesn’t have experience with MCPS from that perspective. Nor does he have links to the PTA network that often produces successful Board of Education candidates.

Endorsements

Today, his campaign was pleased to announce endorsements from seven elected officials:

Maryland State Delegate David Moon (D-20)
Maryland State Delegate Marice Morales (D-19) Maryland State Delegate Will Smith (D-20)
Montgomery County Councilman George Leventhal (D-AL) Montgomery County Councilmember Nancy Navarro (D-4)
Takoma Park Mayor Kate Stewart
Somerset Mayor Jeffrey Slavin

Some of the positive comments from elected officials included:

Nancy Navarro: I had the privilege of serving on the Board of Education with Sebastian, and I witnessed his steadfast dedication to public service. He has a keen understanding of the current issues facing our school system, and he brings a fresh perspective to the Board table. I am proud to endorse his candidacy.

George Leventhal: I’m very excited by the prospect of Sebastian returning to the Board of Education, where he served as student member. Sebastian’s life story embodies the success that we seek for all students. I wholeheartedly support his candidacy.

Kate Stewart: As mayor, an advocate for young people and a parent, I trust Sebastian to do what’s right for all of our kids. As a product of Montgomery County schools, he brings a keen insight to the challenges we face today. I can’t think of a better person to serve on the Board of Education, and I strongly endorse his candidacy.

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