Category Archives: MCPS

Adam Pagnucco, MCPS

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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Adam Pagnucco, MCPS, taxes

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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Adam Pagnucco, MCPS, State Aid, Teacher Pensions

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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Adam Pagnucco, budget, MCPS, Montgomery County, Montgomery County Council, Property Taxes

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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MCPS, Montgomery County Council, schools

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.

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MCPS

No Longer Waiting for a Starr to Fall

MCPS Superintendent Josh Starr and the School Board put the school system out of its misery with his planned exit. Starr leaves in two weeks and all involved have agreed never to speak of it again. It’s all so Downton Abbey.

At this point, figuring out exactly why Starr needed to go remains a mystery. Lou Peck helpfully put together that Judy Docca, Michael Durso, Jill Ortman-Fouse, and Rebecca Smondrowski demanded that he go. Puzzled Montgomery residents may still wonder why. Here is the Washingotn Post‘s explanation:

Montgomery County is a consistently high-achieving district with improving graduation rates and strong SAT scores. County officials familiar with school board deliberations told The Washington Post that Starr’s exit was not the result of a single issue; instead, a series of perceived missteps added to a simmering concern about Starr’s ability to build on the success of Jerry D. Weast, who retired in 2011 after a 12-year run.

County officials, who spoke on the condition of anonymity because they were describing private conversations, said the board members who lost faith in Starr cited concerns with his approach to closing the school system’s achievement gap and his candidacy for the chancellorship of New York’s public schools after a little more than two years in Rockville. They said his personal style was at times remote and dismissive, and they mentioned the lack of coherent vision for principals at the district’s 202 schools.

After reading this, I’m still wondering, Improving graduation rates and strong SAT scores sound not too shabby. The negative phrases of “perceived missteps” and “simmering concern” read like verbiage that could appear in almost any bureaucratic porridge. Doesn’t exactly reek of the polarization associated with Michelle Rhee or utter failure of many of her predecessors.

The concerns about his candidacy to be New York Chancellor make me shrug. It might be seen as a sign that we were on the right track the school system of America’s largest city considered him a good candidate. Would we prefer a superintendent that no one else wants to hire?

There is also a certain double standard in demanding total loyalty that we are clearly unwilling to reciprocate. Someone who wants to move up also has a real incentive to make the system he currently runs function well.

I’m still trying to figure out what the “coherent vision for principals” concern means. It could suggest a lack of clear marching orders. On the other hand, it might indicate a welcome lack of interest in wrapping up the job in the latest educational fashion. As someone who works in academia and has seen trends come and go, that wouldn’t bother me. Is it just bad relations with the School Board?

We’ll never know, though many theories will circulate widely. Less of a problem for the public’s right to know–I’ll manage in this case–than that it may leave potential good candidates wondering why he went and if they want to follow.

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