Once Again, a Battle Looms Over Funding Law and Montgomery County Schools Budget

Superintendent Joshua P. Starr’s proposed $2.2 billion fiscal 2014 budget for Montgomery County schools could face a familiar challenge—how to comply with a state law on school funding minimums while winning approval from a County Council determined to rein in spending on schools.

Starr's spending plan, unveiled Tuesday, is $10 million—less than half a percent—above the funding floor mandated by the state’s maintenance of effort law, which requires counties’ per-pupil spending to remain the same or increase from year to year.

But the half percent increase could have major implications.

County school budgets that dip below the funding level can have the difference withheld by the state comptroller when passing through income tax revenues to county coffers. But funding the budget in excess of the minimum level this year potentially raises the funding floor for subsequent years.

Legislative analysts told the County Council in October that as the county navigates the funding law and takes on, for the first time, a portion of teacher pension costs, slight changes in certain budget variables could have a significant, long-term fiscal impact. Those variables include the amount of state aid for schools, county tax revenues and student enrollment. Schools make up more than half of the county budget. 

With state aid and county revenues uncertain given the fiscal climate and enrollment projected to grow by 2,300 students next year, county officials appear to be steeling themselves for another budget debate over how much is enough for the prized school system.

“The current economic and revenue projections make it clear that our approach to the Fiscal Year 2014 budget, which starts next July 1, must be cautious,” County Council President Nancy Navarro (D-Dist. 4) of Silver Spring said in a statement on Tuesday, the same day the council reviewed the county’s six-year fiscal plan.

“Recovery from the recession continues but remains fragile. The status of state and federal support for the county is uncertain.”

Starr proposed the increase despite a report in The Gazette that he told parents at a recent community meeting that County Council members have indicated they will not approve a budget above the maintenance-of-effort level.

“The county fiscal plan projects that even the MOE funding level would place great pressure on other vital county services,” Navarro said in the statement.

In a brief interview Tuesday, Starr seemed confident that he could bring council members to his side.

“I believe the budget I brought in is a fiscally responsible budget that meets the needs of our kids and helps us invest in our future,” he said. “And I know [council members are] all smart people. My expectation is that they’re going to look and say ‘You know what? This makes sense. And while it may be more than we would like right now, we have to continue to invest in Montgomery County Public Schools. It’s what our community expects.'”

A proposed $28.7 million increase in the county contribution to the budget includes $21.4 million for MOE and $7.3 million for the second year of a four-year plan to shift some teacher pension costs to the county.

Per-pupil spending this school year is $13,592. Under Starr’s proposal, per-pupil spending would grow to $14,029 in 2013-2014, with about $9,000 of that coming from the county.

Starr’s budget assumes $10 million in state aid, a figure that, as he noted in a letter to the board, will not be finalized until Gov. Martin O’Malley (D) introduces his state budget proposal in mid-January. Further complicating matters is Congress' inaction and the continued uncertainty over the so-called fiscal cliff.

“If no action is taken and sequestration is implemented, the impact on state, county and MCPS budgets will be significant and may make it more difficult for the county to meet its MOE obligation,” Starr wrote.

The county school board is scheduled to forward its recommendation to the County Executive on Feb. 12, giving it plenty of time to consider Starr’s plan and “slice it and dice it,” said Christopher S. Barclay, who was elected county school board president on Tuesday.

As for the plan’s fate, “I can never predict the mood or the actions of the council,” said Barclay (Dist. 4) of Takoma Park, a six-year veteran of the board who was re-elected in November.