By Adam Pagnucco.
With a $223 million property tax hike looming, the hunt is on inside the council building to save money and reduce the tax increase. And a council staff analyst has recommended saving more than a third of that amount in one fell swoop. The catch is that it comes out of the county executive’s recommended budget for MCPS.
First, let’s understand the identity of this analyst. Essie McGuire was the MCPS analyst when I worked at the council. She was a crack budget digger and helped us get through the awful days of the Great Recession. In 2016, she left the council and became a senior executive in MCPS. In 2021, she returned to the council. That means McGuire knows where the bodies are buried inside the school system more than nearly anyone else alive.
McGuire’s staff memo on MCPS’s budget, which will be considered by the council’s Education and Culture Committee today, is a 68-page deep dive on MCPS. I could probably write a series about just this one memo, but we have way too many series on this site already! For the purpose of this post, let’s focus on McGuire’s recommended budget savings, which far exceed anything else I have seen from the council. She earned her paychecks for the year from this memo alone.
In FY24, the school board requested a total budget of $3.2 billion, which is a $296 million increase over FY23. Of that increase, the board requested an extra $231 million from the county government, which is $272 million above the floor established by state law. County Executive Marc Elrich recommended funding 99.8% of the board’s request with an increase in the county’s contribution of $223 million. That increase is funded by a ten percent property tax hike using a loophole in state law to get around the county’s charter limit on property tax increases. However, since money is fungible, the tax hike frees up money for large increases all over the county budget.
Each penny of the property tax raises $22.3 million. McGuire identifies and recommends savings in MCPS’s budget of $79.5 million, which if adopted, would shave 3.5% from the 10% property tax hike but would still increase the county’s contribution to MCPS by $144 million compared to last year. Her savings are in two areas.
Fund Balance
MCPS regularly uses $25 million from its fund balance to fund next year’s budget. (Its comprehensive annual financial reports have been showing much larger fund balances than that in the last five years.) McGuire recommends reducing this year’s appropriation of new money by the same amount. She writes:
This recommendation removes the assumption of this amount in future savings, essentially reducing the appropriation by the amount that MCPS would be assuming to carry over unspent into the next fiscal year. Council staff emphasizes that MCPS will still need to budget to achieve a positive fund balance; and that the FY25 budget will not necessarily have as large an amount to use as a resource.
Offsetting New State Aid
Since the superintendent’s budget was released in December, an additional $54.5 million in state aid has materialized for MCPS. McGuire would cut the county contribution by the same amount. She writes:
This amount represents the amount of State Aid above the Superintendent’s December assumption that was added to the overall total in the Board of Education’s budget. Council staff notes that it has been a frequent practice for the Board’s budget to use additional State Aid to offset all or part of the requested County contribution.
The two together add up to $79.5 million, equivalent to 3.5% of the 10% tax hike.
Now the offset for state aid could very well raise eyebrows in Annapolis. Increases in state aid issued in accordance with the state’s Blueprint for Maryland’s Future are expected to supplement rising county contributions. That has caused controversy in Baltimore City, where Mayor Brandon Scott called a state-mandated city contribution increase of $79 million a “gut punch.” Prince George’s County Executive Angela Alsobrooks is also not a fan of state-required increased school spending, telling the Washington Post that “she fears the ballooning costs of education mandates will swallow up the county’s resources.”
But the state built in increasing county contributions into its Blueprint because it fears that counties will supplant state aid intended for schools and direct it to other functions of government. That’s how Annapolis might view McGuire’s recommendation.
So the choice facing the council is which audience to risk offending: the Lords of Annapolis or its own taxpayers.
In any event, McGuire has given the council some options for savings that probably exceed whatever can be found in vacancies. And there could be even more money to get from MCPS’s fund balance because the school system admitted in a response to her memo something I reported back in March – namely that MCPS reported more than $80 million in fund balance at the end of FY22. Are they a school system or a taxpayer-funded bank?
It will be interesting to see how the council and MCPS stakeholders – especially the unions – respond to McGuire’s proposals.