By Adam Pagnucco.
Last spring, MoCo taxpayers witnessed a spectacle they had not seen in years: an open battle over the school budget pitting the county council against the school system and the employee unions. The issue at hand was the size of the budget increase to be received by MCPS. What made it so hot was that the increase was tied to a 10% property tax hike proposed by the county executive. The intended purpose of the budget boost was to hire and pay teachers.
So we were told.
In the wake of a 4.7% property tax hike levied by the council in part to pay MCPS, the school system has come forward with a request: it wants council approval of a transfer of $11.4 million out of instructional salaries towards other purposes for the fiscal year that just ended. How did this come to happen?
In a memo to the school board, Superintendent Monifa McKnight explained that the system recorded a surplus at the end of FY23 (which occurred on 6/30/23). She wrote, “The current projection is that the FY 2023 MCPS Operating Budget ended the year with an expenditure surplus of $21,959,861.” Let’s put that in context: surpluses can be good things when they maintain fund balance, which is a cushion against unplanned but necessary spending. But MCPS has had steadily escalating fund balances for many years as I recently wrote in a five-part series. And this new surplus flies against the claims of financial stress made by the school system in the budget debate.
Next, MCPS had a problem with its employee benefit funds. The superintendent addressed that in a discussion of Category 12 (Fixed Charges), which contains benefit spending:
Category 12, Fixed Charges, reflects a projected deficit of $15,796,034. This is a decrease of $15,896,034 from the amount reported in the April 30, 2023, financial report. The variance from the April 2023 report, as well as the overall deficit, is due to a one-time contribution of fund balance in the amount of $14.0 million to support the Employee Benefit Plan (EBP), for the purpose of maintaining a minimal fund balance for EBP. The overall deficit in Category 12 reflects 2.6 percent in spending more than the budgeted expenditures.
So where is MCPS getting the money? You guessed it – instructional salaries, a regular target for transfers over the years. The superintendent wrote:
Category 3, Instructional Salaries, reflects a projected surplus of $15,077,718. This is an increase of $327,718 from the amount reported in the April 30, 2023, which is the result of additional savings due to position salary lapse. The majority of the overall surplus is the result of savings in position salaries due to salary lapse from positions not filled during the year. Overall savings in Category 3 are 1.4 percent of the budgeted expenditures.
Let’s reflect on the phrase “savings in position salaries due to salary lapse from positions not filled during the year.” In a dire letter sent to the council by the school board, the superintendent and the unions in May, the co-signers argued that a large tax hike was necessary to fund employee compensation. And yet it turns out that the school system has been saving money by not filling positions. Now that money will be shifted to fix a benefits issue.
And so the graphic below illustrates the structure of the transfers MCPS is now seeking from the county council, which must approve them under state law.
Look folks, the transfer memo does not contain enough information to ascertain what the exact problem with benefits was or whether it was MCPS’s fault. But last May, the school system told the county council that it needed millions more dollars to pay its employees. Now it turns out that MCPS has been running up a surplus by not hiring people, a fact presumably known to its leaders when they were requesting more money. And now they want council approval of the transfer of millions of dollars out of instructional salaries for the fiscal year that just ended. Will there be another transfer in our current fiscal year – you know, the one in which we are paying a 4.7% property tax hike?
I don’t blame the superintendent or the current leadership. Her predecessors have been using instructional salary money for other purposes for many, many years. Prior county councils have rubber stamped the practice. So why should MCPS’s leaders expect anything to change?
And so here is a question for the county council. You keep talking about transparency and accountability. Most of you voted for a tax hike that was intended in part to hire and pay teachers. Some of you wanted an even bigger tax hike. You now have to decide if you were serious about transparency and accountability. Will our tax increase go to the classroom or not?
I guarantee that our readers will be watching.