By Adam Pagnucco.
Board of Education President Julie Yang and MCPS Superintendent Thomas Taylor have announced a budget deal with the council in a press release reprinted below. The release does not contain numbers, but Bethesda Today quoted Council President Kate Stewart and my sources reported the following to me.
MCPS’s employee benefits fund has been running deficits since FY21. To fix the problem, Taylor proposed adding $40 million to the fund in FY26 and again in FY27 accompanied by negotiations with the unions about cost shares. That was a part of his huge budget ask.
To assist him, Stewart announced that the council intends to reallocate $25 million from the county’s retiree health benefits fund (known as OPEB) in FY25 and again in FY26. These are intended to be one-time draws.
The council’s plan would fund MCPS at $210 million above the state’s required maintenance of effort level. County Executive Marc Elrich recommended funding MCPS at $250 million above maintenance of effort. That’s important because under the maintenance of effort law, one year’s local per pupil contribution becomes the next year’s floor, essentially locking in increases unless a waiver is obtained from the state. I have heard that the OPEB money may be regarded as a one-time expense not subject to maintenance of effort, but the rest of the funding would be.
Because Taylor is not getting every dollar he requested, he will have to move some money around and pick some priorities. (He has a lot of them.) There is also the matter of the state’s shift of pension liabilities to the counties, which is roughly $20 million in MCPS’s case. Nevertheless, this is a large increase and is a big win for Taylor, who is smart enough to recognize a win when he sees it.
Diverting OPEB funds is problematic and frowned on by ratings agencies. But the council seems prepared to do it to avoid an income tax hike. We shall see if this one-time fix comes back to haunt us.
MCPS’s press release appears below.
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Council President Kate Stewart, MCPS Board of Education President Julie Yang and MCPS Superintendent Thomas W. Taylor announced a path forward regarding the MCPS budget for FY26.
Joint Statement from Board of Education President Julie Yang and Superintendent of Schools Thomas W. Taylor.
Today marks an important moment for Montgomery County and our shared commitment to public education. County Council President Kate Stewart’s proposed approach to funding the Montgomery County Public Schools (MCPS) operating budget for the next school year reflects the very best of who we are—One Montgomery—united by our values and driven by a collective mission to support every student’s success.
We are deeply grateful to County Council President Kate Stewart for her leadership and to the County Council for this solution, which reflects creative problem-solving, collaboration, and commitment. This outcome shows what’s possible when we work together to meet the moment with necessary focus and do the right thing for our students and employees.
We recognize that this is made possible through one-time funding, drawn in part from reserves that exist to bridge moments of fiscal uncertainty like this. It gives us very important time to assess, to plan, and to continue making thoughtful and correct operational and structural decisions rooted in the need for long-term sustainability for our school system and county.
Together, we will move MCPS Forward.
Julie Yang, President
Montgomery County Board of Education
Thomas W. Taylor, Ed.D. MBA, Superintendent
Montgomery County Public Schools