By Adam Pagnucco.
As the public considers the county executive’s request for a ten percent property tax hike to benefit MCPS, it’s time to review the last time a tax hike was proposed for schools. What can we learn from history?
The year was 2016. County Executive Ike Leggett recommended an 8.7% property tax increase in part to make up for an adverse U.S. Supreme Court decision related to out-of-state income tax revenues. When the General Assembly reduced the fiscal hit from that decision, Leggett asked the council to cut his recommended increase nearly in half. The council decided to pass the entire 8.7% increase anyway and marketed the resulting budget as an “Education First” budget. The council called it an “unprecedented partnership” with the school system and a “landmark” achievement as they told the public that it would cut class size.
But the goals of the tax hike were undermined by five subsequent events.
First, revenues from the tax hike were spread across the entire government, not just MCPS. The council president of that time actually admitted this fact, which undercut the notion that the tax hike was just for schools. This is also true of the current tax hike proposal.
Second, MCPS spread its portion of the money throughout its entire budget, not just for the purpose of hiring teachers. The table below shows MCPS spending by state category in FY16 (the year before the tax hike) and FY17. MCPS expenditures rose by $146 million, buoyed by a $110 million increase in the county’s local contribution. But only $56 million, or 38% of the increase, went towards instructional salaries.
Third, in keeping with its past practice, MCPS did not spend its entire appropriation for instructional salaries. Its 2017 comprehensive annual financial report shows that its final budget for instructional salaries was $978 million. But its actual spending on instructional salaries was $958 million – $20 million less than it was authorized to spend.
Fourth, shortly after receiving the extra tax money, MCPS sent over a transfer request to the county council moving $1.3 million out of instructional salaries and into maintenance of plant and fixed charges. The council approved the request two weeks after receiving it.
Finally, the tax hike was sold as being for the purpose of reducing class size. MCPS does not release a district-wide class size statistic in its Schools at a Glance series, but it does calculate students per instructional staff. In FY16, the year before the tax hike, MCPS had 10.9 students per instructional staff. In FY17, the first year of the tax hike, MCPS had 11.2 students per instructional staff. And a year later, MCPS had 11.3 students per instructional staff. So it’s reasonable to ask whether the tax hike actually led to lower class sizes.
But one thing the tax hike surely led to was a tax revolt culminating in the overwhelming passage of term limits.
So what lessons can we learn from 2016?
First, county politicians use the school system as a tool to sell tax hikes that are spread across the entire government. That is happening now. Why would MCGEO, the fire fighters and the police support a tax hike that exclusively benefits MCPS? The answer is that they know they are getting a big chunk of the money.
Second, transfers of instructional salaries to other purposes and rising fund balances raise doubts about how much of any extra funding will truly reach the classroom.
And third, oversight failures by the executive, the council and the school board permit diversions of money to happen. If these elected officials tell their constituents that extra revenues will go to the classroom, they have a responsibility to ensure that they actually go to the classroom. How much confidence should we have that today’s elected officials will do a better job of oversight than their predecessors of seven years ago?
Tax hike or not, here is what needs to happen to make a substantial MCPS funding increase fair for all concerned.
The council must make crystal clear that money for instructional salaries must actually be spent on instructional salaries. That means no transfers and no huge fund balances. If an instructional salary transfer request comes over a few months into the fiscal year – as it usually has in the past – the council must say no.
The council must also tell the school system to conclude collective bargaining agreements with all of its unions before they get any extra money. That way, school employees will know what they are getting, both on the tax side and the compensation side. And parents and taxpayers will have a much better idea of how many teachers will be hired and how their pay packages compare to competitors.
And finally, the council must demand specific numeric targets from the school system in return for any extra funding – something they did not do in 2016. Those targets can be specified as positions, student-instructional staff ratio, vacancies or any other metrics on staffing and performance. Failure to meet these targets must have consequences in the next budget to come.
Above all, there must be no blank checks. Accountability must accompany funding in a highly visible way. Only then will 2023 be a better year for students, taxpayers and school system employees than 2016.