By Adam Pagnucco.
The news that MCPS is considering layoffs has generated shock, outrage and disbelief among elected officials, school employees and folks in the community alike. Here is the big question now on the minds of many: are layoffs necessary?
It’s impossible for anyone outside the system to know as much about MCPS’s finances as its top management and there are questions about its transparency (including from inside the county council building). But MCPS publishes its budgets and annual comprehensive financial reports as do its counterparts elsewhere in Maryland and beyond. If MCPS were in financial distress serious enough to warrant something as radical as layoffs, we would expect to see it in their financial reporting.
Here are six relevant facts in judging whether layoffs are necessary at MCPS.
Fact 1: The county council did not cut MCPS. The council increased MCPS’s operating budget by 5.0% this year.
In FY24, the council appropriated $3,165,007,511 for MCPS’s operating budget. In FY25, the council appropriated $3,322,306,526 for MCPS’s operating budget. This is an increase of $157,299,015, or 5.0%. Members of the press, you are doing a disservice to your readers when you use the word “cut” because it is inaccurate.
Fact 2: Over the last three years, MCPS’s operating budget has increased at a higher rate than any comparable period since before the Great Recession started.
The table below shows MCPS’s grand total operating budgets from FY05 through FY25. All data is actual except for FY24-25, which is approved. Over the last three years (FY22-25), MCPS’s operating budget has grown by 20.6%. The last time it grew that much during a three-year period was FY05-08 (22.6%), when the county enjoyed a historic real estate boom.
Fact 3: Even though MCPS’s spending has grown a lot, its enrollment has still not recovered to pre-pandemic levels.
According to MCPS’s operating budgets, the system’s enrollment peaked at 165,267 in September 2019 (near the start of FY20). MCPS is projecting that enrollment will be 161,580 in September 2024 (near the start of FY25). That’s an enrollment drop of 2.2%. Over the same period, MCPS’s operating budget has grown by 25.6%. On a per student basis, the operating budget has grown by 28.4%, or an annual rate of 5.2%.
How does that compare to inflation? We don’t know what inflation will be in 2024 or 2025, but between 2019 and 2023, the Washington-Arlington-Alexandria CPI-U grew at an annual average rate of 3.6%. So on a per pupil basis, MCPS’s recent increases have exceeded inflation even accounting for the temporary spike in prices during the pandemic.
Fact 4: The council often gives MCPS less than it requests.
When the school board adopts its final operating budget in June, it publishes a memo from the superintendent comparing its request to the council’s final appropriation. The table below shows how those two figures compare from FY08 through FY25.
In 13 of the last 18 fiscal years, the council approved less than the school board requested. The average percentage of the school board’s request that was appropriated was 98.4% from FY08 through FY24. In FY25, the council appropriated 99.1%, which was slightly better than average.
The point here is that the council’s action this year was typical and not an outlier. MCPS often gets less than the school board requests. Competent MCPS leaders prepare for that likelihood. In the past, those adjustments were carried out without layoffs.
Fact 5: MCPS had a nearly $70 million general fund balance just eleven months ago.
At the end of FY23 (6/30/23), MCPS had a general fund balance of $77.3 million, of which $68.6 million was spendable. That is not as high as it was during the pandemic, when MCPS was awash with federal money, but it is significantly higher than before the pandemic struck. The screenshot below, which shows the last ten years of MCPS general fund balances, is from page 121 (pdf page 129) of MCPS’s FY23 annual comprehensive financial report.
One of the benefits of having a fund balance is its availability as a tool to adjust to budget swings. MCPS had a robust fund balance at the end of June 2023. What happened to that money?
Fact 6: MCPS has seen skyrocketing contractual services spending.
The Montgomery County Education Association (MCEA), which represents teachers, has brought up the recent large increases in the system’s contractual services spending. The screenshot below, which is from page 1 (pdf page 18) of the school board’s requested FY25 budget, shows that contractual services have grown from $69.5 million in FY23 actual to $100.3 million in the FY25 request. This is a staggering 44% increase in two years.
MCEA is right to be concerned about this. If MCPS simply returns to its contractual services spending level of FY23, it would save $30.8 million and there might be no need for layoffs. What’s really going on here?
Let’s connect these dots.
MCPS is not getting cut. It’s getting an increase. Since the pandemic began, MCPS has received significant budget increases despite a drop in enrollment. In the past, the county council has often given MCPS less than the school board wants and there have not been layoffs. MCPS had a significant fund balance as recently as 11 months ago, raising questions about what it has now. Finally, contractual services have been a major factor in rising spending but MCPS is discussing layoffs of union members.
The above does not present a convincing picture of financial crisis. Unless countervailing facts emerge, I am skeptical that layoffs are necessary at MCPS.