A huge boost sought for Md. schools funding — but how to pay for it?

Maryland’s public education system is on the verge of major policy changes, but how to pay for those recommendations could elude lawmakers, many of whom ran for election promising to increase school funding.

For many watching and participating in the discussion, there is concern that the 25-member commission named for its chairman, William “Brit” Kirwan, the chancellor emeritus for the University System of Maryland, became bogged down early in policy issues.

Many questions remain, and a final report may not be available until the end of January — a month later than expected and weeks after the start of the 2019 session of the General Assembly. Still, Del. Maggie McIntosh, a Baltimore City Democrat who chairs the House Appropriations Committee and is a member of the Kirwan Commission, said the legislature will have plenty of time to focus on an education plan.

But she noted lawmakers may need to split up the work, addressing policy this year and dealing later with how to pay for what is projected to cost in excess of $4 billion.

This article is part of The Daily Record's coverage leading up to the Annapolis Summit, an event that marks the start of Maryland's legislative session.

Read articles in the series:
Nov. 25: Juvenile justice reform at top of 2019 General Assembly agenda | Dec. 2: Md. lawmakers to take another pass at sports betting | Dec. 9: Md. lawmakers to weigh mandate, drug prices in 2019 | Dec. 16: A huge boost sought for Md. schools funding — but how to pay for it? | Dec. 23: Md.’s rosy fiscal picture belies storm clouds approaching, experts say | Dec. 30: Advocates again hoping to make marijuana legal in Md.| Jan. 6: Urgency on redistricting hinges on Supreme Court

“There will be at least a policy bill, I believe — the beginnings of Kirwan,” McIntosh said. “There are things we can pass now. So many don’t require new revenue or are revenue neutral.

“This is a historic moment for us in K-12 education,” she added. “We are going to be looking for revenues. There’s a lot of things we can look at. There’s always the possibility of finding savings or expanding revenue.”

McIntosh said lawmakers will be keen on identifying ways to pay for the program rather than repeating what happened during a similar expansion of education funding in 2002. Ultimately, legislators will have to write a funding formula that will determine the share of costs to be split between state and local governments.

Final recommendations are expected to help local school systems address achievement gaps, and include plans for expansion of pre-K programs to some 3-year-olds and the hiring of more teachers statewide. Starting salaries for teachers could one day approach $94,000 — an increase over the current average of about $69,000 annually.

The expected delay in the Kirwan Commission’s final report comes after the panel already delayed the report by a year, instead delivering interim recommendations that were acted on by the legislature and governor earlier this year.

The panel so far is scheduled to meet just two more times before the end of the year.

“If we can’t finish in the number of meetings scheduled then we should add more meetings,” said Steven Hershkowitz, a spokesman for the Maryland State Education Association, the state’s largest teacher’s union. “This should be an all-hands-on-deck situation where everyone is doing everything they can to get to the finish line.”

The delay has left key groups, including the unions representing teachers, education advocates with the ACLU and the association that represents county governments, watching the clock and the Kirwan Commission.

“I don’t think there’s any way that counties can just tighten their belts and find hundreds of millions of dollars in their budgets,” said Michael Sanderson, executive director of the Maryland Association of Counties.

Key among the questions is the cost.

An estimate by legislative analysts put the price tag at $4.4 billion over current state spending. The first installment of the 10-year phase in is estimated to be more than $800 million. Nearly $3 billion would come in the first three years, according to initial estimates released in early December.

“That’s a lot of money,” said Sen. Nancy King, D-Montgomery, a member of the commission.

King, who is also the incoming chair of the Senate Budget and Taxation Committee, said lawmakers may be faced with the reality that not all of the recommendations are affordable.

“I think we’re going to have to decide what to prioritize,” she said.

All about the numbers

Those estimated costs don’t take into account inflation for the new plan or what the state would likely spend under existing education funding formulas.

David Helfman, executive director of the Maryland State Education Association, said increases are necessary to make Maryland’s public education program world-class.

“If nothing changes, we’re seriously under adequacy each and every year,” said Helfman during a Dec. 6 commission meeting.

“It’s about 20 percent (increase in spending) to reach adequacy and 10 percent more than that in total spending to reach world-class,” Helfman said. “Ultimately we and the General Assembly are going to have to decide. Does it want to reach world-class?”

Others expressed concerns about the costs and how to ensure the public will see the results promised in return for the sizable increase.

“I know there’s going to be a lot of back and forth on the numbers,” Kirwan told commission members earlier this month.

He acknowledged the steep costs and recommended looking for ways to trim the recommendations. Many believe it will be difficult to find large amounts of savings.

David Brinkley, a commission member who also is Gov. Larry Hogan’s budget secretary, seemed amused as he listened to fellow members argue that the costs were not excessive and, in fact, necessary.

“It’s fascinating sitting here to listen to this, because we also have serious asks when it comes to health and health care, transportation — though they have a separate pool of money, but we’re now going into the general fund to dip into that, and public safety, your higher education institutions, all of these come into the mix, so that’s where we are,” said Brinkley.

While the state is expected to post a budget surplus for the current year and is looking at a structurally balanced budget for the year that starts on July 1, the picture for fiscal years 2021 and 2022 are not so rosy. By 2022, the state is projected to have a nearly $2 billion gap between expected revenues and spending.

That gap does not include funding recommendations from the Kirwan panel.

Previous funding changes

Maryland last updated its public school funding formula in 2002 after a series of state court rulings challenging the adequacy of education funding for Baltimore. The legislature and then-Gov. Parris Glendening approved an increase of school spending that reached $1.3 billion once it was fully phased in.

Maryland’s current attempt to increase education funding comes five years after it was supposed to review spending under the 2002 Thornton plan. The state’s constitution mandates it fund a “thorough and efficient” education system.

“If (education) is the priority, you figure it out,” said Bebe Verdery, education director for the ACLU of Maryland, speaking of state officials finding the funding. “The constitutional mandate is still there. It’s time. It’s time for them to act.”

Lawmakers and others have expressed concern that failing to act soon will open the door to new court challenges.

The 2002 Thornton plan was fully funded for just first year of the plan with $75 million from the state’s share of a tobacco settlement. The following years were left unfunded and contributed to a series of ongoing structural budget deficits that topped the billion mark.

A taxing issue

Currently, the state spends about $6.5 billion on education. Government spending at the county level brings that figure up to between $13 billion and $15 billion, according to legislative analysts.

Proposals for paying for the increased spending includes legalizing recreational marijuana, expanding or increasing sales taxes, boosting income tax rates for wealthy residents or increasing the estate tax. In lieu of tax increases, lawmakers and the governor would have to find savings in the existing budget.

Hogan has not formally commented on the Kirwan Commission’s anticipated recommendations. A spokeswoman noted that the governor funded interim recommendations — which were not nearly as costly — and worked with the legislature to set aside $200 million for future use.

The Republican governor, who was first elected in 2014 on a wave of tax increase fatigue, remains staunchly opposed to tax increases.

Hogan’s opposition to taxes means legislative leaders will need super-majorities in the House and Senate to override a potential veto.

“No, we cannot afford that,” Hogan said of the initial $4.4 billion price tag for the commission’s recommendations. “They haven’t come up with any recommendations on where the additional revenue would come from. They just said, ‘Ideally, if we could get all that money, it would be great but there’s been no discussion on where it’s going to come from.”