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Message on FY12 MCPS Budget
May 18, 2011

As the Council comes down the homestretch of finalizing the Fiscal Year 2012 Operating Budget, you probably have heard a lot about and may even have been contacted about one of its most challenging aspects: the budget for Montgomery County Public Schools (MCPS). I wanted to offer you my perspective on the matter, in real time, in the hopes of clearing up any inconsistencies you may have heard. I do hope that if you've got questions regarding the MCPS budget, you will find answers to them in this message.


HighlightsI have received countless emails and phone calls in support of the MCPS budget - and rightfully so. I believe the quality of our public schools directly contributes to the quality of life we so value. Indeed, I've heard from an overwhelming amount of residents that they chose to live in Montgomery County in large part due to the outstanding reputation of our public schools - a reputation that is entirely deserved and that is a credit to MCPS's dedicated and talented staff. As the parent of two MCPS graduates, I know first-hand the excellent education our students receive.


I believe that each and every stakeholder involved shares a common goal: a world-class education for MCPS students and the continued success of our school system as a whole. Indeed, there is much we can and do agree on when it comes to our superb school system, and whatever differences we may have - almost exclusively with respect to funding - lie on the margins of our common commitment to our County's students. Regrettably, due to the weakened economy and issues of affordability, those differences have become more pronounced. Quite frankly, there's less money to go around but I continue to hold MCPS as my number one budget priority - and I believe my colleagues on the Council would agree.


Given that the MCPS budget is by no means a simple one - it is comprised of several distinct funding sources and impacted by complex state and county laws - it's no surprise that throughout the budget process, confusing data can reach the public and is easily spread through mailers, robo-calls, and emails. You have probably been the recipient of one or maybe all three. I believe that as your Councilmember, it is incumbent on me to present the facts in a way that considers the big picture - the same way my colleagues and I have to consider each decision we make.

Each year, the MCPS budget is largely comprised of funding from three sources: County, state, and federal dollars. (Other sources of revenue, like student activity fees and programs funded through private grants for example, comprise a small portion.) If you'll take a look at the chart below, which illustrates County, state and federal funding over the last nine years, you'll see that County funding of MCPS continued to increase through 2009, was essentially flat in 2010, and for the first time fell in absolute terms in FY2011.

MCPS Funding in Dollars
Source: FY03-FY07 figures from the Office of Legislative Oversight's Report "Key Fiscal Indicators for Montgomery County Public Schools" (2007), found here; FY08-FY11 figures from the MCPS website here.

In examining this data, you may wonder how it is that the County's funding of MCPS has been characterized differently. If you forgive the use of a pastry analogy, beginning in FY04 - when times were good and the County's coffers were flush with revenue - the "pie" that represented total County revenue started getting bigger and bigger. And while the "slice of the pie" that represented County funding allocated to MCPS increased, the size of the pie itself continued to increase as well - and at a higher rate. What does this mean? Well, if you were to use percentages to draw comparisons in year-to-year funding - instead of dollar figures - it would mean that the data could be characterized in such a way that makes it appear the Council's commitment to MCPS began to wane in 2004. I for one do not believe that to be the case, and that the total funding figures simply do not support that view. Moreover, it's useful to note that since FY03 until FY11, the BOE has received at least 97% of their funding request. In FY03, FY05, FY07, and FY10, they actually received more than they asked for. See the chart below.

MCPS Funding as Percentage of Board of Education's Request

There's also concern that the Coucil intends to "divert" or "misuse" State Aid for education. MCPS has been very fortunate in recent years to receive full formula funding of State Aid, and I assure you that the Council has always and will continue to appropriate all State Aid for education to MCPS. We are grateful for the hard work of our Montgomery County Delegation in Annapolis in securing these dollars. In speaking with members of our Delegation, I have found them to be sympathetic to the circumstances, understanding of the County's economic situation, and supportive of the decisions this Council has made in terms of funding MCPS. In fact, the influx of State Aid has protected MCPS from the worst of the budget reductions in the past three years that other County departments and agencies have faced. The first year that total MCPS funding decreased was FY11, in the midst of the Great Recession, by approximately 1%. The same year, the Montgomery County library system experienced a decrease of 23%; the Parks Department 16%; the Department of Recreation 15%. MCPS has benefited from State Aid like no other County agency or department has - and the same will be true this year as well.

Exceeding MOE

As most of you may know, in order to be eligible for an increase in state aid, the county is required to fund schools at a Maintenance of Effort (MOE) level. This requirement, one which our County has exceeded regularly, requires funding to increase significantly even in the midst of a great recession. We have fought unsuccessfully in Annapolis to amend the law to recognize that there should be some flexibility when revenues are plummeting and when cost saving measures are both appropriate and necessary. Having failed to obtain any flexibility, the County decided not to seek a waiver from the law and instead face a potential penalty in FY13. I say potential because we may still obtain relief from the rigidity of the law. Even assuming there is a penalty in FY13, it will be up to the Council then to determine how the penalty should be allocated. It is an open question as to whether, and to what extent if any, this penalty would be borne by the school system. Our decision not to seek a waiver will allow us to put our school budget on a much more sustainable path, and should permit us to meet MOE in the future.


That brings us to the present day. All Councilmembers agree that reductions that impact the classroom should be miniimized - and I am pleased that outcome is achieved by the Education Committee's recommendations made yesterday morning. The Education Committee, chaired by Council President Ervin, who is herself a former member of the Board of Education, proposes making several reductions to the MCPS Maintenance of Effort budget that would not have a programmatic impact.


� Reducing employee "step increases", which are salary icreases employees receive every year for longevity. Elimination of steps, in addition to cost of living adjustments (COLA), was a measure that all County agencies employed in FY11 and are likely to employ again in FY12 as a means of reducing expenditures. (All other County agencies actually went one step further and imposed employee furloughs in addition to eliminating COLAs and steps in FY11 - the Board of Education did not see fit to make the same imposition on the school system's employees however.) Eliminating MCPS employee steps represents a reduction of $28 million.  


� The Committee also recommends reducing the OPEB (Other Post-Employment Benefits) allocation by $27 million, which is identical to the County Executive's recommendation. This step does not impact actual teacher salaries or pensions.


One of the other Education Committee recommendations deals with MCPS employee benefits. The effects of the Great Recession have forced both the County Executive and this Council to consider employee benefits for not just MCPS, but for all County agencies, in a way that we have never had to before - and I consider these decisions to be among the most difficult of the difficult decisions. The County Executive included in his budget recommendations that would have significantly increased the share of health care costs expected to be shouldered by non-school employees. These changes would equate to roughly $5,000 less in take home pay for our employees next year - a burden that I continue to believe was more than we should or could expect our employees to bear on top of all the other sacrifices we have asked of them.

However, that impact on take home pay can be greatly ameliorated if the sacrifice is shared, at least in part, by all County employees - not just our policemen, librarians, Ride-On drivers, and so forth. To that end, the Education Committee recommends reducing funding in "Category 12, Fixed Charges", the MCPS funding category that deals with employee benefits, by $18.7 million. That amount is equivalent to the savings achieved if the Board of Education asks its employees to contribute another 5% towards the cost of their health insurance and if pension reforms equivalent to those made by the state are adopted. With respect to the health care costs, currently, most school employees only pay 5% of their health insurance premiums. By contrast, other Montgomery County Government employees - police, librarians, Ride-On drivers, firefighters, social workers, etc - contribute 20% or more to their health care premium. This disparity has long been a bone of contention for our non-school employees and this proposal moves towards greater equity. This is another structural change that has my support. Finally, the Education Committee recommends an overall reduction of approximately 1%, reductions that could, depending on the choices made by the Board of Education, directly impact the classroom. This amount, as shown below, is almost idntical to the reductions proposed by the County Executive, reductions that the Board of Education characterized as "balanced" as recently as May 17th.


Comparison of CE & County Classroom Impact

While I wish that we were in a position to fully fund the MCPS budget, I would highlight that only $27.9 million - or approximately 1% of the Board's request - might impact the classroom, depending on the BOE's allocation. As I said earlier, my colleagues and I continue to believe there may be alternative approaches to achieving these savings that should not affect the classroom, and we are still considering how to allocate this reduction by categories to minimize the impact on the classroom.

Finally, it should be noted that even though the Council has had to make tremendously difficult decisions regarding the school system's budget, MCPS's total tax-supported budget as it stands now is an increase of $31 million over its FY11 tax-supported budget. I believe the following chart, that represents the percentage change of agency budgets FY09-11 and the County Executive's recommendation for FY12, is a compelling illustration of the commitment this Council has demonstrated to our school system during a time of unparalleled economic downturn.

MCPS Tax-Supported Budget FY09-12 Compared to Other Departments

I want you to know that it is with the most careful consideration that my colleagues and I work through these sets of issues. We take none of these decisions lightly, especially when it comes to MCPS. I do believe that a total budget that represents an increase over the prior year's funding and that minimizes impacts to the classroom is a budget that fulfills our obligation to our students and one that preserves our world-class school system.

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