Will Montgomery Get its School Funding Waiver?

A major part of Montgomery County’s $587 million budget crisis is not under the control of the County Executive, the County Council or anyone else in Rockville. In fact, a decision affecting $79 million of county money will actually be made in Baltimore – the home of Maryland’s State Board of Education.

Maryland state law contains a “Maintenance of Effort” (MOE) requirement for counties stating that they must at least maintain their per-pupil county spending on education before receiving state school aid increases. The goal of the law is to prevent counties from diverting their own school spending while accepting state school money.

Montgomery County is suffering its worst budget problems since at least the early 1990s. The crisis could have been a lot worse if the state did not receive federal stimulus money. Much of the stimulus money was earmarked for schools, and the Governor used part of it to fully fund the state’s Geographic Cost of Education Index (GCEI) program. That meant Montgomery could fund almost its entire education budget request but still faced problems in the rest of its county government. And so the county applied for an MOE waiver from the State Board of Education, claiming that it had more than met its responsibility for education but had needs elsewhere. Specifically, the county asked to use $95 million (later revised down to $79 million) required for school funding to finance other parts of the government, arguing that federal aid would keep the schools whole. Both the Montgomery County Board of Education and MCPS Superintendent Jerry Weast supported the request.

The State Board of Education, however, may not go along. It is taking its sweet time in making its decision, waiting to release its position until May 15. (The County Council’s first vote on the budget, originally scheduled for May 14, has been postponed until next Tuesday.) If the State Board does not grant the county’s request, all or part of the $79 million will have to be transferred from the police, fire service, public works, transportation, health and human services or other government functions to MCPS. Policy makers worry that would damage non-school services and create significant inequities between non-school employees and MCPS personnel.

Rumors are careening all over Rockville even as we write this. Everyone is speculating about what the State Board will do, but very few people claim to know the outcome. (Those who do are probably lying!) Here are a few factors.

1. Precedent
The State Board is full of business people and school activists who are deeply invested in the state’s educational system. They do not want to make it easy for the counties to evade their MOE obligations. In FY 1992, the state gave a blanket waiver to the counties allowing non-compliance with MOE but that idea did not go anywhere this year. It is likely that the State Board will want to keep waivers available only for genuine emergencies.

2. Nancy Grasmick
The state’s Superintendent of Schools is the ultimate survivor of Maryland politics. Even the Governor had to make his peace with her. Part of Grasmick’s power derives from the state’s strong educational performance. What happens if the State Board approves MOE waivers and test scores go down? One more thing: Grasmick and Weast are not the best of friends.

3. Prince George’s County
Two other counties are applying for MOE waivers: Wicomico and Prince George’s. While Montgomery’s leaders are cooperating, Prince George’s County Executive Jack Johnson and his Board of Education are in open conflict over their waiver request. Would the State Board approve Montgomery’s request but deny Prince George’s? How would that be perceived? What would the blowback be from Prince George’s politicians against the O’Malley administration? All of the above may be an issue, but why should one county’s request have anything to do with the other’s?

One of our best-connected spies is convinced Montgomery will not get the waiver. Two spies report that State Board member Blair Ewing - a former Montgomery County Council Member and county Board of Education Member - is working against the request. Our other informants make no predictions and are on the edge of their seats. The State Board will likely show its hand tomorrow and Montgomery officials – and the rest of us – will learn our fate.