County Council Member Valerie Ervin, the Chair of the Council’s Education Committee, recently called MCPS leader Jerry Weast a “rogue superintendent.” That statement is a culmination of years of tension between the County Council and the school system that has been recently exacerbated by budget difficulties. All of that is threatening to erupt in an all-out battle with consequences for the county’s future.
The immediate cause of this dispute is the county’s maintenance of effort (MOE) quandary. State law requires counties to spend at least as much local funding on education each fiscal year as they have the prior fiscal year. This year, Montgomery County asked the state for a waiver of that requirement in the amount of $79 million due to the poor state of the economy and the tax-limiting Ficker Amendment. The county’s Board of Education and Weast agreed with the grounds for a waiver and testified on its behalf. When the state denied the county’s request, the county arranged to give the school district the money to satisfy the state’s requirement, but took it back as a debt service charge for construction. Weast believed that the maneuver would apply just to one year, but the County Council refused to agree to that restriction. Weast then wrote State Superintendent of Schools Nancy Grasmick asking whether the county’s budget maneuver was legal, prompting an opinion by Attorney General Doug Gansler stating that it was not. That may subject the county to penalties ranging from $23-45 million in lost state aid. Weast then blasted the County Council in a statement that was sent to the media but not to the council, prompting Council Member Ervin, who oversees his budget, to denounce him as a “rogue.”
The immediate issue surrounding the penalty is pressing. The budget gimmick approved by the council sent $79 million to the school system so that that money could be used to pay off bonds to build schools. If the state’s penalty applies directly to the school system, it will likely be paid from the money that was to be used for the bonds. That would leave the county responsible for paying off those bonds from another source of money. But if the county makes the school system eat the money, the impact would be unpredictable.
All of this occurs in the background of severe budget problems. The county learned in November that income tax revenues due from the state are $85.2 million lower than originally projected. A County Council budget analysis states:The total FY10 shortfall, based on the State’s new formula, could be in the range of $95 million, while the FY11 shortfall could be in the range of $110 million. These write downs alone could bring the County's estimated FY11 budget gap, which in September was projected at $364.4 million, to well over $500 million, despite the Council's November 17 approval of a $29.7 Savings Plan for FY10. Other factors could make the gap still larger.
In other words, no part of the county government has money laying around to pay off the penalty.
How did things get to this point? Multiple sources report that the school system offered the county a deal last spring to get around the $79 million MOE requirement. The terms of the deal were that the county would pay the schools the $79 million, but the schools would agree to hold the money in reserve. That money would then be available to finance next year’s budget. The reason that proposal fell apart was that many in Rockville did not trust Jerry Weast to sit on the money. And so the ill-fated budget gimmick was instituted, initiating the fall into the hole that the county now occupies.
That brings us back to a central factor that handicaps the ability of the county to respond to adversity: a basic distrust between Weast and some of the county’s elected officeholders. We’ll look more closely at that issue in Part Two.
Monday, November 30, 2009
The Rogue Superintendent, Part One
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4 comments:
First, when the State rejected the waiver, both the County and MCPS, given that we had no more money, were forced to resort to other means of closing the gap. The Supe's suggestion was flawed because we didn't have $80 million lying around and he didn't have a spending category in which to park it legitimately (no expenditure would have matched the appropriation). But where he really blew it was his insistence on the "only one year clause."
We all knew that the proposed solution had risks, however the moment you put "only for one year" into the language of the deal, then it couldn't help but appear to be an accounting trick. Most of us do not want to do this as a regular policy and if we had a realistic waiver process, then we'd never have to even resort to this. If ever the Board thought we were doing this to evade funding responsibilities that we could otherwise afford, they would be free in the future to cry foul and pretty much assure that this wouldn't happen again. So the prime reason for excluding the "one year" language was not so we could imbed this as a practice, but rather to avoid drawing any unnecessary attention to the use of this device. Unlike the Supe's first proposal, we already had money obligated for bond payments.
As for using the device again, there was some talk about maybe having to use it again this year - if we couldn't get a proper waiver, not because we wanted to reduce school funding. (I only heard one member suggest otherwise.) Come May, if we find ourselves in the same situation as last year - ie, no money, no waiver, no viable solution - then we might have revisited this. But revisiting it under these circumstances is a far cry from making a policy decision which would made this a permanent approach to the budget. And that we did NOT make, (and I wouldn't support.)
Much as there are issues of "trust", the fact is that this Council, as with previous Councils, remains highly supportive of funding our public schools. This should not have been played out around whether or not people "trust" each other. There were no good solutions to the problem. Had Weast not gone out of his way to draw attention to the solution and question it's legality, who knows what would have happened in the Spring if he'd sent a letter certifying we'd met MOE. Unfortunately we'll never know that answer now. What we do know is that we have no money. In fact, we just got the news that income tax revenues were down another $85 million which will necessitate even more cuts as well as lower the base for next year's revenues. We have a horrible problem and absolutely no reasonable way to solve it.
Marc Elrich
Adam -
The budget shortfall is extremely challenging as it is and is staggering if you add another $79 Mil + $45 Mil in penalties – but if I take your reporting to be accurate (and it generally is), the line that elected officials and leaders in Rockville “did not trust Jerry Weast (an appointed official) to sit on the money” is breathtaking.
At this moment worrying about who was on board last year regarding the channeling of 79 million is no long and urgent matter – I’d like to see how our leaders in Rockville will work together to solve this “crisis.” Starting first with showing some teamwork, building some confidence and stop not throwing each other under the bus (school bus).
I was talking to a neighbor (with 3 kids in Moco schools) over this weekend and all he could say was that it just seems like “inside baseball”.
My take is we don’t need Active Politicians or “leaders” jockeying for better PR; we need Active Leaders that solve expected budget shortfalls. With cooperation, our county leaders can solve this issue. They certainly have the capacity. The true crisis is the high percentage of African American and Hispanic students that have failed or failing in our high schools.
Guled
The Ficker Amendment, which allows property tax revenues to RISE as much as the rate of inflation, does not unfairly limit education spending. By the 2010 elections, the Council will have had the spending money for three years of increased revenues resulting from the largest property tax increase in a generation, one which exceeded the charter limit by 420%. And now the council is thinking of jamming homeowners with a big gas tax increase AFTER this next election. No wonder we have 120 foreclosures a month in the Germantown zip code alone!
We just had a 33% increase in parking fees in Bethesda. What is next? A speed camera on every block? Parking tickets for those driving on I-270 or the Beltway?
The county could make a lot of money by stopping construction of any improvements to I-270 and handing out parking tickets to trapped commuters instead.
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