Consequences of the Budget, Part Two

One of the most compelling elements of the budget drama was its impact on the county’s most important government institution: its public schools.

The School System

The schools are a unique part of county government in four ways. First, their policies are set by a separate group of elected officials – the Board of Education. Second, the Superintendent is extremely powerful both by the nature of his position and, in the specific case of Jerry Weast, by the nature of his personality, intelligence and longevity. Third, the school system’s three unions – the teachers, SEIU Local 500 (which represents support staff) and the supervisors – are very influential and can move the schools’ political agenda in ways that its administrators cannot. Finally, school funding is protected by the state’s Maintenance of Effort (MOE) law, which requires counties to match the prior year’s per-pupil local funding to be eligible for state aid increases. For all of these reasons, the school budget is harder for the County Executive and the County Council to cut than the rest of the government. When the system’s needs clashed with the gigantic budget deficit, it was truly a case of an irresistible force colliding with an immoveable object.

This time, the immoveable object gave way under enormous pressure. Soon after the school board approved Weast’s $2.263 billion budget, the school system opened negotiations with the Executive branch over what the Executive’s proposal to the council would be. Weast’s budget met MOE requirements, but the Leggett administration needed a lower number to make the rest of the budget work. The two agreed on a $137 million cut from the school budget and the Executive transmitted this to the council. But then three things happened: a revenue writedown, warnings from bond rating agencies about the county’s AAA rating and the County Council’s reconciliation list. The first two added pressure for more cuts, while the last item requires explanation.

Every year, the budget process begins when the Executive sends a proposal to the council. The council then goes about adding spending items back in, which go onto a document called a “reconciliation list.” The cost of the items on that list must be reconciled, or paid for, by tax hikes or spending cuts elsewhere in the government. This year’s list contained $15 million of spending added to the Executive’s proposal. At one point, it was more than $22 million.

The school system was furious at the prospect that the County Council might take the money needed for its reconciliation items out of the schools’ budget. In the system’s view, they had already agreed to go below MOE by $137 million and to support the county’s application for a state waiver. Now the council wanted even more money to support items that the school system saw as frivolous. This was part of the motivation for Weast’s threat of litigation. He simply believed he had given up enough.

The county came much closer to litigation than most people knew. Last Wednesday at 11 AM, word went out through Rockville that the school board was calling a press conference at 1 PM to announce a lawsuit. The council was scheduled to take a straw vote on the budget at 1:30 PM. This set off a mad scramble among elected officials and school system leaders to cut a deal. At that point, only $1.6 million separated the two sides. The council came down by $600,000 and the deal was set: the schools would suffer an extra $24.4 million in cuts from the Executive’s budget. Weast and the school board GRUDGINGLY accepted it and disaster was averted.

The school system fared decently. It did not suffer nearly as big a cut as most county agencies and its employees will not be subject to furloughs. It now accounts for 57% of the county’s budget, its highest percentage in recent memory. But the conflict has had a steep medium-term cost. One Rockville source put it this way:

The threat of litigation was the single most dangerous and stupid miscalculation Jerry Weast has ever made. Had the school system gone ahead and sued the county, it is highly likely the Wall Street rating agencies would have downgraded the county’s General Obligation bond rating. This would have increased the cost of borrowing for the capital budget and slowed the county’s ability to modernize and replace aging school buildings. Even with the litigation threat removed, the county is not out of the woods in terms of the risk of a downgrade…

While the school system’s legal argument was shaky to begin with, the fact that it now will not sue completely discredits their argument. Never again can they make the dubious claim that the County Council has no right to reduce the schools’ appropriation below the amount recommended by the County Executive because a judge will rightly ask, “But the council did precisely that in 2010. Why didn’t you challenge them then?”

Another spy added:

Weast so overplayed his hand he almost brought everyone down with him.

For all his talent, record of achievement and force of personality, Jerry Weast has hit the end of the road with the County Council. The council’s Education Committee chair openly calls him a “Rogue Superintendent.” Few if any Council Members trust his budget numbers. When he claims to submit a “bare bones budget,” no one on the council believes him even if it is true. All of them think Weast has squirreled away secret stashes of money in his $2+ billion budget. There is no longer any fear of Weast in Rockville as even his long-time allies at the Washington Post threw him under the bus less than two months after asking the county to keep him on. Whether Weast’s approach is right or wrong, he and the council are now oil and water that will never mix again.

Tomorrow, we’ll look at the unions.