Thursday, October 28, 2010

Bob Ehrlich: The Anti-MoCo Candidate, Part Two

In Part One, we showed how Bob Ehrlich’s positions on transportation and the Purple Line would damage Montgomery County. Today, we examine a different set of issues that are connected to another county priority: education.

Teacher Pensions

For decades, the state government has administered and financed a pension fund for teachers and other local school employees for the purpose of attracting talented educators. The system has contributed to Maryland’s repeated Number One ranking for its public schools. But the pension fund has encountered three problems: a change to the state’s contribution formula enacted during the Glendening administration that allowed the state to lowball its payments into the fund, investment performance problems during the recent stock market crash, and a large unfunded benefit increase signed by Governor Ehrlich. The state will either have to increase its contributions to the pension fund, restructure future benefits, or both. But some in Annapolis have a different idea: pass down the funding obligations to the counties even though they did nothing to cause the problems.

The state’s assumption of teacher pensions is one of the few state programs that benefit Montgomery County. That’s because MoCo hires lots of teachers and has to pay them well to compete with the rest of the Washington area. Most of the state’s other aid programs are tied to wealth formulas that send MoCo tax dollars away to other jurisdictions. In the last session, the Senate passed a handoff plan that would have cost MoCo $192 million over four years – far more than any other county. MoCo already runs nine-digit annual budget deficits and such an additional cost would play havoc with county services.

So what of the two candidates for Governor? Ehrlich favors at least a partial shift while O’Malley is vague. We do not find O’Malley’s ambiguity comforting. But the truth is that O’Malley has had multiple opportunities to pass down pension liabilities to the counties, an idea aggressively supported by the Senate President, and he has not done so. Ehrlich’s election would certainly saddle MoCo with a gigantic pension obligation that it cannot afford, while O’Malley’s reelection would give the county a little bit of hope that we can negotiate something marginally better. On this issue, MoCo’s interest aligns with O’Malley.

Education Funding

Maryland’s Number One public schools ranking depends not only on the state’s funding of teacher pensions, but also in part on the massive amounts of state aid that go to its local school systems. Much of that school aid has its roots in the 2002 Thornton Plan, which committed the state to hundreds of millions of new dollars in school spending. Education funding is popular in Maryland, but Thornton is not just an aid program: it is also effectively a transfer program because it is driven by wealth formulas. That means the state disproportionately funds “poor” jurisdictions with money taken from “wealthy” jurisdictions.

Let’s put aside the fact that MoCo is not as rich as the state believes. Montgomery County has one-sixth of the state’s population, pays one-fifth of the state’s combined income and sales tax revenues and accounts for one-third of its business income. One would believe that the county would receive comparable benefits from the state in return. But in FY 2009, MoCo received $166 million of the state’s $2.8 billion in base education aid, or just 6% of the total. This is despite the fact that MCPS has a higher percentage of limited English students than any other jurisdiction in Maryland.

Back in 2002, when the Thornton Plan was being drafted, then-County Executive Doug Duncan and his top budget expert, future Senator Rich Madaleno, were aware that this kind of disparity would result. So they pressed the state to include a program with Thornton that would later be known as the Geographic Cost of Education Index (GCEI). The point of GCEI was to direct additional money to jurisdictions that experience higher costs of educating students. Because the program also benefited Baltimore City and Prince George’s County, it passed the legislature along with Thornton – but only as a discretionary spending item. Governor Ehrlich refused to fund it. Governor O’Malley phased in funding over his term.

GCEI is a relatively small program, even under O’Malley. It accounts for $127 million of the state’s $2.9 billion in school aid in FY 2011, of which just $31 million goes to MoCo. (Prince George’s County gets $39 million.) But Bob Ehrlich has targeted it for elimination to partially pay for his proposed sales tax cut. Ehrlich told the Associated Press that the program was “a political ploy” and that “It was all about getting votes in the 2002 session… They just made it up to get votes from Montgomery County to pass Thornton in the first place.”

Let’s be clear, Governor Ehrlich. We in Montgomery County pay more in taxes to the state than any other jurisdiction. We are entitled to ask for a fair share of state money in return. We support any effort by our delegation to fund public education and to bring back the dollars we need for MCPS. Any politician who has a problem with that does not deserve our vote.

Want more? Come back tomorrow for Part Three.