Duchy Trachtenberg sharply criticized the creative accounting measures the County Council used to fully fund next year’s MCPS budget request.
In a televised debate with District 1 Council incumbent Roger Berliner, Trachtenberg said using one-time funding sources — such as a healthcare trust for retired MCPS employees — was what “people call the Detroit accounting style.” Detroit filed for bankruptcy last year with an estimated debt of $18-$20 billion.
“They actually went into the retirement, the retiree health funds to a large degree,” Trachtenberg said. “I think over $30 million was taken out of there and I don’t believe that was the right way to fund the additional $51 million that the school system was asking for.”
The debate was filmed on May 22 at the Montgomery Community Media studios and broadcast on Montgomery Channel 21 this week. The Council decided to fund the $2.3 billion MCPS budget request by taking money from the healthcare trust, a projected surplus in existing healthcare funds and the MCPS general fund balance.
That way, the Council avoided using typical funding sources and going over the dreaded maintenance of effort minimum funding level.
The law now requires counties in Maryland to fund local school systems at the same per-pupil level as in the previous fiscal year. Going over the maintenance of effort minimum, as MCPS had requested, would have locked the county in to a new minimum funding level that county officials said could threaten the budgets of other county services.
“I actually think it betrays a lack of oversight by the Council. It’s what many call, people call the Detroit accounting style,” Trachtenberg said, “and I can assure everyone listening to this debate that the first thing that the rating agencies are going to ask about when representatives meet with them to talk about the county budget that was passed, is going to be why did we go into a retiree benefit reserve fund and do it at the expense of the retirees and look to fund our operating budget in that manner. That is not sound fiscal management.”
Trachtenberg prefaced her statement by saying she agreed with the Council’s move to fully fund the MCPS request, just not the way in which the Council did it.
Councilmembers, MCPS Superintendent Joshua Starr and County Executive Isiah Leggett celebrated the budget agreement on May 14. Berliner called it a, “creative, win-win solution.”
But some questioned how the Council planned to fund the MCPS budget request next year and if the move was in response to primary year pressure from the politically influential county teachers union.
“We did protect taxpayers,” Berliner said in the debate. “It was creative and I think it was something that our school system embraced, that our county executive embraced and that our County Council embraced. And it was the right thing to do because our school system has challenges and needs these dollars. And we now have time to work through the maintenance of effort law, which certainly should not be done away with. But even the superintendent of schools acknowledged that there can be tweaks to the law that make it more manageable.”
You can view the full 46-minute debate here. The discussion of school funding starts at the 35:37 mark and continues until the 39:45 mark.