Maryland’s proposed new education formula: What’s inside?

This article was republished with permission from WTOP’s news partners at Maryland Matters. Sign up for Maryland Matters’ free email subscription today.

This content was republished with permission from WTOP’s news partners at Maryland Matters. Sign up for Maryland Matters’ free email subscription today.

The Blueprint for Maryland’s Future Funding Formula Workgroup voted on proposed changes to Maryland’s education funding formulas on Tuesday.

The formulas will help guide $4 billion in state education spending for the next decade, directing additional money to early education, special education and schools with high numbers of children living in poverty.

The proposed formula now heads to the full Kirwan Commission on Innovation and Excellence in Education, which created the reform plan the workgroup set out to fund. The commission will spend the fall reviewing the proposal, and it is expected to make a recommendation to the General Assembly before the legislative session starts in January.

Here’s a look at some parts of the workgroup’s proposed formula:

A new base: One of the primary goals of the funding workgroup was to incorporate the recommendations of the Kirwan Commission on Innovation and Excellence in Education. The workgroup is recommending that funding specified for several new programs should now be included in the state’s base education funding formula: increasing teacher salaries and implementation of a “career ladder” for educators; a restructuring of the school day to give teachers more time to plan and work outside of the classroom; additional school-based health and behavioral health programs; and getting students to college and career readiness.

Combined with other spending, the new recommendations to include in the foundation formula would increase the statewide per-student figure from about $7,244 currently to $9,180.

The new education funding formulas would go into effect in the 2022 fiscal year, at which point local governments would have to begin contributing their local share of increased funding. The workgroup recommended phasing in the additional county costs, but did not specify a phase-in period, leaving that for discussion among lawmakers.

A new phase-in: The workgroup on Tuesday agreed to a slower phase-in of the Kirwan Commission’s proposed policy programs. Under the workgroup’s recommendation, state school funding would increase by about 5.6 percent a year.

The proposal would effectively slow the rollout of new programs including college and career readiness, supplemental education programs, mental health coordinators, and expanded pre-kindergarten, but begin moving everything incrementally forward right away.

Teacher salaries: The workgroup recommends some tweaks to an ambitious plan to increase teacher salaries statewide by 10 percent. The commission had planned for three bumps in pay – 3 percent, 3 percent and then 4 percent. The workgroup recommends increasing salaries in four steps: a 3 percent increase was incentivized this year, another 3 percent increase would come in January 2022, and the last 4 percent is spread out between 2023 and 2024.

Maintenance of effort: Under current law, school systems must have a continual “maintenance of effort” for school funding, which basically drives spending incrementally higher each year.

Currently, that calculation requires counties to cover the local share of the foundation funding formula, but not for specialized programs such as special education.

The workgroup wants to require maintenance of effort for all the newly proposed programs, including targeted funding for special education, English learners and increases in teacher salaries and benefits.

Counties that historically have covered maintenance of effort for the state’s base program but not all add-on programs face the greatest increases between current funding and what would be expected under the Kirwan Commission reforms. The city of Baltimore, for example, would have to double education spending once adjusted for inflation, from about $280.5 million today to about $661.2 million in 2030.

Concentration of poverty: The workgroup is recommending that the state cover most of the cost for new Concentration of Poverty Grants, except in some of the state’s wealthiest jurisdictions. The workgroup’s recommendation would phase in the grants for schools with the highest percentages of children living in poverty – 80 percent or more – first. The plan would increase funding each year until grants are given to all schools in the state with 55 percent or more students receiving free or reduced lunch.

The counties that would have to cover a local share for the concentration of poverty grants are Anne Arundel, Kent, Montgomery, Queen Anne’s, Talbot and Worcester.

CWI: The Comparable Wage Index is a new part of the funding formula that would replace the Geographic Cost of Education Index. The CWI, as the GCEI did before, directs additional state money to jurisdictions where it costs more to educate children. This can often be higher-wealth jurisdictions, which has drawn some criticism in the past about the formula’s equity from advocates like the ACLU.

The new formula requires those counties that receive CWI funding to also pay a local share, unlike the former GCEI program.

NTI: The workgroup also recommends a change to net taxable income that will more accurately reflect the true income wealth of Maryland’s counties. Under current law, counties calculate their net taxable income on both Sept. 1 and Nov. 1. Counties then receive state education aid based on whichever calculation yields more state funding.

However, higher-wealth taxpayers are more likely to defer their final tax filings until the last deadline of Oct. 15, so the September calculation does not reflect a county’s overall wealth.

When per-pupil wealth in a county goes up, aid from the state goes down. So counties could benefit from choosing to use their September net taxable income, which was calculated before all tax filings were complete.

For higher-wealth counties like Montgomery and Talbot, about one-fifth of the total income wealth has not been historically captured in the September figure, according to Department of Legislative Services figures.

The workgroup recommends basing all wealth formulas in the future based on November net taxable income; the change is recommended to be phased-in over time.

TIF: The workgroup recommends changes to the way tax-increment financing can alter local property wealth calculations. Tax-increment financing, or TIF, bonds allow developments to borrow money based on anticipated future increases in tax revenue, part of which will be used to pay back the bond debt. Under current law, Maryland exempts areas that are in TIF districts from a jurisdiction’s wealth calculation, which can artificially decrease the local tax base.

The workgroup decided to change this by allowing property tax revenue in TIF districts that is higher than the amount needed for debt service to count towards local wealth.

Two-thirds of the wealth calculation used for state funding decisions is based on property wealth.

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