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Assembly passes bill to force counties to pay for schools

Laws and LegislationBudgets and BudgetingPersonal Income

The General Assembly has approved a tough new law that will require Maryland's counties and Baltimore to keep up a minimum level of education spending or risk having the state withhold part of their annual tax collections and ship the money directly to local school boards.

The House of Delegates voted 93-44 on Friday to give final approval to the bill, sending it to Gov. Martin O'Malley, who said he will sign it. The Senate passed the bill last week.

"While the state was investing more and more, the counties were investing less and less," O'Malley said Friday. "I think the legislature had to do something to make sure ... that the counties were doing their share."

The measure passed as part of a package including the House version of the state budget, legislation to shift part of the state's teacher pension costs to the counties and a bill to raise income taxes on high-earning Marylanders. Those measures have to go to a conference committee to work out differences with the Senate.

The legislation seeks to address what top state officials see as a problem of counties accepting growing amounts of state education aid while failing to keep up their own required investment in their school systems. Steve Brooks, deputy state school superintendent for finance, said compliance with the decades-old requirement was never a problem until the recent economic recession put a squeeze on county finances.

As the number of counties failing to keep up with so-called "maintenance of effort" requirements grew, legislative leaders became alarmed. The county cutbacks have come as state aid to education has grown steadily under the Thornton formula adopted by the General Assembly in 2002. Next year the state is expected to send the counties $4.9 billion in aid to K-12 schools.

The Maryland State Department of Education has flagged seven counties for failing to maintain required spending on schools during the current budget year. The only jurisdiction in the Baltimore area that has fallen below the required spending level is Anne Arundel County, which was $12 million short.

John R. Leopold, the Anne Arundel County executive, called the legislation "an unwarranted intrusion by the state of Maryland in local governments." He said the new law would take money away from other county agencies that have already seen reductions.

Even officials from some counties that are in compliance criticized the bill as an inexcusable intrusion into local autonomy. The Frederick County Board of Commissioners urged its delegation to oppose the measure.

"The bills devastate county budgets for law enforcement, fire protection, roadways and public health," the all-Republican board said in a letter to legislators.

But the head of the state teachers union welcomed the measure.

"The passage of this bill is a huge win for students, educators and local governments," said Clara Floyd, president of the Maryland State Education Association. "We now have a revitalized maintenance-of-effort law that protects local school funding from deep cuts."

In one of its most controversial provisions, the bill also seeks to neutralize one reason some counties have given for failing to keep up their spending on schools. It allows, but does not require, counties that have voter-approved property tax caps to override them for the purpose of funding schools. The counties that have such caps are Prince George's, Montgomery, Talbot, Wicomico and Anne Arundel.

Besides Anne Arundel, the counties the state education department has identified as falling short of maintenance-of-effort goals are Dorchester, Montgomery, Queen Anne's, Talbot, Wicomico and Kent.

Talbot, in particular, has attracted the attention of legislative leaders — not just because of its budget decisions but because of the defiant attitude of its commissioners. In a letter to the state education department, the commissioners said they believed they were not legally required to keep up with spending requirements.

During House debate on the bill, Del. John Bohanan Jr., the St. Mary's County Democrat who sponsored it, singled out Talbot as being the No. 2 county in wealth per person in Maryland but last out of 24 in funding per student.

The difficulty facing state officials as they entered this year's legislative session was that their only means of enforcing maintenance of effort was to deduct money from a jurisdiction's future education aid. In effect, the only way they could penalize the counties was by hurting the schools they were trying to support.

With the blessing of House Speaker Michael E. Busch and Senate President Thomas V. Mike Miller, a small group of influential legislators met to hammer out a common approach to the tricky problem of assuring county compliance without penalizing any jurisdiction unjustly.

The solution arrived at by the Senate and House sponsors — Sen. Nancy King and Del. Anne Kaiser, both Montgomery County Democrats, and Bohanan — was to use the state's power as tax collector on behalf of the counties.

Each Maryland county derives a large part of its revenue from the "piggyback" tax paid along with state income taxes. Under the legislation, the state could in effect treat a defiant county much as it would a parent who owes child support.

The comptroller's office could be instructed to "garnish" a county's tax revenues much as it would dock a deadbeat parent's wages. But instead of sending the money to the custodial parent, it would go to the county's school board to make up for the funding deficit.

Kaiser said tax withholding would be used only as a "tool of last resort" in cases of outright defiance of the state mandate.

The legislation spells out a formal process under which counties could apply to the state school board for waivers from the requirements. It also provides guidance to the school board on the criteria to use to judge whether a waiver is justified. Among the factors the board is told to consider are the county's tax base and its history of funding education in the past, a concession to counties such as Montgomery that have historically spent more than required.

Baltimore Sun reporters Liz Bowie and Annie Linskey contributed to this article.

michael.dresser@baltsun.com

Copyright © 2014, The Baltimore Sun
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