The Maryland State Board of Education said Wednesday that Anne Arundel County government underfunded schools by nearly $12 million for the current fiscal year, striking down the county's appeal of an earlier ruling that it failed to meet a state-mandated funding requirement.

The requirement, referred to as maintenance of effort, says that counties must give school systems at least the same level of funding per pupil as in the previous year, adjusted for student growth.

In November, Anne Arundel Superintendent Kevin Maxwell indicated to the state board that the county had appropriated $556.1 million for the schools, about $12 million short of the maintenance-of-effort target. In December, interim state schools Superintendent Bernard J. Sadusky notified Anne Arundel government that it had not met the funding requirement, and in January the county appealed the ruling to the state board, stating that it appropriated $610 million, which includes $54 million for debt service in the schools' capital budget.

The state board, in its decision upholding Sadusky's ruling, cited an attorney general's opinion that debt service cannot be used in calculating the funding requirement unless the same appropriation had been used the previous fiscal year.

"In our view, the state Attorney General did not condone an artificial manipulation of the prior year's ... calculation, as occurred here, in order for a county to count debt service toward [maintenance of effort] in the first year that is included in the school system's appropriation," the state board wrote in its opinion.

The school system says County Executive John R. Leopold's fiscal 2013 budget proposal, which was unveiled April 16, would leave the school system with the same $12 million shortfall because Leopold used per-pupil calculations from his fiscal 2012 recommendation instead of those from the school system's request for 2013.

The school system pointed to recently passed emergency legislation that requires counties to use figures from the last time they met funding requirements, as well as legislation compelling the state comptroller to intercept money from counties and distribute it directly to the schools if counties fail to meet the funding requirement. The county will adopt its budget next month.

"We felt all along, and I've said all along, that the county is violating the law when it comes to maintenance of effort," said Maxwell. "We told them this last year when we spoke with them about the budget for [fiscal year] 2012, but they continued to do what they did, which was to violate the law and shortchange the children of Anne Arundel County."

Leopold said the state board's decision was "not unexpected" and added, "Unfortunately the recent legislative session exacerbated the problem of the state mandating level of education funding that crowds out other priorities of county government, whether we want to increase the number of police officers, firefighters, our health department, our libraries, aging and disabilities, all these other services of county government [that] are equally important to meeting the quality-of-life standards that our citizens have every right to expect."

Maxwell said that communication between the school system and county government must improve for more collaborative efforts in crafting the budget. "We don't have an excellent relationship with the county execcutive," he said. "Unless you're willing to communicate and collaborate instead of trying to control and drive things not under your immediate purview, you just can't move forward without that ability."

But Leopold said that communication is not the problem, adding that his fiscal 2013 budget proposal funds "the entire board of education request minus the nearly $34 million for pay raises."

"He looks at it from the narrow prism of his own budget," Leopold said of Maxwell, "but he's a part of county government. And if he wants to be a part of county government he has to understand that it's a matter of equity when you grant pay raises to school board employees while other county employees are taking pay reductions."

Anne Arundel chief operating officer Alex Szachnowicz said that in addition to the $12 million shortfall from the county for fiscal 2012, the school system was subjected to an additional $3.8 million penalty from the state as a result of the county failing to meet the state funding mandate but the recent emergency legislation "fortunately relieves us from suffering that additional $3.8 million penalty."