Saved by stimulus

The Baltimore Sun

Gov. Martin O'Malley announced yesterday that he has canceled plans to lay off 700 state workers and slash millions from local school budgets, saying federal stimulus funds have saved Maryland from some of the most painful belt-tightening decisions proposed in recent weeks.

Under the spending bill signed by President Barack Obama this week, Maryland schools will receive more than $720 million extra through the state and $400 million directly from Washington over two years, officials said. Baltimore will see the largest increase - $84 million - next academic year over what O'Malley had initially proposed.

"We will be able to make all our local school systems whole," O'Malley said, flanked by the presiding officers of the General Assembly and about a dozen more lawmakers. In recent weeks, legislators and officials from the state's poorest areas had reacted angrily to O'Malley's lean 2010 budget, which included $140 million in savings by cutting funds to schools. The biggest cuts had come from the two districts with the neediest students: Baltimore City and Prince George's County.

Yesterday, those critics were singing a happier tune. "Now it looks very good for the next two years," said Del. Curtis S. Anderson, a Baltimore Democrat. But Anderson said he remained "disappointed" that those budget trims were ever on the table. "The idea of cutting education I found somewhat appalling in the first place," he said.

Baltimore schools chief Andres Alonso praised state leaders yesterday for moving faster than their counterparts in other states to protect education from the economic downturn. "The governor and the legislature moved with tremendous speed to safeguard the interest of the students of Maryland, and they deserve tremendous credit," he said.

Alonso said the influx of money will free him from having to make painful cuts to schools. He still plans to downsize the central office to offset a budget shortfall resulting from a 2007 state decision to temporarily cap inflation increases to school districts. "The dollars are not going to be used to safeguard jobs," he said. "The dollars are going to be used to improve services to kids."

William R. Hite Jr., interim superintendent in Prince George's County, said the additional $72 million headed to his district will prevent furloughs and an increase in first- through third-grade class sizes.

"We're elated," Hite said, adding that O'Malley "took some real leadership in realizing his commitment to public education."

Even with the roughly $3.8 billion in total stimulus funds funneled to Maryland, the state still faces a deficit of more than $600 million at the end of the 2011 fiscal year, according to the governor's office. And state officials said yesterday that they expect a revenue write-down of about $300 million in March. If accurate, that would mean Maryland tax revenues will have come in this year at well over $1 billion less than expected, underscoring the impact of the national recession and possibly requiring future reductions.

"If things don't recover, in 18 months, we'll be back where we are and we'll be facing those cuts again," said Del. Murray D. Levy, a Charles County Democrat regarded as a budget expert in the legislature.

Senate President Thomas V. Mike Miller, a Calvert County Democrat, yesterday commended O'Malley's "focus on education."

The governor committed yesterday to maintaining a mandatory minimum 1 percent increase for every school system's budget for the next two years. And he pledged to fully fund for the first time a program that appropriates extra state education dollars to districts such as Baltimore where the cost of educating students is higher.

Both categories of state aid to education had been in jeopardy under O'Malley's initial budget proposal, which gave funding increases to some wealthy counties such as Montgomery while the neediest districts were subject to the largest cuts.

O'Malley had proposed asking local school districts to equally share with the state the cost of educating special-needs students who must be taught in private schools. The state currently pays for 80 percent of those costs - and O'Malley said yesterday that he would maintain that proportion for the next two years, thanks to federal funds. He is proposing a 50-50 split starting in the 2012 fiscal year. Alonso said that will give him time to create programs to keep more special-education students in public schools and negotiate better contracts with private schools.

In response to O'Malley's earlier proposal for cuts, more than 20 advocacy groups in Baltimore joined together in protest and were planning a rally in Annapolis on March 3 with nearly 3,000 participants. One of the organizers, Carol Reckling, said yesterday that the groups are now considering turning the event into a celebration.

"We want to thank the governor for responding to the call we made as parents, teachers and citizens," said Reckling, executive director of the Child First Authority, which runs after-school programs at a dozen city schools. "We're really excited."

Another of the advocates, Bebe Verdery of the American Civil Liberties Union of Maryland, praised Obama and federal lawmakers for making education such an important part of the stimulus. "The federal government has come to the rescue," she said.

Besides K-12 education, O'Malley said federal funds will enable Maryland to increase funding to community colleges by more than $50 million over the next two years and restore some cuts to health, energy-assistance and public safety programs.

The governor's revised budget still must be approved by the legislature and will still contain "great challenges as we move forward," said House Speaker Michael E. Busch, an Anne Arundel County Democrat. He noted that while widespread layoffs were avoided, state employees will get no raises or cost-of-living adjustments.

Health advocates had hoped that a federal-funds infusion could allow Maryland to move forward with a planned expansion of Medicaid access to low-income adults with no children. "I don't think we're going to be able to do that this year," O'Malley said yesterday.

Baltimore Sun reporter Julie Bykowicz contributed to this article.

FEDERAL FUNDS TO THE RESCUE

The state will use stimulus funds to ease general cuts in several ways:

* Cancel plans to lay off 700 state workers.

* Restore some money to health, energy assistance and public safety programs.

* Increase community college spending by about $50 million through 2011.

Education

* Prevent changes in funding formulas that would have disproportionately hurt the neediest districts.

* Restore the most money to Baltimore City and Prince George's County, which faced the biggest cuts. Here is a breakdown by district for the fiscal year that begins July 1:

Baltimore City $84 million

Anne Arundel County $23 million

Baltimore County $33 million

Carroll County $7 million

Harford County $9 million

Howard County $10 million

Montgomery County $50 million

Prince George's County $72 million

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