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Baltimore's progress at risk

Mayor Stephanie Rawlings-Blake and other Baltimore leaders are mobilizing to fight some of the cuts in state aid to the city in Gov. Larry Hogan's budget. They're not alone among local leaders in objecting to the new governor's spending plan, but they have a strong argument that Baltimore is bearing a disproportionate share of the pain.

It's not that Governor Hogan is being vindictive against a jurisdiction that voted overwhelmingly for his opponent. After all, state aid to some of the counties that form his base — Carroll and Kent — is actually declining more on a percentage basis than it is in Baltimore City, and aid is actually going up in the Democratic strongholds of Montgomery and Prince George's counties, though not by as much as the state's baseline budgeting formulas would have suggested or as local officials there were expecting.

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But Baltimore is expected to lose about $41 million in state aid this year. That's not a reduction in the expected increase, it's an actual honest-to-God cut, and it is in dollar terms more than six times greater than what any other jurisdiction is experiencing. (Overall, aid to local governments is actually going up by about $30 million statewide.) The vast majority of that reduction — about $35.5 million — is in aid to public schools. That's the equivalent of the salary and benefits of about 420 teachers, and it's hitting a system that, based on state calculations, is already funded at nearly $2,000 less per pupil than is needed to provide an adequate education. The cut is being driven by three factors — two in the governor's control, one not — and in all three, Baltimore fares at or near the worst among the state's jurisdictions.

Governor Hogan is proposing to eliminate this year and cap in the future an inflation adjustment baked into the state's formula for calculating school aid. That poses a bigger problem in the jurisdictions where the state covers the highest percentage of education costs because it represents a bigger share of their overall budgets. Baltimore is more reliant on state aid than any jurisdictions save Caroline and Wicomico counties, and the governor's proposal would cost the city $10.2 million.

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Mr. Hogan's decision to reduce funding for something known as the Geographic Cost of Education Index, or GCEI, is costing the city about $11.6 million, the third most in the state behind Prince George's and Montgomery counties. GCEI is meant to compensate jurisdictions where the cost of providing a quality education is high, primarily because of the cost of living.

Thomas A. Firey, a fellow at the conservative-leaning Maryland Public Policy Institute, posted an essay today arguing that GCEI amounts to "alms for the rich." He included a scatterplot graph showing a strong correlation between a jurisdiction's wealth and its score on the GCEI — that is, the richer the jurisdiction, by and large, the more it got through that formula. The real outlier is Baltimore, which has the second-highest score on the GCEI, behind Prince George's County, despite having the second-lowest median household income in the state. (Montgomery County gets more GCEI money than the city because of its larger enrollment.) If anyone deserves a subsidy based on the GCEI, Mr. Firey writes, it's Baltimore.

Nonetheless, Baltimore is losing out in the state's main distribution of educational aid because it is, based on another formula, getting richer — or at least less poor — compared to other jurisdictions. One of the key components of Maryland's system is a mechanism to base the amount of state aid on the wealth of the jurisdiction, with poorer counties getting more and richer counties less. Baltimore saw virtually no change from last year in its residents' net taxable income, which makes up half of the calculation, but it did see an increase in its assessable tax base that was greater than the statewide average. Thus, although Baltimore remains near the bottom in terms of wealth per pupil, its education aid would have gone down by $13.7 million without any action from Mr. Hogan.

The reality that the state's wealth calculation formula doesn't take into account is Baltimore's sky-high property tax rate. It is seriously out of line with surrounding counties and thus a major disincentive for people to buy or improve property here. The recent increase in the assessable base is likely a result, at least in part, of Ms. Rawlings-Blake's steady efforts to chip away at the rate. If she keeps at it, Baltimore may eventually enter a virtuous cycle in which increases in population and property values enable the city government to take on a larger share of the burden to fund K-12 education. But we're not there yet.

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Meanwhile, Baltimore City continues to post impressive gains in its high school graduation rate, even as state standards have gotten tougher. According to new data from the Maryland State Department of Education, the city's four-year graduation rate is now nearly 70 percent, still well below the statewide average but a massive improvement from the 43 percent graduation rate when the state took on a greater role in running and funding the system a generation ago.

Mr. Hogan has said he wants Baltimore to be an economic engine for the state, and there are signs that it's heading in that direction in terms of its development of both physical and human capital. But the cuts in Mr. Hogan's budget effectively provide the city with a choice of either accepting reduced support for education or abandoning efforts to cut the property tax. Neither would be wise. We hope the mayor, legislators and the governor can find a way to restore these cuts and preserve the progress Baltimore has made.

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