By now, I hope that you have heard about what Kirwan is. That is the short name for the Commission on Innovation and Excellence in Education, which is the multi-billion dollar overhaul for how education will be funded in Maryland. As part of my duties for Talbot County and the Maryland Association of Counties (MACo), I have followed education legislation closely, especially since the “Maintenance of Effort” (MOE) law was passed in 2012.
I have attended all of the smaller funding workgroup meetings from July through October. After the full Kirwan Commission issued their recommendations last year, but never discussed how it would be paid for or how it might be split between the State and Counties, this workgroup was formed to make funding recommendations to the full commission. That commission will reconvene in a couple weeks and then issue their final recommendations to the legislature in Annapolis for the 2020 session. One thing to keep in mind is that it was not the charge of the Kirwan commission to address actual curriculum in our school systems. I would encourage you to read the full report online to find out specifically the policy areas they addressed.
The first six meetings consisted of background information on the education recommendations and how funding formulas work. I wrote in depth on that subject for the Star Democrat in their September 1st edition. The charge of this group was to figure out how to split cost equitably between the State and Counties and how it could be paid for by considering various formulas and data.
The vast majority of the conversation throughout was on the “counties’ ability to pay.” There was very little, if any, discussion on how the State was going to be able to afford their share. The sense was that the counties would be able to contribute more and there were not any numbers even provided to the workgroup until just one week ago, at their October 8th meeting. Then they were expected to vote on the entire package on October 15th, only having seen the final numbers for a few hours.
The articles that have been written across the state so far have reported that the State would fund about $2.8 billion more for a total after 10 years of $10.2 billion per year. The counties would fund an additional $1.2 billion for a total by 2030 of about $9.2 billion. This is a bit misleading because current 2020 funding from the counties combined is $6.7 billion, for an actual increase by 2030 of $2.5 billion.
So, why is there a discrepancy between the two numbers? The current MOE law mandates an automatic escalator for counties that have funded below the statewide average. Therefore, costs were going to go up significantly every year anyway. The total projected by DLS (Dept of Legislative Services) rose to $8 billion by 2030. The figures that are being reported are based on that number of $8 billion growing to $9.2 billion paid for by the local jurisdictions. But it only tells half the story.
Since Tuesday, MACo has recalculated what that MOE number would actually be under current law based on using the best data available. DLS used a “trendline” assumption. Since many counties have contributed well above what was actually required, this was not the most accurate number to base a projection on 10 years out. The MOE amount required for all 24 jurisdictions combined is $7.1 billion, not $8 billion. This changes what the counties increase is from $1.2 to $1.9 billion in additional state mandated increases.
This is the largest unfunded state mandate placed on the counties in history. If the State leaders think that it such a good idea and are really committed to doing all these things for the schools across the state, maybe this should just be a STATE plan and let them pay for it. I’m not sure why we are all taking for granted that this has to be funded by the county governments at all.
But what people really want to know is how much their taxes may have to go up to pay for it. I can’t tell you what the State’s plan is to pay for their $2.8 billion share. All I can speak to are the limited revenue sources for the counties and our only real means to pay for the increase is through property tax. Keep in mind, these amounts are only to pay for the local share, the State still has to figure out to pay their part, which may require additional State tax increases.
Why would the counties be forced to raise taxes? The numbers are so big for every county, that there isn’t any way to “cut” our way to be able to absorb these State mandated increases. County services would be almost non-existent in many cases. Most counties are maxed out in their income tax rate at or near 3.2%.
Let’s talk some numbers. In Talbot County, currently we fund our Board of Education $42.5 million per year, which accounts for over 70% of their total budget and about half of our total county budget. The MOE law, based on the MACo calculation over the next 10 years mandates a funding increase to $48.3 million per year, an increase of 13.6%. Under the Kirwan recommendations, that number balloons to $75.2 million per year, a total increase of 76% by the year 2030.
Assuming that the increased spending is funded only through property taxes, what might that mean to your tax rate? Currently our rate is just under 64 cents per hundred dollars of assessed value. Using the median house value in Talbot of $350,000, that homeowner is paying $2230 in property taxes each year. Under the Kirwan funding requirement, that same homeowner could pay an additional 48 cents per hundred or $1685 for a total of $3915, a potential rate of $1.12.
You may also ask, but Talbot (along with several other counties in the state) has a revenue cap on the property tax, how can you raise it? That does not apply when it comes to education spending. The MOE law of 2012 permits/requires a county to break their tax cap to pay for increased funding for education only.
While the numbers are big for every county in the State, Talbot’s numbers are completely out of step with other jurisdictions. The next highest local percentage (MOE + Kirwan) increases are Baltimore City at 43% and PG County at 42%.
On the Eastern Shore, Kent is the next highest at 38%. They currently fund $18 million per year, under MOE, that rises to $20.2 million and under Kirwan, the total becomes $29.7 million. This could equate into a property tax increase of 38 cents, from $1.02 to $1.40.
For Caroline, the increase is 33%. Current funding is $15.2 million, under MOE that actually decreases to $14.6 million and under Kirwan, the total becomes $23.7 million. This could equate into a property tax increase of 32 cents, from 98 cents to $1.30.
In Dorchester county, the increase is 23%. They currently fund $20.1 million per year, under MOE, that rises to $24.4 million and under Kirwan, the total becomes $26.9 million. This could equate into a property tax increase of 23 cents, from $1.00 to $1.23.
We, the counties are not being given a choice and very little voice, when the legislature in Annapolis will vote on these recommendations and mandate that the counties must pay for them. This is not a judgement on whether we believe in better education for our children; this is just the reality of what it will mean to the average taxpayer across the State of Maryland.
Laura Price, a member of the Talbot County Council, serves on the executive board of directors for the Maryland Association of Counties (MACo). She is chairman of MACo’s Budget & Tax Committee and also serves on MACo’s Legislative Initiatives Committee.