Montgomery County Taxpayers League

The Voice of Taxpayers of Montgomery County, Maryland

Public Schools

County, Schools Arrive At Plan For Fully Funding Schools’ Budget

From BethesdaBeat.com May 15, 2017:

“The Montgomery County Council agreed to supply the county’s public schools with $1.663 billion during fiscal 2018, enough when combined with state and federal aid to cover the $2.522 billion spending plan backed by the school board….The $1.663 billion funding level suggested by the county executive is about $19 million above the state-required minimum…The council is expected to finalize the MCPS budget later this month.”

Notes from the meeting of March 22, 2017

Topic: “The FY 2018 Montgomery County Budget and what it means for County Residents”

Speaker:   Jennifer Hughes, Director
Office of Management and Budget, Montgomery County

Wed., March 22, 2017  –  7:00 – 9:00 pm
Council Office Bldg. (3rd Fl. Conf. Rm.), 100 Maryland Ave., Rockville, MD 20850

Free and open to the public

Here are the 9 questions sent to the speaker in advance of the meeting and the answers supplied by the speaker at the meeting:

Q1.  Moody Analytics predicts that reductions outlined so far by the Trump administration would reduce employment in our region by 1.8%, personal income by 3.5% and lower home prices by 1.9%.  These reductions might affect Montgomery County even harder given the presence of several federal agencies and tens of thousands of employees in the county.  The budget has been touted as a “cautious” budget.  Is there room in this budget to handle what could be deep cuts later in the year?

A1. The proposed Federal budget suggests major cuts in Federal programs and employment, which will affect the county significantly. The county is home to many Federal agencies (Nuclear Regulatory Commission, National Institutes of Health, etc.). There are approximately 50,000 federal employees in Montgomery County. The county has not made any serious efforts to analyze the effects of the Federal budget so far and will wait until the federal budget picture becomes clearer.

Q2.  Can you discuss the major sources of revenue for the County, and comment on the percentage contribution of each and their volatility (unpredictability) for the last 5 years?  Are the revenue projections that underlie this budget realistic?  How so?

A2. The major source of revenue is property tax which accounts for $1.8 B (28.7%) of total revenue followed by income tax of $1.6 B ( 25.3%) and Intergovernmental which is State and Federal funds of $1.1 B almost all of which goes to the Montgomery County Public Schools (MCPS). The rest of the revenue pie consists of transfer and recordation taxes, charges for services, fines and miscellaneous and other taxes.

As to revenue projections, so far these projections have been valid.

The county’s bond rating has remained at AAA, the highest possible, allowing the county to borrow at a rate less than 1 percent. Much of the bond revenue goes to finance capital projects such as school buildings and police and fire stations.

The County Executive’s highest priorities are education and public safety. For FY 2018, 49.6% of the budget is for MCPS 12.2% for public safety and 8.4% for debt service.

Q3.   What did the property tax increase of last year actually accomplish?  Could you list the programs towards which this increase was applied and did these programs achieve the ends for which they were intended?  Given that the tax increase raised the base for these programs, how are these funds being spent in the FY 2018 budget or are these funds being used elsewhere?  

A3. Most of the tax increase went to MCPS where the Maintenance of Effort funding has remained static for at least 5 years. The increased funding was able to decrease class size by 1, though the results of reducing class size will take some time to show up.

For FY 2018, the County Executive has recommended that the property tax rate be decreased but because property values are going up, there will be a small increase in property tax revenue.

Q4.   When will we see a sunset of the energy tax which we were promised was temporary with a 2-year life ending in 2012? It is now 2017 and the energy tax lives on.  It is true that the County Council has reduced it somewhat by nibbling at the edges but the promise has not been kept.  What gives?

A4. The energy tax increase, enacted in 2010 brings in over $200 million in revenue. One advantage of this tax is that it is very broad and includes entities that pay very little or no tax such as the Federal Government and non-profit groups. There will be a problem if this tax is reduced or eliminated as it currently funds many programs. While the speaker did not address this, it is clear that a tax, once levied never goes away as this “temporary” tax increase now funds permanent programs.

Q5.  What is the rationale for increasing the MCPS budget above the maintenance of effort level, after the huge increase provided last year?  In the absence of a strategic plan to close the achievement gap, how is the Executive assured that continuing the extra spending will make a difference in academic performance?  How much of the increase for MCPS is directly related to employee salaries and benefits?

A5. About half the county budget goes to MCPS which has grown by 2,000 new students annually over the last several years. Of the entire State student population, Montgomery County accounts for 30% of the increase every year; which is the equivalent of one high school per year. This increase in student population is more than that of any of the other 23 school districts in the State. A question was raised that it appears that 25,000 of our total student population are undocumented. The number was said to be highly suspect as there are only 23,000 students in the system who qualify as English for Speakers of Other languages (ESOL)and this includes those who are here legally.

The MCPS budget is supplemented by over $250 million in additional county funds that are used for police officers in schools, nurses, health aides, debt service for school construction, IT modernization, etc. This funding does not appear in the MCPS budget.

Q6.   Given that 70+% of the county budget funds county salaries and benefits, what is the pay raise this year and how much will this pay raise alone increase pension costs over the next 10 years?  Given the collective bargaining process where the unions are much more successful in bargaining than the Administration and given the tilted playing field of arbitration, is there a likelihood that the County Executive will push to change the arbitration process that failed in the Council last year? 

A6. The pay raise for fire, police and Montgomery County Government staff is 2% for COLA, 3.5% for within-grade increases and 3.5 % for longevity. This was questioned by audience members as excessive compared to the private sector in the county.

As to the collective bargaining process and the need for public participation at least at the stage of “opening offers” and later before the “final” decision, the response was that the public might not find the process too interesting.

Q7.  Would the county consider including civics/citizens groups in the budget formulation process so that ordinary citizens and taxpayers have greater input into how their money is spent?  Also, has the County considered asking for representation in the budget formulation process for MCPS, given that it is close to half of the entire County budget.

A7. The County Executive has been very transparent and has held many meetings open to the public where he has listened to the public’s ideas on the budget. The question was raised as to why there could not be civic representation in the budget formulation process at the agency level before decisions were made by OMB and the County Executive. It was suggested to the speaker that public input could be useful in setting performance measures for the budget year linked to strategies and spending. Most performance measures are “outputs” and not “outcomes”. A discussion ensued as to whether county programs are developed and funded without performance measures established at the outset.

Q8.  The County Executive supported a 4.5% salary increase last year for the WSSC, a $1 billion bi-county enterprise with little oversight and no Inspector General.   In light of a benchmarking study last summer that showed higher than necessary staffing, and weak controls over high fixed cost reliability of service activities, and water rates that are much higher than Fairfax County for residences and businesses, how does the Executive justify a 3.5% spending increase this year.   Why is there not a freeze on spending until new cost controls are implemented?

A8. The WSSC is a bi-county organization which means that both counties have to agree on the budget proposed by the WSSC. If there is no agreement, the budget as proposed by the WSSC goes into effect automatically. Also there is quite a bit of oversight in existence at present by 4 entities – each of the county executives for Montgomery County and Prince George’s County as well as the county councils of both counties.

Q9.   Does every major department in the County Government have a strategic plan in place?  For those that have such plans, why can’t the published budget for the department include a cross-walk of the budget request to the strategic plan so that the public can see how much planned spending is related to strategies, how cost-effective those strategies are, and how much spending is for non-strategic programs and overhead activities?

A9. Will think about it.

“Will the Montgomery County delegation fight for us?”

From “The Seventh State“:

“In 2010, almost all MoCo state legislators promised to oppose a shift in their election campaigns.  But just two years later, Governor Martin O’Malley proposed a partial pension funding shift, backed by both the Speaker and the Senate President, and most MoCo lawmakers voted to support it.  The cost of the shift to the Montgomery County Government increased steadily from $27 million in FY 2013 to $59 million this year, with $6 million offset by the state….. MoCo taxpayers get back just 24 cents for every dollar in taxes they pay to the state.  The state average for all residents is 42 cents.”

Questions for the meeting of December 14, 2016

Topic: “The FY 2018 Proposed Budget for the Montgomery County Public Schools

Speaker:   Dr. Jack Smith, Superintendent, Montgomery County Public Schools

Dec. 14, 2016 — Free and open to the public — 6-7:30 pm. —  Rockville Public Library

  The following questions have been sent to Dr. Smith in advance of the meeting

1.  What are the costs related to the top three academic strategies – Achievement Gap, 21st Century Education and Special Education for FY 2018.  What percentage of increased spending is for these 3 strategies? 

2.  Data from prior superintendents and reports by the Council’s Office of Legislative Oversight (OLO) show that MCPS has expended an additional $2,000 per student annually in “targeted” elementary schools to reduce class size and provide supports to low-income learners.  However the achievement gap by student race, ethnicity and income continues to persist and has widened on several measures of college readiness, such as SAT and ACT performance.   How many schools did not meet district-wide performance targets?  Have you set improvement goals for these schools for FY 2018?  As you have highlighted narrowing the achievement gap as a major goal, would you consider sponsoring an independent review by outside specialists of gap closing strategies to determine which approaches are cost-effective – with a report to the public?

3.  Will you consider charter schools as a means of closing the achievement gap?  A review of Baltimore schools in Freddy Gray’s Sandtown neighborhood showed a charter school (Empowerment Academy) not only out-performed his public school (New Song), but out-performed two elementary (Greencastle and Strathmore) and two middle schools with high FARMS rates in Montgomery County – Benjamin Bannecker and Argyle. (see 5/18/15 study posted on MCTL web site).

4.  Will you use Department of Education standards to decide if there is reasonable evidence to deploy a program countywide.  For instance have the Choice Program and the Middle School Magnet Consortium met their performance goals?  If yes, will they be expanded? Will you reprogram funds if goals for these and other programs are are not reached? 

5.  Are performance target improvements planned for special education students in FY 2018 separate from the at risk population at large? How do the marginal costs to achieve these improvements compare to the marginal costs for at risk students in the general student population for the same measures?

6.   Given that the mandated Maintenance of Effort law may not be able to cover both the program needs of our school children and the salaries and benefits of staff which account for 90 percent of the MCPS budget, will you rein in labor contracts so that teacher’s salaries and benefits match more reasonably with their counterparts in Howard and Fairfax counties?

7.  How does your FY 2018 budget manage non-instruction overhead ?  Have you considered benchmarking this against other school systems?  For example, the overhead rate at large school districts in California average 32%.  For MCPS it was 45%  in FY 2017.  Lowering this overhead could result in the hiring of thousands more teachers to lower class size and narrow the achievement gap.  Will you use the expertise of the business community to advise on administrative costs?  Will you consider consolidating administrative functions with those of the Montgomery County government.

8.   Language immersion programs are very popular and wildly over-subscribed.  To open the program to a larger school audience, have you considered innovative solutions such as partnering with universities that provide video classroom learning in a wide range of languages.   

Questions for the of meeting of November 16, 2016

Free and open to the public

Topic: “What Factors will Shape the FY 2018 County Budget?”

Speaker: Steve Farber, Council Administrator, Montgomery County Council

Questions sent to the speakers in advance of the MCTL meeting of November 16, 2016

1.  Will the results of the national elections affect the projections for FY 2018 revenue and spending for Montgomery County?

2.  What do you project to be the revenue source mix for FY 2018 among property taxes, income taxes, grants and contract, fees and other?  Are there policy options in place for increasing the less volatile property tax share?  Is it likely that there will be another Charter busting property tax increase?   How could other revenue sources be boosted to match Fairfax County’s approach?

3.  Given that the Wayne case decision has been incorporated into the projections for FY 2018, will ITOC credit refunds, faster reassessments for property improvements, and collections of overpayments made to municipalities affect the revenue picture positively?  By how much?

4.  Other than spending increases that are likely to exceed the CPI such as negotiated salaries and benefits for MCPS and county employees, and debt service, what other spending increases are likely?

5.  With the FY 2017 funding of MCPS of $90 million over the Maintenance of Effort requirement, by how much will this increase the baseline of per pupil costs for FY 2018?  Given MCPS cost projections for FY 2018, is it likely that funding for MCPS will exceed the MoE limit once again?

6.  What are some of the bills passed at the last legislative session in Annapolis that will affect the Montgomery County budget in FY 2018 –  both positively and adversely?

 

“Is Maryland building ‘Cadillacs or Buicks’ for its new public schools?”

From the Maryland Reporter website of July 7, 2016:

“In a heated discussion with the head of the [state] school construction program, Gov. Larry Hogan and Comptroller Peter Franchot aired serious concerns about the state’s spending on public school projects at Wednesday’s Board of Public Works meeting.  “We can’t just keep shoveling more and more money without accountability,” Hogan said.  “The taxpayers are getting pretty frustrated with the results.”

“Biggest tax hike since 2009 is now official in Montgomery County”

From the Washington Post of May 26, 2016:

“The Montgomery County Council gave final approval Thursday to a $5.3 billion budget that includes the biggest property-tax hike in seven years, trims pay raises the county had promised to unionized workers and pours record funding into the school system….The budget, which takes effect July 1, includes a nearly 9 percent property-tax increase that will add $326 to the average residential tax bill. It is also supported by a rise in recordation taxes that will add $455, for example, to the cost of buying or selling a $500,000 home.”

Feel free to comment below.

“Montgomery County homeowners face biggest tax hike in seven years”

From the Washington Post of May 19, 2016:

“The Montgomery County Council, citing the unmet needs of a school system facing explosive enrollment growth and a widening academic achievement gap, voted Thursday to raise the average residential property tax bill by 8.7 percent — the largest increase in seven years.

The tax hike required a unanimous 9-0 vote because it exceeds the charter limit on tax revenue the county can collect each year. That revenue will help underwrite a $5.2 billion operating budget for the fiscal year that begins July 1, with about half of the money resulting from the tax increase going to Montgomery County Public Schools.

The council set the property tax rate at $1.02 per $100 of assessed value, 3.9 cents above last year’s rate. With rising assessments, it means that the average annual residential property tax bill will rise $326, to $4,075.”

Feel free to leave your comment below.

 

“County Council Votes to Cut Pay Increases, Reduce Class Sizes”

From the Bethesda Beat May 16, 2016:

“The council then pledged unanimous support of a $2.45 billion schools operating budget that is nearly $90 million more than the minimum required by state law…Council members made clear the spending approved Monday is dependent on the council’s approval of a 6.4 percent property tax increase and an increase of the county’s tax on home sales,…“We are about to do three things that some of us said we would not do again,” council member Roger Berliner said, referring to the proposed property tax increase above the county’s charter limit and home sales recordation tax increase as well as funding the school system over the minimum required by the state’s maintenance of effort law.”