ANNAPOLIS, Md. (AP) — Gov. Martin O’Malley’s proposal to shift part of the expense of teacher pensions to Maryland counties prompted lawmakers on Friday to question whether the added cost should be factored into a state law that requires counties to maintain a certain amount of spending on schools.
Under O’Malley’s plan, about $239 million in new county expenses would not apply to their maintenance of effort requirements.
Delegate Theodore Sophocleus, D-Anne Arundel, questioned why the added pension expense would not be factored in when determining whether a county was meeting the requirement.
“If the shift is going to the county and the county will be responsible for paying the cost, it seems to me that that would
probably lead to the MOE being adjusted to absorb that change,” Sophocleus said during a joint meeting of the House Appropriations Committee and the House Ways and Means Committee.
Mark Collins, an analyst with the state’s nonpartisan Department of Legislative Services, pointed out that lawmakers could consider changes as they deliberate over the governor’s budget proposal.
“I think we’re a long way away from knowing exactly how it will all play out and whether or not there will be some sort of overlap with maintenance of effort,” Collins said. “As the bill stands right now, the counties will pay those costs and there’s no change to maintenance of effort.”
O’Malley, a Democrat, has proposed requiring local jurisdictions to pay half of the combined cost of teachers’ retirement
contributions and Social Security. The counties, which now pay all Social Security costs, pay one-third of the combined cost. The governor has included money to help counties make the transition, including about $111 million in new revenue from reducing tax exemptions for people who make more than $100,000.
Counties have had a harder time meeting the state’s maintenance of effort law in recent years because of the recession and its aftermath. The law requires a county to spend at least the same amount on a per pupil basis as the year before, so counties don’t go backwards in education funding. The state can withhold funding if counties don’t meet the requirement.
There are currently seven counties that are not meeting the requirement in the current fiscal year. They are Anne Arundel, Dorchester, Kent, Montgomery, Queen Anne’s, Talbot and Wicomico counties. Three are facing penalties in the next fiscal year, including Anne Arundel, Montgomery and Queen Anne’s.
The General Assembly created the maintenance of effort law in 1984 as part of legislation that increased the state’s
participation in K-12 education to make sure funding provided by local governments was not reduced.
Prior to fiscal year 2010, no county failed to meet the requirements for 15 years, but counties have been struggling in
recent years due to declining wealth bases.
“There may still be a couple of years ahead of us where the counties continue to have problems with their tax bases that may create some issues with maintenance of effort,” Collins said.
The Maryland State Department of Education has identified flaws with the law, and it has asked the General Assembly to fix them.
For example, the department says the law has become subject to manipulation by counties, enabling them to avoid paying what they should. Seven counties ignored seeking waivers from the department for fiscal year 2012, even though they are funding schools below the maintenance of effort law.
(Copyright 2012 by The Associated Press. All Rights Reserved.)