In his weekly message to the community, Montgomery County Executive Marc Elrich addressed funding for MCPS schools. His full statement below:
“Our Montgomery County public schools are some of the best in the nation and an important reason why people want to live here. Funding for the schools is about half of the County’s operating budget (and a big portion of the County’s capital budget). The recently approved budget for the Montgomery County Public Schools (MCPS) has been raising questions and concerns.
I am concerned by the school board’s decision to fix its budgeting shortfall by increasing class sizes. My staff and I are in conversations with MCPS staff and County Councilmembers about possible solutions. At least part of the issue is tied to the escalating cost of health care for MCPS employees and retirees. When I finalized my recommended budget in March, this was not forecasted to be an issue. However, by the time the County Council passed the budget in May, there was a $22 million hole in Fiscal Year 2024 and a $22 million hole for FY25, and there may be more as well.
So, what caused this? From conversations with school district leaders, I understand that inaccurate financial forecasting and inflationary costs for health care coverage are a big part of it. Actuaries looking at MCPS finances did not anticipate the amount being spent currently and what will need to be spent. We are working with MCPS staff to improve their cost projections for the coming years. In the meantime, these are real costs that must be paid – these are health care costs for current employees and retirees. That is why I will be advocating that we shift some of our “pre-funding” dollars that are currently allocated for a fund for future retiree health care costs to pay for current healthcare costs. I explain this more in my newsletterfrom a few weeks ago.
This is a solution that would help close the cost gap without jeopardizing health care funding for current employees or current or future retirees.
We have known that when Federal funds ran out, we would face the same demands without the additional resources we need. That is why I had proposed a property tax increase last year that was targeted solely for education funding. While I appreciated the County Council supporting some tax increase, it supported an amount too low and instead directed the school system to use the last of one-time Federal funds to meet ongoing needs. The Council and I knew then that we would be facing this problem this year, and we will continue to face it going forward.
I am cognizant of minimizing tax burdens on our residents. Still, there is room to expand how much we collect from households with the means to pay more and from companies contributing a lower share of taxes compared to what they pay in neighboring jurisdictions. Efforts to pass fair share tax legislation failed at the State legislature earlier this year, and was not supported by the Council. However, we will renew those efforts for the next session.
Other measures I support would help increase revenue in every Maryland county. We are long overdue for having the authority to generate meaningful revenue for our desperately needed transportation projects as has been done successfully in Northern Virginia. They have authority to create a different tax rate for commercial property versus residential property so the commercial tax rates can be increased to support transit investments. The commercial property owners want the increased investment because they know the funds will be used to support transportation infrastructure (such as the Silver Line in Northern Virginia is supported by taxes there), and that infrastructure makes their projects more desirable. A similar system here would free up taxpayer dollars for other projects, including for schools. You can read more about this idea in my newsletter from March 1.
Look around us and you will see neighboring jurisdictions in Maryland, Washington, D.C. and Virginia are in the process of raising taxes to offset higher operating costs. We have avoided that this budget cycle, but we need to be sure that we continue to invest in our County.
Our school system has a stellar reputation, and it has been struggling to maintain its high quality of education since the last recession, when we had to reset the spending. We have not yet reinvested in the same way we did before. If we want to maintain the quality of our schools, we must invest in our schools, students and teachers.
Larger classes, as explained in an MCPS video from 2017, are a way to spend less money, but they place a burden on educators. The pandemic has created some new problems and highlighted older ones. We need to support our teaching staff.
The school district is a poster child for what happens because of inflation. Costs are rising beyond expectations, and we must react to that in real time. If this is the new normal regarding health care costs, we will have to adjust our thinking regarding how we fund the schools. The consequences of not addressing those costs will inevitably impact education in the County. Additionally, investing in our school district helps our home values and the quality of life for everyone. We cannot adopt an approach of compensating for increasing health care costs by cutting investments in our classrooms.”
