Part L - EDUCATION

The General Assembly addressed concern over public school class sizes in Senate Bill 137/House Bill 187 (both passed), which establishes the Maryland Learning Success Program. This program provides funding to local boards of education to reduce class sizes to a maximum of 20 students for reading instruction in the first and second grades. Currently, the average elementary reading class in the State consists of 27.8 students, ranging from 22.5 students in Kent County to 36.5 students in Allegany County.

The Maryland Learning Success Program grant includes two components: a reading instruction component to reduce class sizes in the first and second grades and a professional development, materials, and facilities component. The reading component is based on the number of students enrolled in the first and second grade and 130% of the standard salary for a beginning teacher. Each board's share of the professional development component is determined by the State Superintendent, with the statewide amount capped at $3 million. Local boards are eligible to receive the professional development component for only three years (fiscal 2001 through 2003).

Beginning in fiscal 2003, a local board's grant may be reduced if the percentage of provisionally certified teachers exceeds 2%. However, the State Superintendent may waive or modify this provision if the local board demonstrates that it has made substantial efforts to reduce the number of provisionally certified teachers to less than 2% of the total number of teachers. To the extent that substantial efforts to reduce the number of professionally certified teachers are not made, State aid under this program will be reduced. Currently, 12 local school systems exceed the 2% limit.

To receive funding, local boards must submit a Maryland Learning Success Plan to the State Superintendent by October 1, 1999. The plan must (1) describe the local school system's intended use of State funds and federal class size reduction initiative grants; (2) specify how the funds will initially target higher-risk schools and schools that serve disadvantaged students; (3) include performance indicators to evaluate the success of the school system's class size reduction program; (4) include a statement of any funding increases provided from local sources since fiscal 1995 that have been provided for class size reduction; and (5) provide a strategy for reducing the number of provisionally certified teachers to no more than 2% of the total number of teachers.

A local board cannot receive a Maryland Learning Success Program Grant unless the school system expends its federal class size reduction initiative grants to reduce class sizes for reading instruction in the first and second grades. Beginning in calendar 2001 local boards of education must submit an annual Maryland Learning Success Report to the State Superintendent and the State Superintendent must provide an annual status report to the Governor and General Assembly. In addition, the bill requires the Special Study Commission on Class Size Reduction Programs to include in its report to the Governor and General Assembly the benefits and necessity of reducing class sizes for mathematics in public schools and reading instruction in the third grade.

State grants to local boards of education could increase by $10.3 million in fiscal 2001 under the program. This includes $7.3 million to reduce class sizes for reading instruction in the first and second grades and $3 million for program development, materials, and facilities costs. The following table shows the projected grant amounts for fiscal 2001 through 2004. The additional State aid under this bill will enable the local boards of education to hire 200 new teachers in fiscal 2001 and 1,000 teachers by fiscal 2005.

Due to increases in enrollments and the number of retirement-eligible teachers, Maryland is expected to experience an increase in the demand for public school teachers. According to the Maryland State Department of Education, an additional 10,000 teachers will be needed by 2001. House Bill 9 (passed) includes a series of provisions to enhance the State's ability to recruit and retain public school teachers.

House Bill 9 enables a public school teacher who has a standard professional certificate or an advanced professional certificate to claim a credit against the State income tax for up to $1,500 of tuition paid by the individual for graduate level courses required for maintaining certification beginning in fiscal 2001. Approximately 13,800 teachers are seeking either a standard professional certificate II which requires six credit hours of course work or an advanced professional certificate which requires a master's degree or 36 credit hours of course work. Teachers have three years to obtain a standard professional certificate II and ten years to obtain a master's degree. Therefore it is assumed that most teachers would take one or two courses each year in order to satisfy their certification requirements. The aggregate cost for these courses total about $11 million in fiscal 2001.

In addition, House Bill 9 provides several salary enhancements for teachers including a salary enhancement for teachers obtaining national certification, a signing bonus for teachers graduating in the top of their class, and a stipend for teachers working in reconstitution eligible or challenge schools. In addition, $5 million in grants for teacher mentoring programs is provided to local school systems.

Legislation enacted in 1997 established a State and Local Aid Pilot Program for Certification by the National Board for Professional Teaching Standards. It takes approximately one year to complete the certification requirements and around 75% of the teachers seeking national certification receive it. MSDE estimates that by fiscal 2000, 43 teachers will be certified. House Bill 9 requires the State to provide a teacher who has obtained national certification with a salary supplement equal to the incentive grant provided by the local school system up to a maximum of $2,000. The number of teachers obtaining national certification is projected to increase from 43 in fiscal 2000 to 500 (1% of the total number of teachers) by fiscal 2004. State expenditures would increase by $86,000 in fiscal 2000 and by $1 million in fiscal 2004. This provision was also included in Senate Bill 272 (failed) which did not pass the General Assembly.

In addition, the State must pay a salary signing bonus of $1,000 to an individual graduating from an institution of higher education in the top 10% of his/her class who remains employed as a teacher in a public school for at least three years. If the individual leaves employment with the public school system before the three-year commitment ends, the individual must reimburse the State for the cost of the signing bonus. It is estimated that 840 teachers would be eligible for this bonus in fiscal 2000, thus increasing State costs by $840,000.

Also, the State must pay a $2,000 stipend to a teacher with an advanced professional certificate who teaches at a reconstitution, reconstitution eligible, or challenge school. There are around 97 schools (12% of all schools) in the State that are reconstitution, reconstitution eligible, or considered a challenge school. It is estimated that 3,900 teachers would be eligible for this stipend in fiscal 2000, thus increasing State expenditures by $7.8 million.

House Bill 9 also provides up to $5 million in competitive grants to local boards of education to developed expanded mentoring programs. Funding priority is granted to programs in schools in which (1) 40% of the students receive free or reduced price meals; and (2) 50% or more of the teachers have five years or less of teaching experience or student achievement scores on local, State, and national assessments are at or below a satisfactory level.

In addition, House Bill 9 extends the probationary period for public school teachers to three years for those teachers who are not approved for tenure after the second year. For the probationary period to be extended, the teacher must demonstrate strong potential for improvement and be assigned a mentor. Under current State regulations (COMAR 13A.07.02.01) teachers serve under a two-year probationary period. During the probationary period, a local school system can refuse to renew a teacher's contract without reason or cause. After the two-year probationary period, the local school system must have cause for not renewing a teacher's contract for another year. Such causes include immorality, misconduct in office, failing to report suspected child abuse, insubordination, incompetency, and willful neglect of duty.

The General Assembly failed to pass Senate Bill 320 (failed) which would have established a 15-member Commission to Study Teacher Shortages in Public Schools in the State. The Commission would have studied the extent of teacher and other professional personnel shortages at public schools, the cause and effect of teacher shortages, how local school systems handle teacher shortages, the impact on student academic performances, and possible solutions to alleviate teacher shortages.

Legislation enacted in 1997 established a three-year pilot program to provide financial assistance to teachers seeking certification from the National Board for Professional Teaching Standards. Under current law, the State Board of Education may select up to 48 teachers to participate in the pilot program each year.

Senate Bill 273 (passed) extends this program to 2004 and authorizes the State Board to select up to 300 teachers to participate in the program each year. The National Board for Professional Teaching Standards charges teachers a $2,000 application and certification fee. Under Senate Bill 273, the State covers two-thirds of the fee with the county covering the remaining one-third. Teachers who fail to complete the requirements for assessment by the National Board must reimburse the State and county for any aid received under this program.

The National Board for Professional Teaching Standards is an organization of teachers and other education personnel working to advance the teaching profession and to improve student learning. As of November 1998, 13 teachers in Maryland had attained national board certification.

Senate Bill 391/House Bill 907 (both passed) address the growing problem of violence in schools by providing further protections designed to promote the safety of Maryland's public school students and employees. They add new offenses to those offenses committed by a child (an individual under the age of 18 years) that a law enforcement agency must report to the superintendent of schools of the school system in which the child is enrolled as soon as practicable after the arrest of the child. The new reportable offenses are: (1) various controlled dangerous substance offenses, beyond minor possession offenses; and (2) offenses relating to destructive devices. Under current law, reportable offenses by a child that a law enforcement agency is required to disclose to a local superintendent include crimes of violence, serious crimes for which a child over the age of 16 years may be tried as an adult, and certain handgun and weapons violations. Unless otherwise ordered by a court, this information that is given to a county superintendent is confidential and may not be made part of the child's permanent educational record.

The bills also expand the existing prohibition against molesting or threatening with bodily harm a student, employee, administrator, agent, or any other individual who is lawfully on school property to include those who are on a school vehicle, at an activity sponsored by a school that is held off school property, or on property that is owned by a county board and is used for administrative or other purposes.

The legislation further prohibits a person from threatening with bodily harm any employee of any institution of elementary, secondary, or higher education at home by any means, including in person, by telephone, or by electronic mail. This prohibition applies only to threats arising out of the scope of the employee's employment.

A person who violates these prohibitions is guilty of a misdemeanor and on conviction is subject to a fine or imprisonment not exceeding six months or both. The bills increase the fine from $1,000 to $2,500.

During the 1998 legislative session, the budget committees requested a report on the development of a funding formula for the State Library Resource Center (SLRC) which recognizes the dual function of the Enoch Pratt Central Library as both the SLRC and a local branch library in the Baltimore City library system. The State currently provides one-third of the funding for the SLRC, with Baltimore City providing most of the remaining funds. House Bill 601 (passed) establishes a funding formula for the State Library Resource Center that requires the State to contribute a larger share of the center's funding.

House Bill 601 sets out a funding formula for the SLRC using a per capita grant based on the State's population.

The funding formula will result in an increase in State support of approximately $3.1 million for the SLRC in fiscal 2001, increasing to $6.1 million in fiscal 2004 when the funding formula is fully phased-in.

House Bill 10 (passed) creates a 27-member Commission on Education Finance, Equity, and Excellence. This commission will conduct a comprehensive review of the State's current education funding system, examining (1) whether the current level of funding enables our school systems and students to perform at peak levels; (2) whether funds are equitably allocated statewide; and (3) whether additional funds should be provided through targeted grants or an increase in the base level of funding.

The establishment of this commission is in response to concerns raised by the local boards of education that the current funding formulas do no account for critical factors such as rapid enrollment growth, the increasing costs of special education services, and funding for student transportation services. Additionally, several major funding programs are set to abrogate in fiscal 2003.

An interim report of the commission's findings and recommendations is due January 1, 2000, with a final report due October 15, 2000. The commission will be staffed by the Maryland State Department of Education and the Department of Legislative Services.

Task Force to Study Alternative Educational Programs for Chronically Disruptive Students

House Bill 864 (passed) establishes the Task Force to Study Alternative Educational Programs for Chronically Disruptive Students. This Task Force will develop a comprehensive strategy for dealing with chronically disruptive youth. In developing its strategy, the Task Force will examine:

In early 1998, the Prince George's County Board of Education, the county government, and the National Association for the Advancement of Colored People (NAACP) signed a Memorandum of Understanding (MOU), thereby reaching agreements to serve as the basis for resolving the 25-year desegregation litigation that has involved the county board and the NAACP. The MOU prescribed that a comprehensive plan be prepared to define how the agreements reached among the parties would be implemented. The comprehensive plan was endorsed by the parties involved in the litigation on July 21, 1998, and then was submitted to and approved by the U.S. District Court.

The School Accountability Funding for Excellence legislation passed during the 1998 legislative session required that performance and financial audits of the Prince George's County school system be conducted. This legislation also established a management oversight panel (MOP) to monitor the progress and the implementation of the audits' recommendations for a four-year period. The audits, which were completed in July 1998, included 98 commendations and 298 recommendations.

House Bill 831 (passed) is emergency legislation that sets forth several changes in the management and authority of the Prince George's County school board. The bill requires the MOP to participate in the selection of a superintendent for the school system. In addition, the county superintendent must submit the annual school budget to the MOP concurrent with its submission to the county board. The legislation also requires that the county board notify the MOP before taking any personnel actions related to senior positions or substantial procurement actions. House Bill 831 also requires the MOP and the county board to develop and publish a protocol to improve the flow of information and communication between the MOP and the county board and county superintendent. Any breaches in the protocol must be reported to the legislative members representing Prince George's County.

This legislation also authorizes the MOP to hold executive sessions with the board, county superintendent, or employees of the board to discuss matters in which the MOP and the board may discuss separately in an executive session. Finally, the bill requires the MOP to report annually to the General Assembly on its activities.

Under current law, only ten counties may appoint a hearing examiner for certain school board proceedings. These counties include Anne Arundel, Baltimore, Baltimore City, Calvert, Carroll, Charles, Harford, Howard, Montgomery, and Prince George's counties. Of these counties, only Anne Arundel and Harford counties may appoint a nonattorney as a hearing examiner.

House Bill 609 (Ch. 104) authorizes all counties to have proceedings involving personnel matters, student discipline, or administrative cases heard first by a hearing examiner. House Bill 609 also requires that all local school boards, except Anne Arundel County, appoint an attorney as a hearing examiner for all personnel matters before a county board.

Senate Bill 744/House Bill 868 (both passed) establish a three-year pilot school breakfast program to provide funding for public and nonpublic schools that make an in-classroom breakfast available to all students in the school. To receive funds under the pilot program, at least 40% of the school's students must be eligible for the federal free or reduced price meal program. This program is expected to increase the number of students receiving a school breakfast thus improving student performance. Based on a similar program operated by the Abell Foundation in Baltimore City, student participation in the school breakfast program increased from 18 percent to 85 percent in schools with an in-classroom breakfast program. In addition, schools with an in-classroom breakfast program realized a 3 percent increase in student attendance (from 86 percent to 89 percent) and a significant decrease in the number of discipline incidents (50 percent reduction).

The State Department of Education (MSDE) would select schools to participate in the pilot program based on applications submitted by county boards of education on behalf of their local schools (or based on applications submitted by the sponsoring agency on behalf of a private school). Assuming 50 schools are selected to participate in the pilot program, State expenditures could increase by $1.8 million annually and federal fund expenditures could increase by $3.5 million annually.

House Bill 34 (failed) would have increased State funding for public schools by establishing a school operating support grant program. This program was modeled after the basic current expense formula, which is the major State aid program for primary and secondary education. Local school systems would have received an additional $20 million in funding in fiscal 2000, $25 million in fiscal 2001, and $30 million in fiscal 2002. The program would have terminated after fiscal 2002. In addition, House Bill 34 included a hold harmless grant to four counties that experienced a decrease in State funding under the basic current expense formula in fiscal 2000. These grants would have totaled $708,000.

Senate Bill 736/House Bill 1167 (both passed) establish Martin Luther King, Jr. Day as a public school holiday and repeal the requirement that a part of the day on Martin Luther King, Jr. Day be devoted to appropriate exercises. An amendment to establish Presidents' Day as a public school holiday was adopted by the House but later rejected in a conference committee.

Senate Bill 269/House Bill 377 (both passed) requires the State Board of Education to adopt regulations that require textbook publishers to provide an electronic version of certain pupil edition textbooks used by local school systems to the Instructional Resource Center, located at the Maryland School for the Blind. This legislation is intended to reduce the time required to translate textbooks into a suitable braille format for visually impaired students. According to the National Federation of the Blind, 14 states currently impose such a requirement.

House Bill 984 (passed) requires the State Board of Education to issue regulations that prohibit a local board of education from knowingly hiring an individual as a noncertificated employee if the individual has been convicted of a third degree sexual offense, child sexual abuse, or a violent crime. The law currently requires that teachers and other professionals in public schools undergo criminal background checks, however, this requirement does not extend to noncertificated employees (i.e., secretaries, janitors, etc.). Under House Bill 984, this protection is extended to these employees as well.

The General Assembly considered two bills that addressed the issue of charter schools.

House Bill 116 (failed), would have allowed Maryland public charter schools to apply for start-up funds under the Federal Charter School Grant program. This grant program is open to states that have enacted a state law that authorizes the granting of charters to specified groups who wish to have a charter school. As Maryland currently has no authorizing legislation, House Bill 116 identified the provisions that should be contained in such a law.

House Bill 116 defined a charter school as a new or existing public school that would be nonsectarian in nature, under public supervision, and operated according to a specific academic focus and set of educational goals. The county boards were to be the public chartering authorities. The staff of a public school, parents of children attending a public school, or a public institution of higher education would have been allowed to organize a charter school. The charter schools would have been accountable to the county board and open to all students in the county with no tuition charge.

Senate Bill 761 (failed) differed substantially from House Bill 116 as it would have established a pilot program to provide educational opportunities for children from low income families who participate in the Family Investment Program (FIP). Under the pilot program, a child of a family participating in the FIP who attends a traditional public school would have been able to attend a public charter school if the child's current school had scored at or below 24% on the Maryland School Performance Assessment Program (MSPAP) Composite Index within the past year. Seventy percent of the students of a school established as a new public charter school would have come from families in the FIP. The pilot program would have terminated at the end of June 30, 2003.

Although Senate Bill 761 would have required a charter school to focus on enrolling children with scores at or below 24% on the MSPAP Composite Index and families participating in the FIP, the schools would have been open to other students in the jurisdiction on a space-available basis.

House Bill 120 (passed), the operating budget for fiscal 2000, includes several primary and secondary education enhancements.

The General Assembly authorized grants totaling $8.1 million in fiscal 2000 for 30 institutions that provide unique educational services for school children. Twenty organizations were funded at their fiscal 1999 levels. Grant increases were authorized for five organizations as follows:

The fiscal 2000 budget includes $2.5 million in State Head Start, the early childhood development program primarily for disadvantaged children aged three to five. These funds are intended to supplement the $50.6 million in federal funding. The federal funds are granted directly to a local head start grantee in each jurisdiction, for example, in Baltimore County the YMCA, in Montgomery County the public school system. Maryland is one of only a handful of states not to offer State support for Head Start, although the State has other early childhood development programs which complement Head Start.

The proposed supplementary State dollars will only be made available to existing Head Start grantees. Each jurisdiction will receive a portion of the available appropriation using a formula similar to the federal allocation formula and on a per-child basis.

In support of the continued development of the high school assessment program, the General Assembly authorized a $3.8 million funding increase for the program within the Maryland State Department of Education, for total funding of $7.0 million in fiscal 2000. The program is an extension of the Maryland School Performance Assessment Program (MSPAP). It will eventually replace the Maryland Functional Tests. The new, more rigorous assessments are a series of multiple choice and short answer end-of-course tests in English, mathematics, science, and social studies. Under the current schedule, the tests will apply to students entering high school in the fall of 2001. Based on the results from two years of testing all students, the State Board of Education will determine whether passage of the tests will be a graduation requirement for the class of 2005.

The MSPAP, which is given in grades 3, 5, and 8 is intended to measure school improvement, not individual student performance. In an effort to address frustration over the lack of student-level performance data and other issues raised by the MSPAP Review Panel and Issues Committee, the General Assembly authorized $1.2 million in new State funding for universal administration of the Comprehensive Test of Basic Skills/5 (CTBS/5) in grades 2, 4, and 6. These tests will provide student-level data. Administration of the CTBS/5 is currently required of the jurisdictions on a sampling basis every other year. The new funding will enable each of the 24 jurisdictions to test every student in those grade levels each year.

House Bill 143 (passed), the Maryland Consolidated Capital Bond Loan of 1999 (the capital budget), also contains provisions that affect primary and secondary education in the State. Most notable are a $90 million allocation for public school construction and improvements throughout the State and a $2 million grant to the Kennedy Krieger Institute for the construction of a career and technology high school for students with developmental disabilities. With the $165.0 million in school construction funding in the operating budget a total of $255 million will be available this year.

For fiscal 2000, the Governor announced that funding for higher education was to be one of the top priorities of the budget. State support for public four-year institutions in the fiscal 2000 budget is $774.1 million, an increase of 10.5%, and the State's private colleges and universities will receive $36.6 million. State support for the University System of Maryland, consisting of 13 institutions, is $719.8 million, an increase of 10.7%. There are many systemwide enhancements including an increase of $4.2 million to maintain resident tuition increases at 4% and $2.1 million for scheduled upgrades to the library information systems. There is also an additional $7.0 million for the flagship initiative at the University of Maryland, College Park and a $3.0 million increase to the University of Maryland University College to continue implementation of a plan to increase State support to $19 million by fiscal 2003.

Two public four-year institutions are not part of the University System of Maryland (USM). Morgan State University's State appropriation is $43.4 million, an increase of $5.1 million, or 13.2%. Enhancements at Morgan State include reducing student/faculty ratios, library improvements, technology enhancements, and moderating resident tuition increases. State support for St. Mary's College of Maryland is $12.7 million, an increase of $305,000, which is consistent with the statutory formula for funding the college.

Exhibit L.1 shows the fiscal 2000 General Fund allocation to the public four-year institutions and the increase over the fiscal 1999 appropriation. The fiscal 2000 appropriation includes actions taken by the General Assembly to the Governor's proposed budget including $893,000 in reductions at the University of Maryland, College Park ($263,000), University of Baltimore ($130,000), and University of Maryland Biotechnology Institute ($500,000); a $2.1 million reduction throughout USM; a $1.8 million reduction throughout higher education which reflects the amount which must be absorbed within higher education resources to fund the full State employee general salary increase; and increases provided in Supplemental Budget No. 3, including $7.35 million to partially implement the funding recommendations for USM in Senate Bill 682 (passed). The fiscal 1999 revised appropriation includes a deficiency appropriation across the USM for early retirement.

Baltimore City Community College, which was funded through a statutory formula for the first time in fiscal 2000, receives $22.9 million. The State's remaining community colleges receive $119.2 million under the Cade funding formula and an additional $21.8 million from the State's support for teachers' retirement payments.

There were also large increases in student financial aid programs administered through the Maryland Higher Education Commission. The appropriation for State financial aid increases by 19.4%. The most noteworthy increases are for scholarship programs associated with the new HOPE Scholarship Program, which provides awards for students in certain disciplines that maintain a 3.0 grade point average and work in Maryland following graduation. Approximately $5.1 million is provided for the Maryland Science and Technology Program. Funds are also provided for the new Maryland Teacher Scholarship for prospective teachers with $1.5 million in the first year to be directed to scholarships for seniors and graduate students. There is a net increase of $3.0 million for the remaining financial aid programs.

In August 1998, the Task Force to Study the Governance, Coordination, and Funding of the University System of Maryland (USM) was appointed by the Governor, President of the Senate, and Speaker of the House. The task force was created as a result of joint resolutions passed by the General Assembly during the 1998 Session and signed by the Governor (Joint Resolutions 4 and 5). Admiral Charles R. Larson, USN (Ret.) was appointed Chairman of the task force.

The 23-member task force set an ambitious schedule throughout the fall of 1998 by holding eight meetings, conducting four regional public hearings, and visiting all 13 constituent institutions. The task force heard testimony from major stakeholders and experts in higher education, and retained the Association of Governing Boards of Colleges and Universities and the Education Commission of the States to complete studies on governance structure and funding. The task force focused on key issues raised in a number of areas including statewide goals and priorities for higher education, the governance structure of USM, duplication and overlap of authority between the Maryland Higher Education Commission (MHEC) and USM, flexibility in management and reporting functions, and funding issues. The task force submitted its final report to the Governor and General Assembly in January 1999.

Senate Bill 682 reflects the statutory changes necessary to implement the recommendations of the Larson Task Force. The legislation takes effect July 1, 1999. The major provisions of the legislation are summarized below.

The legislation reaffirms the current responsibility of MHEC to conduct statewide planning for higher education and to develop and periodically update an overall State Plan for Higher Education. The legislation requires MHEC to ensure that the State Plan for Higher Education complies with the State's equal educational opportunity obligations under State and federal law. In developing the State Plan for Higher Education, MHEC must incorporate specified goals and priorities for higher education. The legislation also requires the Chancellor of USM to incorporate specified priorities in the overall plan for USM.

To assist in developing a strategic planning process that produces a new State Plan for Higher Education, the legislation requests that the Governor convene a State Conference on Higher Education in 1999. Following the conference, MHEC shall continue to coordinate the development of the State Plan which shall be updated every two years and culminate in a State Conference for Higher Education, hosted by the Governor, to focus the public agenda on higher education.

The legislation requests that the Governor provide funds to MHEC beginning in fiscal 2001 for strategic incentive funding to distribute to institutions of higher education to encourage attainment of statewide goals and priorities. The Governor is also requested to provide funds in fiscal 2001 to the USM Board of Regents for incentive funds to encourage each constituent institution to accomplish its approved mission.

The legislation changes MHEC's role in the review and approval of the mission statements for all public institutions of higher education, including USM, by providing that MHEC shall review each mission statement only to determine whether it is consistent with the State Plan for Higher Education. A mission statement shall be deemed approved within 30 days of receipt unless MHEC finds it is not consistent with the State Plan for Higher Education. If MHEC determines that the mission statement is not consistent with the State Plan, the governing board and institution president must negotiate with MHEC to amend the statement or prepare a new statement.

For a three-year period, the legislation revises the procedures applicable to the development and approval of new programs that are proposed to be implemented within existing program resources by presidents of USM constituent institutions. These proposed programs must be reported to the institution's governing board and MHEC. MHEC must then notify all other State institutions of higher education. An institution's governing board is responsible for ensuring that a new program is within the scope of the institution's mission statement and within existing program resources. The USM Board of Regents must approve a proposed new program within 60 days if it meets these requirements, unless MHEC or an institution file an objection. The legislation also establishes a process whereby MHEC or an institution may object to a proposed new program within 30 days based upon one of three criteria: (1) inconsistency with the institution's approved mission; (2) unreasonable program duplication which would cause demonstrable harm to another institution; or (3) violation of the State's equal educational opportunity obligations under State and federal law. If such an objection is made and cannot be resolved through negotiations with the institution, MHEC must make a final determination on approval of the new program within 30 days of receipt of the objection.

Additionally, MHEC is responsible for identifying low productivity programs. MHEC and the governing boards of the public institutions must jointly develop a definition and accepted criteria for determining low productivity programs.

The legislation changes the legal status of USM from a State agency to a public corporation and an independent unit of State government. The powers enjoyed by USM are expanded to include the acquisition of property, the management of public improvement projects, and borrowing money for any corporate purpose, including working capital for its operations. The legislation authorizes the Board of Regents to establish, invest in, finance, and operate business entities when the Board finds that doing so would further the goals of USM and is related to the mission of USM.

Additionally, the legislation generally exempts USM from State law governing procurement, information technology, and telecommunications. However, the legislation requires Board of Public Works' approval of contracts for services or capital improvements exceeding $500,000. Subject to review and approval by the Board of Public Works and the General Assembly's Administrative, Executive, and Legislative Review Committee, the Board of Regents of USM is required to establish procurement policies and procedures that promote the purposes of the State procurement law. USM's procurement policies must promote the purposes of Department of General Services' regulations governing the procurement of architectural and engineering services. USM is also required to purchase supplies and services, to the maximum extent practicable, from State Use Industries, Blind Industries and Services, and sheltered workshops. Additionally, the USM Board of Regents is required to develop an information technology plan for USM that is functionally compatible with the State information technology plan.

Current law authorizes the USM Board of Regents to delegate any part of its authority over the affairs of the institutions to the Chancellor or the presidents. Consistent with the goals, objectives, and priorities of the Board of Regents and its legal responsibility for the efficient management of USM, the legislation requires the Board of Regents to delegate to the president of each constituent institution authority to make and implement policies promoting the mission of that institution. Additionally, the current appeals process for employee grievances is revised so that the president of the constituent institution which employs the aggrieved employee hears step two appeals rather than the Chancellor. For step three appeals, the bill requires the involvement of the Chancellor, instead of the Secretary of Budget and Management. However, this authority may continue to be delegated to the Office of Administrative Hearings in accordance with the Administrative Procedures Act.

The legislation requires the USM Board of Regents to adopt a policy by September 1, 1999, to govern the public ethics of members of the board. The policy must be consistent with the Maryland Public Ethics Law and must include a prohibition against a member of the board assisting or representing any party in any matter before the General Assembly.

Since 1995, the presidents of the USM constituent institutions have had the authority to create positions within existing funds. The total number of positions authorized is limited as specified annually in the State budget bill. The 1995 legislation included a provision terminating this authority on July 1, 1999. The legislation removes the July 1, 1999 termination date and continues this authority indefinitely.

The legislation requests the Governor to appoint a group to conduct a thorough review of higher education reporting requirements with the goal of reducing the number of required reports. The group is requested to submit a report to the Governor and General Assembly by December 31, 1999.

The legislation revises the role of MHEC in the review and approval of the budget submitted by the USM Board of Regents. For the operating and capital budgets of the USM constituent institutions, the bill authorizes MHEC to review and comment only within the broad context of the State Plan for Higher Education. The legislation prohibits MHEC from recommending against a budget item approved by the Board of Regents unless the item is clearly inconsistent with the State Plan for Higher Education.

Currently, the Board of Regents reviews, modifies as necessary, and approves consolidated operating and capital budget requests for USM. These requests are then submitted to MHEC, the Governor, and the General Assembly. The legislation provides that, after the board submits the consolidated budget request, the President of the University of Maryland, College Park will have the opportunity to meet with the Governor to discuss the impact of the board's request on that institution's mission as the flagship campus.

The legislation reaffirms the responsibility of MHEC to develop operating and capital budget funding guidelines based on current and aspirational peer institution comparisons and other appropriate factors. MHEC is required to develop the funding guidelines in consultation with the segments of higher education and the presidents of the public institutions.

Pending the development of funding guidelines by MHEC, the Governor is requested to increase the base budgets of certain USM institutions by including in a fiscal 2000 supplemental budget:

Some additional funds were included in the fiscal 2000 Supplemental Budget No. 3 for these institutions (see Fiscal Impact section).

To the extent the base budgets of these institutions are not increased in a fiscal 2000 supplemental budget as requested, and if funding guidelines are not developed and operational by December 1, 1999, the Governor is requested to include in the fiscal 2001 operating budget:

Exhibit L.2 shows the additional funding amounts requested in the legislation for fiscal 2000, additional funding amounts contained in the fiscal 2000 budget, and fiscal 2001 additional funding amounts requested in the legislation as compared to the fiscal 2001 forecast (based upon the Administration's most recent forecast of higher education funding for fiscal 2001, adjusted by the supplemental funding amounts contained in the fiscal 2000 budget). The last column shows the total fiscal 2001 increase over fiscal 2000 required to fund both the Administration's January forecast and the additional amounts for higher education requested under the legislation. Fiscal 2001 figures assume that funding guidelines are not developed and operational by December 1999.

State funding amounts for community colleges (Cade formula), nonpublic institutions (Sellinger formula), and Baltimore City Community College in any given year are dependent on funding amounts for certain public institutions for the previous fiscal year. Therefore, fiscal 2001 funding amounts for community colleges, nonpublic institutions, and Baltimore City Community College will increase.

If the funding guidelines are not operational by December 1, 2000, the Governor is requested to put in the fiscal 2002 operating budget and each subsequent operating budget, until the funding guidelines are developed, the fiscal 2001 minimum funding levels, adjusted annually for inflation in accordance with the Higher Education Price Index.

The legislation states that the USM Board of Regents should develop a long-range capital plan for USM that identifies capital needs by project and institution for at least a ten-year period.

The legislation reestablishes the Private Donation Incentive Program, under which the State will match certain amounts pledged by eligible private donors to a public institution of higher education for an endowment for an academic purpose. The donations must be from a new donor or represent an increase over the amount given by the donor in fiscal 1998. Eligible institutions include the 22 community college campuses. Payments must be made by the State only with respect to pledged amounts which are paid by the eligible private donor to the eligible institution before July 1, 2004.

The legislation reestablishes the College Preparation Intervention Program which was in effect from 1989 to 1992. The purpose of the program is to raise the level of academic preparedness of disadvantaged students to enable them to attend and succeed in college. The legislation requires the Governor to include at least $750,000 in general funds in the annual budget for the program.

*FY 2001 Forecast is based upon the Administration's most recent forecast of higher education funding for FY 2001, adjusted by the supplemental funding amounts contained in the FY 2000 budget. Per institution funding amounts for the fiscal 2001 forecast were based on each institutions percentage share of fiscal 2000 funding.

Several USM constituent institutions currently have independent foundations. These institutions include Coppin State College, Frostburg State University, Salisbury State University, Towson University, and University of Baltimore. The foundations of the other eight USM constituent institutions (Bowie State University; University of Maryland, Baltimore; University of Maryland Baltimore County; University of Maryland Biotechnology Institute; University of Maryland Center for Environmental Science; University of Maryland, College Park; University of Maryland Eastern Shore; and University of Maryland University College) are subsumed under the umbrella of the University of Maryland Foundation, Inc. (UMF). Although the institutions retain full responsibility for fundraising, UMF manages foundation assets and provides philanthropic support.

Senate Bill 296/House Bill 419 (both passed) allow the presidents of all USM constituent institutions to establish campus-based foundations. Each foundation does not need to be approved by the USM Board of Regents but must operate subject to policies adopted by the board in consultation with the presidents of the institutions. A campus-based foundation utilizes the staff employed by the university, raises money, and invests assets. All gifts from the foundation flow through the university accounts. The legislation is intended to allow institutions the flexibility necessary to achieve greater success in fundraising. The legislation also clarifies that an affiliated foundation is not a State agency and that obligations of an affiliated foundation are not obligations of the State or USM.

Senate Bill 354/House Bill 682 (both failed) would have authorized the Office of Legislative Audits to access and review the audit reports, working papers, and management letters of each private foundation affiliated with a unit of State government. The legislation would have permitted the office to conduct an audit of an affiliated foundation if the Joint Audit Committee determined that an audit was warranted as a result of the review of the foundation's audit reports or an audit of the affiliated unit of State government. This legislation would have had a disproportionate impact on higher education institutions which have the greatest number of affiliated foundations in State government.

Since 1995, the president of Morgan State University has had the authority to create positions within existing funds. The total number of positions authorized is limited as specified annually in the State budget bill. The1995 legislation included a provision terminating this authority as of July 1, 1999. Senate Bill 56 (passed) removes this termination date and continues this authority indefinitely.

House Bill 150 (passed) expands the procurement authority of Morgan State University to include supplies funded by the proceeds from State general obligation bonds (capital equipment purchases). Previously, Morgan State was required to go through the Department of General Services (DGS) to purchase capital equipment. Morgan State will still have to otherwise follow State procurement rules and regulations.

House Bill 456 (Ch. 93) increases the membership of the Board of Regents of Morgan State University from 13 to 15. In addition, the requirement that each member of the board be a State resident is repealed. Except for the student member, at least 11 members of the board must be State residents.

Senate Bill 131/House Bill 189 (both passed) establish two new scholarship programs: the Maryland Teacher Scholarship Program and the Maryland HOPE Scholarship Program. These programs complement the Maryland Science and Technology Program, which was established in 1998 to encourage students to enter the computer science, engineering, and technology fields. The HOPE program is a modified version of a 1997 Administration proposal based on the successful Georgia HOPE scholarships, which failed to win legislative approval in 1997 due to its significant cost.

Maryland is facing a critical teacher shortage. Several factors have contributed to the decline in the number of professionally certified teachers, including a 62% rise in the percentage of teachers eligible for retirement since 1989. Public school enrollments are rising statewide and will continue to increase into the first decade of the 21st century. Secondary enrollments are projected to be 16.2 percent greater in 2006 than in 1996.

The Maryland Teacher Scholarship Program is intended to encourage the State's best and brightest students to become Maryland public school teachers. A recipient must pledge to work as an elementary or secondary public school teacher after graduation (or repay scholarship funds received, plus interest) one year for each year that the scholarship is awarded. To qualify for an award, a student must be a Maryland resident and enroll full-time at a Maryland public or private institution of higher education in a course of study (undergraduate or graduate) leading to a Maryland professional teacher's certificate. A recipient must also maintain a grade point average of at least 3.0. The scholarship amount is $1,000 per year for community college students and $3,000 per year for students at four-year institutions. The Teacher Scholarship Program takes effect July 1, 1999.

The HOPE Scholarship Program is intended to increase access to higher education for Maryland's youth and to encourage students to work in Maryland upon graduation. The program provides tuition assistance to Maryland residents who graduate from high school with a grade point average of at least 3.0 and enroll full-time in a bachelor or associate degree program at a Maryland public or private higher education institution. A recipient must begin attending college within two years of completing high school and have an annual combined family income of $80,000 or below. A recipient must also pledge to work in the State after graduation for one year for each year that the scholarship was awarded (or repay the funds received plus interest). The scholarship amount is $1,000 per year for community college students and $3,000 per year for students at four-year institutions. The HOPE Scholarship Program provisions of the legislation are effective October 1, 2000.

The legislation requires the Maryland Higher Education Commission to develop a plan by October 30, 1999 for the three-year progressive implementation of the HOPE Scholarship Program beginning in fiscal 2001. The plan must include a priority list of eligible fields of study which focuses on the economic needs and employment shortage areas of the State and the capacity of Maryland's higher education institutions. It is intended that students in all academic majors will be eligible for the program by fiscal 2003. (See Exhibit L.3.)

Funds for both scholarship programs are to be as provided by the Governor in the annual budget. Costs to fully fund the program are estimated at $125,000 in fiscal 1999 for program administration and $7.4 million in fiscal 2000, of which $7.1 million represents teacher scholarship awards. The fiscal 2000 budget includes an appropriation of $125,000 for administrative costs and $1.5 million for Maryland Teacher Scholarships, directed to seniors and graduate students. Future year expenditures increase with increasing enrollment rates, scholarship renewals, the addition of eligible majors for the HOPE Scholarship Program, and inflation. In fiscal 2002 when both programs will be effective for the full fiscal year, the scholarships will cost an estimated $16 million, $7.2 million for teacher scholarships, and $8.8 million for HOPE scholarships. Costs to fully fund both programs are projected to increase to $34.4 million by fiscal 2004.

Year	Title	% of Distribution
FY 2001	Health Professions
	Biological Sciences
	Architecture & Environmental	17%
	Physical Sciences
	Mathematics
	Public Affairs
FY 2002	Social Science
	Fine & Applied Arts
	Foreign Languages	21%
	Psychology
	Communications
	Letters
FY 2003	Agriculture & Natural Resources
	Law
	Business & Management
	Home Economics	36%
	Theology
	Area Studies
	Interdisciplinary

It is assumed that the majors in the fastest growing occupations and industries would be included in the first year. Science and technology and teacher education programs, which represent approximately 25% of all majors, are excluded.

The Maryland Science and Technology Scholarship Program was created in 1998 for students who intend to study computer science, engineering, or another technology-related field and who pledge to work in the State after graduation. Senate Bill 83/House Bill 710 (both passed) repeal the requirement that a recipient of a Maryland Science and Technology Scholarship graduate from a secondary school in Maryland. The legislation provides that a recipient must be a Maryland resident and have been a Maryland resident at the time of graduating from secondary school. The legislation would allow Maryland residents who attend out-of-state high schools (day or boarding) to become eligible to participate in the program.

Developmental Disabilities and Mental Health Workforce Tuition Assistance Program

Senate Bill 340 (passed) establishes a tuition assistance program for students at State higher education institutions who agree to work as direct service employees in community-based programs providing support to individuals with developmental disabilities or mental disorders. Students may receive tuition assistance up to $100 per credit hour, not to exceed:

A student who receives tuition assistance must pledge to work in a community-based program for 4,000 hours of continuous full- or part-time employment, and enroll in a degree program in human services in a State institution of higher education. Costs to fully fund the program are estimated at $60 million in fiscal 2001, increasing to $14.4 million by fiscal 2004.

Delegate Scholarships - Use At Out-of-State Institutions by Disabled Students

House Bill 1155 (passed) permits a disabled student to use a Delegate Scholarship at an out-of-state institution if the institution makes special provisions for disabled students and comparable special provisions are not available to that student at an institution in the State.

House Bill 129 (passed) increases total bonding authority from $40 million to $65 million for Morgan State University, and from $25 million to $45 million for St. Mary's College of Maryland. The legislation also authorizes Morgan State to issue $4 million in academic revenue bonds to finance the construction of a fine arts center. House Bill 1011 (passed) authorizes the University System of Maryland to issue a total of $25 million in academic facilities bonds to finance the development and improvement of specified academic facilities.

The Maryland Higher Education Investment Program (MHEIP) is an independent State agency established in 1997 to enhance the accessibility and affordability of a college education by providing for the prepayment of projected in-State tuition and mandatory fees at Maryland public colleges and universities. Parents, grandparents, and other interested persons may purchase a contract based on current tuition and fee amounts. The program offers several tuition plans and payment options. If the beneficiary chooses to attend a private or an out-of-state college, the program will pay the weighted average of tuition and mandatory fees of the Maryland public colleges.

Legislation enacted in 1998 established two tax incentives for Maryland residents participating in MHEIP. First, purchasers may take a State income tax subtraction modification of up to $2,500 in years they pay into the program. Second, earnings are tax-deferred while in the program, and distributions are exempt from Maryland taxes when the contract benefits are used for qualified higher education expenses. For federal tax purposes, earnings are taxed at the beneficiary's rate when the contract benefits are used for qualified higher education expenses.

MHEIP began selling contracts in 1998 and fell far below projections, selling only 1,500 compared to projections of 10,000. The agency projects selling over 8,500 contracts in 1999 (the current enrollment period ends June 10, 1999). The program is not backed by the full faith and credit of the State; the investment earnings of the contracts and other revenues must sustain the contracts.

Senate Bill 8 (Ch. 7) and House Bill 28 (passed) modify the income tax subtraction modification for contributions made to an MHEIP contract. The purchaser may subtract up to $2,500 each year until the full value of the contract has been allowed as a subtraction. The legislation also provides that the subtraction modification applies to each prepaid tuition contract purchased. Under current law, the cost of the contract cannot be carried forward and the subtraction modification is capped at $2,500 regardless of the number of contracts purchased. The legislation is applicable to all taxable years beginning after December 31, 1997.

Senate Bill 341 (passed) makes the following changes to provisions of law relating to MHEIP:

House Bill 1177 (passed) allows District of Columbia residents to participate in MHEIP. Under current law, either the purchaser or the qualified beneficiary must be a Maryland resident at the time that the purchaser enters into the contract. Under Internal Revenue Service rules, the District of Columbia was not included in the definition of "State" which provides for the favorable tax treatment of State-sponsored prepaid tuition programs. Thus, the District of Columbia cannot offer a prepaid tuition program to its residents. The bill would allow D.C. residents to prepay college tuition costs and obtain federal tax benefits. Contract earnings are not subject to federal income tax at the time of purchase. At the time of use by a beneficiary for qualified higher education expenses, the earnings are taxed by the federal government at the beneficiary's tax rate.

House Bill 1121 (failed) would have established the Maryland College Tuition Savings Plan, to be administered by MHEIP side-by-side with the existing plan. A tuition savings plan is an alternative type of tuition plan that is permitted under federal law. While the existing plan is a defined benefit plan under which the contract benefits are based on tuition, benefits of a tuition savings plan are based solely on investment performance. The purchaser decides how much to pay, and the beneficiary receives the contributions plus earnings less an administrative charge. Tax benefits are similar for the two types of plans. No other state has a tuition savings plan in place, although states including Virginia, Colorado, and Massachusetts are in the process of implementing tuition savings plans.

Senate Bill 283/House Bill 483 (both passed) increase the annual State funding limit for English for Speakers of Other Languages (ESOL) programs at community colleges. The legislation requires that State ESOL grants cannot exceed $2.5 million for local community colleges and $500,000 for Baltimore City Community College. Under current law, State ESOL grants cannot exceed $1 million for local community colleges and $200,000 for Baltimore City Community College.

Legislation enacted in 1995 provided grants to community colleges in the amount of $800 per student enrolled in an ESOL program. There were 2,276 students enrolled in ESOL programs in fiscal 1998. Absent the funding caps, State ESOL grants to community colleges would total $1,820,800 in fiscal 2000, a $620,800 increase over current law. Increasing the funding caps will enable community colleges to receive full ESOL funding.

House Bill 1196 (passed) establishes the College of Southern Maryland in place of the existing Charles County Community College. The transition to the new college will begin on July 1, 2000. The college is to be considered a regional community college for purposes of receiving State funding for capital projects. The legislation also increases the number of members on the college's board of trustees from seven to eight.

Charles County Community College currently operates three facilities - a main campus in Charles County and branch campuses in St. Mary's and Calvert Counties. State funding under the community college funding formula will not change pursuant to the bill. The college could receive additional State funding for capital projects, however. Currently, the State provides 58.2% of the funding for capital projects at the Charles County main campus and 61.6% of the funding at the St. Mary's County campus. As a result of the bill, the college will become a regional institution and will therefore be eligible to receive up to 75% in State funding for capital projects.

Promoting Commercial Potential of Inventions of Public Higher Education Institutions

House Bill 195 (Ch. 74) provides that, with certain exceptions, a custodian may deny inspection of that part of a public record that contains information disclosing or relating to an invention owned in whole or in part by a State public institution of higher education for four years. This will permit the institution to evaluate whether to patent or market the invention and pursue economic development and licensing opportunities related to the invention.

The legislation would prevent the public from obtaining information about inventions created in connection with academic research projects, and would therefore enhance the ability of public colleges and universities to obtain revenues derived from patenting and licensing activities. Patenting and licensing activities are not currently a major source of revenues for public colleges and universities, but that revenue source is expected to grow in the future.

House Bill 246 (passed) enables University of Maryland University College students to become eligible to serve as the student member of the USM Board of Regents by exempting a student member of the USM Board of Regents who is a student in good academic standing at the University of Maryland University College from the requirement of being a full-time student.

Components	FY 2001	FY 2002	FY 2003	FY 2004	FY 2005
Reading	$7.3 million	$14.8 million	$22.7 million	$31.3 million	$39.6 million
Program Development	$3.0 million	$3.0 million	$3.0 million	$0	$0
Total	$10.3 million	$17.8 million	$25.7 million	$31.3 million	$39.6 million

Institution	FY 1999 Revised	FY 2000 Approp.	$ Incr. 1999-2000	% Incr. 1999-2000
University of Maryland, Baltimore	$116,412	$127,285	$10,873	9.3%
University of Maryland, College Park	273,232	301,915	$28,683	10.5%
Bowie State University	16,022	18,584	$2,562	16.0%
Towson University	51,297	58,760	$7,463	14.5%
University of Maryland Eastern Shore	18,541	20,468	$1,927	10.4%
Frostburg State University	21,883	24,699	$2,816	12.9%
Coppin State College	14,504	16,009	$1,505	10.4%
University of Baltimore	20,816	22,098	$1,282	6.2%
Salisbury State University	22,180	24,460	$2,280	10.3%
University of Maryland University College	7,374	10,590	$3,216	43.6%
University of Maryland Baltimore County	50,976	59,356	$8,380	16.4%
University of Maryland Center for Env. Science	9,983	10,887	$904	9.1%
University of Maryland Biotechnology Institute	19,513	16,358	($3,155)	(16.2%)
University System of Maryland Headquarters	8,868	8,350	($518)	(5.8%)
Subtotal University System of Maryland	$651,601	$719,819	$68,218	10.5%
St. Mary's College of Maryland	12,359	12,664	$305	2.5%
Morgan State University	38,358	43,415	5,057	13.2%
Reduction to Fiscal 2000 COLA		(1,800)
Total General Fund Support for Higher Education	$702,318	$774,098	$71,780	10.2%

Provision	FY 2000 Additional Funding Requested in Legislation	FY 2000 Additional Funding Contained in Budget	FY 2001 Additional Funding Requested in Legislation Above FY 2001 Forecast*	FY 2001 Additional Funding Requested in Legislation Above FY 2000 Budget
Strategic Incentive Funding	unspecified	$0	unspecified	unspecified
College Preparation Intervention Program	$150,000	$150,000	$750,000	$750,000
Private Donation Incentive Program	$0	$0	$1,630,000	$1,630,000
$5,000 Floor for Towson University	$5,279,927	$1,215,235	$5,483,329	$8,496,692
$5,000 Floor for Salisbury State Univ.	$928,600	$214,141	$431,941	$1,687,934
Floor for UMCP	$9,847,949	$2,263,597	$22,165,415	$36,898,932
Floor for UMUC	$0	$0	$874,863	$3,874,863
University of Maryland, Baltimore	$7,000,000	$1,610,012	$5,389,988	$6,551,127
University of Maryland Baltimore County	$5,000,000	$1,150,009	$3,849,991	$6,893,765
Bowie State University	$1,300,000	$300,000	$1,000,000	$1,955,836
Coppin State College	$1,300,000	$300,000	$1,000,000	$1,824,300
University of Maryland Eastern Shore	$1,300,000	$300,000	$1,000,000	$2,052,057
Frostburg University	$500,000	$0	$500,000	$1,768,165
University of Baltimore	$500,000	$0	$500,000	$1,661,139
Total	$33,106,476	$7,504,994	$44,575,527	$76,044,810