Commission
on Education Finance, Equity, and Excellence
Minutes
September 7, 2000
The Commission on Education Finance, Equity, and Excellence
held a meeting on September 7, 2000, at 1:15 p.m. in Room 130 of the Lowe House
Office Building, Annapolis, Maryland. The following Commission members attended
the meeting:
Dr. Alvin Thornton
Mr. Joseph Anderson, III
Senator Michael Collins
Delegate Norman Conway
Delegate Jean Cryor
Assistant Secretary Thomas Lee (attending for Secretary Eloise Foster)
Ms. Beatrice Gordon
Dr. Nancy Grasmick
Dr. Francine Hawkins
Delegate Paul Carlson (attending for Delegate Sheila Hixson)
Senator Barbara Hoffman
Delegate Carolyn Howard
Ms. Loretta Johnson
Dr. Donald Langenberg
Mr. Raymond LaPlaca
Senator Christopher McCabe
Mr. William Middleton
Ms. Elizabeth Moyer
Senator Robert Neall
Ms. Carolyn Perkins
Ms. Marilyn Praisner
Delegate Howard Rawlings
Mr. Walter Sondheim, Jr.
Dr. G. William Troxler
Mr. John Wagoner
The Commission adopted the September 7, 2000, meeting agenda. The Commission
also adopted the August 24, 2000, meeting minutes with modifications submitted
by Ms. Praisner.
Report on Local Tax Limitations/Education Effort
The Commission first heard a report on local tax limitations and education
effort presented by John Rohrer, Coordinator of Fiscal and Policy Analysis at
the Department of Legislative Services (DLS), and Mark Collins and Heidi
Dudderar, policy analysts with DLS. Mr. Rohrer began by noting that Maryland's
local government contributed about 54 percent of education revenues to school
operations, with the State contributing about 42 percent, and the federal
government contributing the remaining 4 percent. Mr. Rohrer described the two
major local tax bases, the county assessable base and the county net taxable
income. He also outlined recent local appropriations, recent tax rates, local
tax limitations, local education effort, and the reasons for differences in
education effort.
Mr. Collins further explained the trends in local appropriations to boards
of education, noting that Wicomico and Somerset Counties had the largest
percentage increases in appropriations from fiscal 1997 to 2000. Mr. Collins
also discussed the change in the assessable property tax base from fiscal 1992
to 2000, mentioning that the assessable property tax base increased by 34.87
percent.
Mr. Rohrer continued by noting how the assessable base growth has slowed in
recent years. Mr. Rohrer noted that, in the early 1990s, growth in State income
and sales tax revenues slowed whereas growth in the assessable base increased
more rapidly. He said the increase in the assessable property tax base helped
the local governments handle the slow growth in other tax revenues.
Mr. Collins discussed the changes in local net taxable income between
calendar year 1990 and 1998. He noted that growth slowed in the early 1990s and
that Baltimore City and Prince George's County have experienced the slowest
growth rates during this time period. Mr. Collins said that their slower growth
was offset by other counties doing extremely well, led by Queen Anne's County
with its rate of growth equaling 80.63 percent between 1990 and 1998. Mr.
Rohrer added that the growth in the net taxable income from 1996 to 1998 varied
widely, with several jurisdictions witnessing growth of greater than 20 percent
while others experienced less that 10 percent growth.
Delegate Rawlings asked Mr. Rohrer whether he could identify those counties
which have tax caps. Mr. Rohrer replied that Montgomery, Prince George's, Anne
Arundel, and Talbot Counties had tax limitation provisions in their charters.
Ms. Praisner asked Mr. Rohrer whether the property tax rate is the average
tax rate for a jurisdiction. Mr. Rohrer responded that the tax rate is a
combination of property taxes and special countywide taxes (e.g., transit
taxes) but said the tables shown do not include municipal taxes or other
special taxes that are not countywide.
Mr. Collins noted that seven counties have increased either their property or their income tax rates, while three counties increased both rates. Ms. Praisner asked whether these increases were just for 2001, and Mr. Collins indicated that they were.
Ms. Dudderar discussed local tax limitations, noting that charter and code
counties can enact local laws on subjects permitted under the Express Powers
Act. Ms. Dudderar detailed how Anne Arundel County, Montgomery County, Prince
George's County, and Talbot County's tax caps work. She noted that in Anne
Arundel County, the tax cap cannot exceed the lesser of 4.5 percent or the
increase in the Consumer Price Index (CPI). She noted that Montgomery County's
tax cap limits the annual increase in property tax revenues to the annual
increase in the CPI. She said Montgomery County's tax cap is unique because,
unlike other counties, Montgomery County may override its cap if seven of the
county's nine council members vote to remove the cap.
Ms. Praisner noted that she would call the cap a "revenue cap"
rather than a "tax cap."
Ms. Dudderar continued, noting that Prince George's County maintains a tax
ceiling of $2.40 per $100 of assessed property value. She noted that the $2.40
does not include special taxing districts. She added that in 1996, Prince
George's County amended its charter to require that all tax increases be
submitted to the voters at the next election. Ms. Dudderar also noted that
Talbot County's annual growth of property tax revenues is limited to the lesser
of two percent or the change in the CPI.
Mr. LaPlaca asked whether most jurisdictions separate out special taxes on
their citizens to fund parks and recreation services or other distinct services
as does Prince George's County. Mr. Rohrer responded that most jurisdictions do
not have special tax rates for general governmental services such as parks and
recreation. He noted that for Prince George's County, the Maryland-National
Capital Parks and Planning Commission has more independence.
Ms. Dudderar continued, noting that prior to 1995, the property tax
limitation in Talbot County restricted the tax rate to the constant yield tax
rate. The courts ruled that the limitation was unconstitutional because the
Talbot County Council was unable to exercise its discretionary power to set tax
rates. Ms. Dudderar also discussed the steps necessary to propose amendments to
a local jurisdiction's charter. She noted that a local tax cap that inhibits a
county's ability to raise enough revenue may be invalid.
Mr. Middleton asked whether there had been any measure of whether a county
with a cap is meeting its obligation to provide adequate services. Mr. Rohrer
responded that there has been no precedent. Senator Hoffman added that she did
not know how funding could be proved insufficient.
Ms. Praisner asked DLS to provide a document of what has happened in the
past five years of counties requesting additional taxing authority and what has
happened in the Maryland General Assembly.
Mr. Collins next discussed education effort in the 24 jurisdictions and
their overall tax effort. He noted that Baltimore City had the highest average
overall tax effort between fiscal 1996 and 1998. However, he noted that despite
the city's very high tax effort, the city had a lower education effort. He
attributed this discrepancy to competing funding needs in the city for other
services such as public safety.
Mr. Rohrer clarified that the Commission should not assume that counties
with below-average education effort are making an insufficient education
effort. He noted that the data is in comparison to other counties' education
effort. He also added that tax limitations could impact effort.
Senator Hoffman asked whether the Maryland-National Parks and Planning
Commission tax revenues are under the Prince George's County cap. Mr. Rohrer
responded that the revenues are not included in the county's cap and that the
Prince George's Council has to approve the Maryland-National Parks and Planning
Commission's tax rate.
Mr. LaPlaca then asked whether, if certain services are excluded from Prince
George's County's tax cap of $2.40 per $100 of assessed value, Prince George's
County could be putting more funds toward education than reported.
Senator Hoffman asked whether everyone in Prince George's County had to pay
the Maryland-National Park and Planning Commission tax. Mr. Rohrer replied that
almost everyone in Prince George's County must pay the tax.
Ms. Praisner noted that different counties have different responsibilities.
She said some counties may put forth a greater education effort than what shows
up in the data as education effort because these counties may fund certain
educational support services outside of the education budget. She said that the
data is not sensitive to these differences.
Delegate Rawlings asked whether DLS staff sees anything about effort that is
broken or something that could or should be fixed. Mr. Rohrer noted that
nothing specific is broken. He noted that there are important differences, with
wealth being the most important difference. He noted, for instance, that some
counties have more children with special needs.
Delegate Rawlings asked whether there is anything egregious that the
Commission should focus its attention on. Mr. Rohrer responded that there are
important differences, especially in local wealth, that could impact effort.
Delegate Rawlings asked whether the State aid addresses those differences. Mr.
Rohrer replied that State aid does address wealth issues.
Ms. Praisner added that since a county's debt service does not show up in
the education budget, the true education effort of a county is not reported.
She also noted that DLS' presentation did not show maintenance of effort nor
discuss issues of maintenance of effort.
Discussion of Potential Approach to Measuring Adequacy
Dr. Thornton asked Dr. John Augenblick to further discuss his proposal for
using the professional judgment model to measure adequacy. Ms. Praisner noted
at the outset that she has ongoing concerns about the use of the professional
judgment approach.
Dr. Augenblick began by noting that he would prefer to use the
"successful schools" approach to measuring adequacy but said he would
need school-level information to use this approach. He said this level of
information is not available for Maryland's schools. However, he went on to say
that his proposal does include a successful schools approach for the purpose of
validating the costs identified in the professional judgement approach. Dr.
Augenblick, with the aid of the Maryland State Department of Education (MSDE),
would select 10 successful schools where the staff would be willing to have
auditors examine school records in order to collect the necessary data. This
effort would provide the costs per regular education pupil within the selected
successful schools. These costs would then be compared to the costs derived
from the professional judgement approach.
For the professional judgment method, Dr. Augenblick recommended that six
teams of educators -- two from elementary schools, two from middle schools, and
two from secondary schools -- be identified by MSDE. The teams would meet
individually and discuss the basic resources that would be needed to achieve
State education standards. Dr. Augenblick noted that using two teams for each
school level would help him to understand differences that are attributable to
a team rather than to the true needs of students and schools. Dr. Augenblick
noted that there would also be a seventh team comprised of experts who would
review the work of the six other teams and look at the costs at the district
level.
Dr. Augenblick said he would then attempt to price out the resources the
teams have identified. This cost would be compared to the per pupil costs
determined by examining the ten successful schools. Dr. Augenblick noted that
the purpose of this approach is to develop a base cost figure which could be
used in Maryland's current expense formula. He said this approach would leave
out the costs for special education, limited English proficiency students, and
disadvantaged kids. However, he said he can look at other states and available
research to develop appropriate weights to account for students with special
needs. He said all of the information should be available by next spring.
Mr. LaPlaca asked whether Dr. Augenblick would be able to take into account
the differences in the cost of living among jurisdictions. Dr. Augenblick
responded that there are two ways to account for the differences: (1) adjust
the allocation by school districts in the spring; or (2) use those figures when
looking at the ten schools.
Dr. Langenberg asked whether the adequacy study will look at outcomes. Dr.
Augenblick responded that the study will look at performance-based outcomes as
defined by the State. Dr. Augenblick added that the ten schools that MSDE will
select will have met the State's performance-based outcomes.
Dr. Troxler asked how the Commission would know that those 10 schools
selected by MSDE would truly be representative schools. Dr. Augenblick said
that no one should call them representative. He said that MSDE will determine
which schools are "successful" based on State performance
requirements. He reminded the Commission that these schools also have to agree
to participate in the study. He emphasized that he will be trying to find out
the costs of serving regular students and then adding in special needs
students. Dr. Troxler responded that MSDE should not pick the 10 schools
casually.
Mr. Sondheim asked Dr. Augenblick whether, in May, there will be agreement
that this number is fair, noting, "one man's adequacy is another man's
poverty." Dr. Augenblick responded that he believed the teams will produce
a consensus agreement.
Mr. LaPlaca asked why it would not be advantageous to study schools with
special needs children that are performing at a high level rather than add
their costs on at the end. Dr. Augenblick noted that he would have a problem
with basing costs for special needs on only ten schools. Dr. Augenblick also
noted that Maryland has too few school jurisdictions to use a statistical
approach to infer what the costs are for special needs children.
Mr. LaPlaca asked whether there were other intangible factors that
contribute to a school's success. Dr. Augenblick responded that he will be
focusing on fiscal information but will share any other information he finds in
the course of his study.
Ms. Praisner asked Dr. Augenblick three questions. (1) Why is MSDE selecting
only 10 schools? (2) Would it be possible to get progress reports from Dr.
Augenblick since the adequacy report is not expected to be competed until May
2001? (3) Is it problematic to assume that these 10 schools are spending their
resources appropriately and do not need more resources without rigorously
reviewing how these ten schools are spending their resources? Dr. Augenblick
replied that the number of schools selected comes from his discussions with
MSDE. He also replied that he would be happy to provide progress reports.
However, he noted that he had no control over the auditing process. He
concluded by noting that he will try to provide as much information as
possible, but specified that he will be studying how much the 10 schools spend
to become successful and not how they are spending their resources. He noted
that it is dangerous to infer from those 10 schools even if he did find a
pattern in spending.
Mr. LaPlaca asked whether Dr. Augenblick's study would look at Scholastic
Aptitude Test (SAT) scores and other factors that may relate to the performance
of these 10 schools. Dr. Augenblick replied that his study will look at those
factors.
Dr. Thornton then reiterated a May 1, 2001, deadline for submitting the
results of the study. Ms. Moyer asked whether the Commission could discuss this
study further at the September 14 meeting. Dr. Thornton responded that the
Commission could discuss this study further at its next meeting.
Fiscal 2002 Budget Enhancements -- Maryland State Department of
Education
Dr. Grasmick, State Superintendent at MSDE, summarized the enhancements,
noting that MSDE focused on enhancing the performance of students and staff,
stressed accountability, and considered overall framework issues when putting
together its request for budget enhancements. Ms. Tina Bjarekull, Assistant
State Superintendent at MSDE, then discussed in detail MSDE's fiscal 2002
budget enhancements.
Delegate Rawlings inquired as to whether the Academic Intervention
Initiative focuses on middle schools. Dr. Grasmick stated that the Academic
Intervention program is focused on individual students and discussed how the
budget enhancements would be used to expand the program to assist all students
in preparing for the new high school assessments.
Senator Collins asked about increasing the signing bonus for teachers in
response to the fiscal 2002 budget enhancement to recruit teachers. Dr.
Grasmick replied that MSDE examined the experience in Massachusetts and found
that the pool of applicants qualifying for the bonus was small. Dr. Grasmick
added that MSDE is creating a consortium with surrounding states for recruiting
teachers. She noted that Pennsylvania produces more teachers than it needs.
Senator Collins also commented that younger teachers are not being retained.
He said the State needs to really provide a big incentive for new teachers. He
said the State will face a major teacher shortage in the next few years. Dr.
Grasmick said she strongly agrees.
Dr. Troxler asked what the teacher attrition rate was around the State. Dr.
Grasmick replied that the rate varies by jurisdiction. She said the statewide
retention rate is approximately 80 percent. Dr. Grasmick also said that the
State's teacher workforce is aging.
Ms. Moyer added that she thinks the State's retention rate will change
because many students entering the education field do not intend to become
lifelong teachers. Dr. Grasmick agreed, noting that the economy also impacts
retention rates.
Dr. Troxler asked whether any jurisdiction or the State does an exit
interview of teachers leaving the profession. Dr. Grasmick responded that MSDE
will be implementing a strong mentoring program.
Delegate Cryor asked whether the main reasons teachers leave the classroom
are because of financial reasons. Dr. Grasmick replied that financial reasons
are certainly a factor, noting low starting salaries, but she also cited lack
of flexibility in the workplace and a lack of training for young people about
the reality of what teachers face in the classroom.
Ms. Bjarekull continued outlining MSDE's fiscal 2002 budget enhancements. In
response to Ms. Bjarekull's discussion of MSDE's plans to expand the number of
Judy Hoyer Centers and phase in full-day kindergarten, Mr. LaPlaca asked Dr.
Augenblick to examine the percentage of students in the 10 study schools who
experienced early childhood training.
Senator Collins asked whether it was premature to look at full-day
kindergarten until the State sees the impact of class-size reduction. Dr.
Grasmick replied that: (1) many local school systems already provide full-day
kindergarten; (2) the State's population is shifting toward middle and high
schools, providing more space in elementary schools; and (3) the potential for
influencing early cognitive development is great.
After Ms. Bjarekull concluded, Delegate Rawlings asked whether the State
Board of Education takes into account the State's ability to pay for all of
these enhancements. Dr. Grasmick replied that the board does not deal with the
revenue issue but targets what is needed, recognizing that perhaps not all of
these enhancements will be funded. Mr. Sondheim added that the board makes its
decisions with a consciousness of limitations on State resources.
Delegate Howard noted that many federal grants to schools contain a
requirement for permitting school choice. Dr. Grasmick responded by saying that
she does see a trend toward more and more grants requiring school choice.
However, MSDE leaves the issue of school choice to local jurisdictions.
Potential Policy Options for the 2001 Session
Mr. Rohrer began the discussion by noting that the policy options DLS and
MSDE were presenting were guided by comments at public hearings, reviews of
education programs, questions raised by Dr. Augenblick's equity analysis, and
questions raised by Commission members.
As Mr. Hiram Burch, a DLS policy analyst, discussed the policy options
related to the current expense formula, Senator Hoffman noted that these
options do not address adequacy since the foundation amount is not currently
based on an empirically derived amount needed to support an adequate education.
Policy Options Related to Special Education
Dr. Grasmick discussed policy options related to special education. She
noted that the State has not been paying its fair share, noting that the State
contributes approximately 15 percent of the funding for special education
whereas the local jurisdictions contribute 76 percent with the federal
government contributing the remaining 9 percent.
Dr. Grasmick also cited the reasons for the high costs of transportation for
special education students. She noted that since not every jurisdiction has a
program for every special education child, children have to be transported longer
distances which increases the costs of transportation. Additionally, she noted
that every special education bus must have a bus monitor which further
increases transportation costs.
Ms. Bjarekull presented MSDE's recommended policy option for funding special
education. Under this option, the distribution of the $70 million base grand
would not change. Second tier funding (currently $11 million) which is
distributed based on wealth and the number of special education students would
be increased. In the proposal, an estimated additional $211 million would be
phased in over 5 fiscal years, including $42.3 million in fiscal 2002. By the
end of the five-year phase-in period, the additional State funds would provide
2.3 times the State's share of the basic current expense amount for each
special education student. She said MSDE also believes the formula would
encourage more jurisdictions to educate special education students in public
schools, rather than more costly nonpublic schools, since the formula would
provide more funding.
Senator Hoffman noted that current first tier funding ($70 million) is not
distributed on a rational basis. She asked if MSDE had tried to eliminate the
$70 million while adding the proposed $42.3 million into the funding. Ms. Bjarekull
replied that MSDE did run such a formula. However, the formula resulted in some
jurisdictions either losing special education funds or receiving no additional
funds.
Senator McCabe noted that the Commission would want to make sure any special
education funds went toward appropriate purposes.
Senator Neall noted that if the State is not putting in sufficient special
education funds, the locals are, and it is coming out of the local education
budget. He noted that if the State can fix special education and special
education transportation, then the State can focus on current expense. He also
commented that he did not know if there was space in public schools for those
special education students with profound needs that are currently in nonpublic
schools. He concluded by noting that there should be some type of a
accountability mechanism to insure that this funding will be used responsibly.
Senator Hoffman suggested that besides conducting an audit of any schools
with more than a 12 or 13 percent special education population, the State
should look at what is in a special education student's Individualized
Education Plan (IEP), whether the goals of the IEP are being met, and whether
funds are being pulled from traditional education budgets to special education
budgets. Dr. Augenblick suggested that the Commission might want to examine the
possibility of phasing out over several years the $70 million, or a portion of
it, while phasing in the $211 million. Dr. Grasmick proposed that the revenue
source for MSDE's recommended special education formula comes from teachers'
retirement savings.
Policy Options Related to Transportation
Ms. Bjarekull discussed MSDE's proposal for transportation funding. She said MSDE proposed leaving the base grant alone, changing only the State contribution for students in need of
special transportation services. MSDE's proposal provides $1,000 per
disabled student receiving transportation services.
Senator Hoffman asked whether any jurisdiction would lose funding under
MSDE's transportation proposal. Ms. Bjarekull replied that every jurisdiction
would gain more funding under the proposal. Mr. Middleton suggested stressing
flexibility in the use of the transportation funds.
Mr. Sondheim then asked whether these two formulas were stopgap measures or
permanent. He also asked whether the formulas would be revisited by the
Commission. Dr. Thornton replied that they could be revisited by the
Commission.
Ms. Praisner said the special education and transportation funding formulas
need to be in tandem because if the State gives more funds for transportation
than for special education, the State may create the potential for a
jurisdiction to support a longer distance for transporting children than is
necessary just to receive additional transportation funding.
Ms. Perkins asked how MSDE arrived at a $1,000 per student transportation
cost. Ms. Bjarekull replied that the jurisdictions reported transportation
costs between $3,000 and $4,800. However, Ms. Bjarekull said using these
figures would substantially increase the cost of the proposal. Dr. Grasmick
noted that the formulas could be phased in over a two-year period.
Mr. Rohrer noted that enrollment growth was not accurately reflected in the
transportation formula until 1998. He also noted that special education costs
and high growth counties are two factors affecting transportation funding. DLS
presented an option for transportation funding that attempted to account for
enrollment growth prior to 1998.
Policy Options Related to Targeted Poverty Grants
Mr. Burch discussed the policy options related to targeted poverty grants.
He noted that there is an opportunity to consolidate these targeted poverty
grants.
In reviewing the policy options, Senator Neall discussed his desire to
explore the possibility of distributing targeted funds directly to particular
schools with special needs rather than to counties. He also discussed the need
for accountability with regard to the use of targeted funds. Mr. Middleton
noted that the accountability mechanism that is built into the School
Accountability Funding for Excellence (SAFE) program is working well. Ms.
Praisner echoed Senator Neall, stating that she is concerned that funds are not
following programs and therefore accountability is needed. Ms. Perkins added
that the State should not automatically exclude a population from any funding
formula.
Senator Hoffman discussed her desire to find a way to avoid a judicial
solution to the dispute over how to fund the Baltimore City remedy plan.
Mr. Rohrer and Mr. Burch continued discussing policy options, including a
targeting approach that recognizes local effort. They concluded by noting that
several programs sunset in fiscal 2002 and that there is an opportunity to
rework some of that targeted funding.
Discussion of Potential Recommendations for 2001 Session
Dr. Thornton asked the Commission to come to the September 14 Commission
meeting prepared to choose recommended proposals from among the various policy
options.
Mr. LaPlaca noted that he would be reluctant to recommend any proposals that
perpetuate a fiction and are not based on actual student populations and other
factors. He added that the Commission needs to look at how the special
education funding base is allocated.
Chair's Closing Remarks and Adjournment
Dr. Thornton asked the Commission for authorization to send a letter to the Legislative Policy Committee requesting the assistance of the legislative auditor for the successful schools portion of the adequacy analysis and also to allow Dr. Augenblick to prepare a task order letter that reflects the adequacy approach that he outlined at the meeting. The Commission granted its permission. The meeting adjourned at 5:05 p.m.