1. Maryland Association of Counties – Annual Winter Conference 2013 THE NUTS AND BOLTS OF SCHOOL BUDGETING – THE STATE PERSPECTIVE Stephen A. Brooks Deputy State Superintendent for Finance Maryland State Department of Education

2. Maryland Constitution ARTICLE VIII EDUCATION. SECTION 1. The General Assembly, at its First Session after the adoption of this Constitution, shall by Law establish throughout the State a thorough and efficient System of Free Public Schools; and shall provide by taxation, or otherwise, for their maintenance.

3. Maryland Major Aid for Public Education State aid in billions of dollars

4. Some Education Article References 5-101 Annual school system budgets 5-102 Budget submissions and reductions 5-103 Budget amount 5-104 Tax levy and payments to school systems 5-105 Expenditures and transfers 5-202(d)Maintenance of Effort requirements 5-213(c)Withholding funding for not meeting MOE 5-213.1Withholding funding for not meeting minimum local share

5. Maint. of Effort (MOE) Recent History FY 2010 FY 2011 FY 2012 FY 2013 MOE Waiver Requests2200 MOE Waivers Granted0200 Counties Not Meeting MOE20*70 Funding Reductions Made$0 * Both counties received waivers from MOE

6. Ch-Ch-Ch-Ch- Changes – SB848 MOE Filing for waiver is mandatory if county does not anticipate being able to meet MOE “Bounce Back” Provision – Most recent per pupil amount when MOE was last met Establishes three types of waivers: Impeded Ability Waiver, Recurring Cost “Agreed To” Waiver, and Rebasing Waiver In FY 2015 - Additional MOE adjustment for counties with lower than average education effort Assurance (Offset of amount of MOE not met) Multiple process, timing, and reporting changes

7. Education Effort – Used for Rebasing Waivers and Starting in FY 2015 for MOE Increases Education Effort = A County’s Education Appropriation divided by The County’s Wealth 5-year Moving Average = the average of the five preceding years e. g: the 5-year moving average to be used for FY 2014 MOE is the five preceding years (i.e. FY 09 – FY 13) The average is calculated as a simple average of the five years The Statewide 5-year moving average is also a simple average of the 24 systems and across the five years

8. Ch-Ch-Ch-Ch- Changes – SB1301 BRFA Shifts payments for the normal costs of Teacher Pensions over a four year period from FY 13 to FY 16 50%, 65%, 85% and 100%, Phase-in amounts shown in law Additional MOE for Pension Costs Section 18 contains a table by county and fiscal year during the four-year phase-in Section 19 requires that the FY2016 amounts are to be included in FY 2017 per-pupil calculation Special provisions for the MOE calculation for Baltimore City (Section 20) Additional authorization for rebasing MOE levels under certain conditions in FY 13 and FY 14 (Section 23)

9. State Processes and Timelines – Supplemental Nonrecurring Costs In accordance with COMAR 13A.02.05.03(b) a county has until March 31 st of the prior fiscal year to request items for exclusions as nonrecurring costs Before submitting the written request, the county shall confer with the local board of education The county is also to send a copy of the written request to the local board of education MSDE notifies the county and the local board of education within 30 days from receipt of the written request, but no later than May 1 of the prior fiscal year A county must obtain approval from MSDE to count any mid-year supplemental increases as nonrecurring costs

10. State Processes and Timelines – Waiver Requests to the State Board of Education Annually the State Board releases the specific timeline for filing, some dates are specifically in law If a county is applying for waiver, the request is required to be filed by the earlier of: The seventh day following the end of the legislative regular session; or April 20 th of the prior fiscal year The State Board is required to notify the county whether the waiver is approved or denied by the earlier of: 30 Days after receipt of the application; or May 20 th of the prior fiscal year

11. State Processes and Timelines – MOE Compliance Documents Two primary documents used to certify MOE MOE Certification Form – Signed by local superintendent Budget Certification Form – Signed by county Timing (per SB848) Budget documents are required to be submitted to MSDE by seven days after passage but not later than June 30 th Preliminary determination of MOE compliance is required within 15 days of receipt of the county budget

12. FY 2014 MOE Calculation Process Beginning for FY 2013, the MOE Certification form was adjusted to include the additional MOE required in accordance with SB1301 – Section 18 To avoid double counting the effects of Section 18 amounts, beginning for FY 2014 (and running through FY 2016), the MOE form will also adjust for the prior year Section 18 amount The prior year Section 18 amount will be deducted in the determination of the prior year’s “Highest Local Appropriation” on the back of the form In FY 2017, in accordance with SB1301 – Section 19, the additional MOE from 2016 becomes part of the per pupil calculation and does not need to be reduced