Maryland Revamps State Funding for Schools: Adds $1.3 Billion Based on Adequacy Cost Study

In a stunning victory for Maryland advocates of adequate school funding, the Maryland legislature in early April enacted a new education funding system and related accountability measures. Despite an uncertain fiscal climate, the new law increases state funding for schools by $1.3 billion annually, nearly 35%, to be phased in over the next six years The new system also targets a larger portion of the increase to low wealth districts and to districts educating high-need students.

Chris Maher, the Education Director at Advocates for Children and Youth, credited a broad coalition of advocacy groups, including the Maryland PTA, the Maryland Caucus of Black School Board Members, and the ACLU of Maryland, among others, with uniting the interests of rural poor and urban poor constituencies who persuaded legislators that the proposed bill promised to benefit students statewide.

The new law overhauls and simplifies the funding system by eliminating or phasing out numerous categorical grants in favor of a higher foundation amount and additional funds for students who: (1) are economically disadvantaged; (2) have limited English proficiency; or (3) need special education services. The state share of education funding is slated to increase from the current 41% to 50%, and distributions are indexed for the cost of education in Maryland localities.

For local school districts, the new system requires fiscal "maintenance of effort" and development of accountability plans. By September 2007, each school district must also provide full-day kindergarten for all students and make pre-K programs available to all economically disadvantaged four-year-olds.

This year's legislative session began on a pessimistic note because legislators had pronounced the increased funding recommendations of the state's Commission on Education Finance, Equity, and Excellence ("Thornton Commission") dead-on-arrival when they were issued shortly before the legislature convened. The governor's January budget proposal included a small increase in education aid, but did not back the Thornton Commission's plan.

Established by the legislature and appointed by the governor, the Commission was charged with reviewing the state's school finance system and accountability provisions and making recommendations to ensure adequate funding, equity in funding, and excellent student achievement. Maryland, like most states, has established standards for student performance and a system for assessing that performance. The Commission found that school districts farthest from meeting the standards had the lowest funding. After two years of work, which included a 2001 study to determine the cost of resources sufficient to allow students to meet the state's performance standards, the Commission recommended the systemic revisions approved -- with only minor modifications -- by the legislature.

Bebe Verdery, Education Director for the ACLU of Maryland views the change as "a substantial step towards ensuring that Maryland's children get the education they deserve, that the State Constitution requires, and that the ACLU has been fighting for in Maryland's courts since 1994." Both the ACLU and Baltimore City filed lawsuits against the State in 1994, and won a partial summary judgment motion in 1996. In 2000, the Circuit Court held that the state "is still not providing the children of Baltimore City . . . a constitutionally adequate education." Based on a preliminary cost study, the court found that the state should provide "additional funding of approximately $2,000 to $2,600 per pupil."

Looking forward, the legislative bill, which the governor has said he will sign, establishes a commission to study the state's tax structure and recommend changes by the end of this year and sets up a task force to study facilities funding in recognition of the need for additional classrooms for the kindergarten and pre-K mandates.

Prepared April 11, 2002