On February 24th a letter was sent from Howard County Government (Holly Sun – HoCoGov Budget Office) to the Howard County Board of Education concerning the proposed HCPSS FY2022 Capital and Operating budgets.
I am going to give you the big spoiler (about the operating budget request) right up front here in this article:
“Given the limited amount of available funding growth to support operating budgets across County public services, an operating budget increase to support HCPSS at the level proposed in the Superintendent’s request can only be achieved through either a significant reduction in all other services to the Community or a tax increase in FY2022”
Here is the full text of the letter:
Dear Chair Chao and Members of the Board of Education:
As you and the members of the Board of Education (BOE) are in the process of deliberating and finalizing the BOE’s proposed FY2022 operating and capital budgets, both to be adopted at this Thursday’s (February 25th) BOE meeting, I encourage you to take into consideration the County’s fiscal outlook and funding constraints. With this information in mind, I am confident that the BOE can make informed decisions that balance the many needs of our students and educators with the broader impact that these decisions have on the availability of resources to support all of our County residents.
On September 25, 2020, the BOE proposed a capital budget of $108 million for FY2022. The proposed capital budget includes a request for $40.3 million in State funding and $67.8 million in County funding for school projects in FY2022.
In FY2021, the County provided $68.7 million in support for the Howard County Public School System capital budget. However, the $68.7 million provided last year was only made possible by a transfer tax increase that allowed a one-time authorization of $19.7 million in bond funding, necessitated by the fact that the State failed to provide any funding for the priority Hammond High School Renovation and Addition project. Prior to the one-time, transfer tax supported spike in FY2021, the five-year average County funding contribution to the HCPSS capital budget was $46.9 million.
I am writing to confirm that an estimated $50~54 million in total County funding will be made available to support the Howard County Public School System (HCPSS) capital budget annually for the foreseeable future, ensuring a sustainable funding stream for school construction projects. This funding level is a significant commitment given the fiscal challenges currently facing the County, including the economic stress and rising needs from the pandemic, and a shrinking capacity to take on new debt with escalating debt burdens. By projecting support in the $50~54 million range for the foreseeable future, the County will be providing significantly more funding to the HCPSS capital budget ($3~7 million annually) than has been provided historically.
This estimated amount was originally communicated to the BOE in correspondence dated November 27, 2019, and further confirmed by the County’s Budget Office to the school staff on August 13, 2020. The projected $50~$54 million annual County funding was also included in the multi-year FY 2021 Council Approved Capital Improvement Program (CIP) Budget book.
On January 21st, the Superintendent’s proposed operating budget for FY2022 was released. The $932.1 million proposal includes a request for $642.4 million in County funding, representing a $22.1 million (3.6 percent) increase in County funding over the FY2021 HCPSS operating budget. This amount is $39.6 million higher than the formula-driven Maintenance-of-Efforts (MOE) County funding in FY 2022 based on the 2.8% drop in enrollment.
At the February 9th BOE Budget Work Session, the County Budget Office provided a preliminary economic outlook presentation for the members of the Board. In that presentation, it was communicated that the County was currently projecting $26.7 million in operating budget revenue growth for the FY2022 operating budget. After accounting for mandated expenditures like annual service payments related to the Courthouse P3 project ($9.9 million) and debt service payments ($3.3 million), just $12.9 million in funding growth remains to support the entirety of County public services, including 26 County government agencies, three educational entities (HCPSS, Howard Community College and the Howard County Library System), and our non- profit partners. Given the limited amount of available funding growth to support operating budgets across County public services, an operating budget increase to support HCPSS at the level proposed in the Superintendent’s request can only be achieved through either a significant reduction in all other services to the Community or a tax increase in FY2022.
Additionally, due to a potentially strong enrollment recovery next fall (from the 2.8% enrollment drop experienced in current year) as assumed in Superintendent’s FY 2022 budget proposal, there is a strong likelihood of a significant formula-driven MOE increase in County funding in the FY2023 operating budget. This anticipated mandated increase, combined with rising debt service payments to finance infrastructure projects, could dramatically reduce the availability of resources for all County public services needed by our residents as we continue the work of recovering from the pandemic. Budgetary decisions in FY 2022 will have a direct impact on the following year’s budget and all the services it supports.
I appreciate the challenging position that the BOE assumes in this process, advocating for important school operating and construction priorities while considering the fiscal constraints of the County. Thank you for your attention to this matter.
Holly Sun, Ph.D.
Howard County Budget Office
Here is the PDF of the letter: 20210224 Budget Letter to BOE
The big question is will this information from Howard County Government give the Board of Education pause on submitting a budget that once again they will know up front that will not be fully funded (or even come close to being fully funded)?
We wait and see. Adoption of the proposed budget by the Howard County Board of Education is scheduled for February 25th at 3:00pm: https://www.hcpss.org/about-us/budgets/fy22/
I did like the fact the HoCoBOE did at least discuss not getting close to their budget amount this year and some scenarios in case: https://go.boarddocs.com/mabe/hcpssmd/Board.nsf/files/BYCPQJ65A5FA/$file/02%2017%202021%20Board%20Memo%20-%20Potential%20FY%202022%20Budget%20Reductions.pdf. It still concerns me that their scenarios do not mention a number below a $10 million increase over last year….especially with this statement above:
“…just $12.9 million in funding growth remains to support the entirety of County public services, including 26 County government agencies, three educational entities (HCPSS, Howard Community College and the Howard County Library System), and our non- profit partners”
This will be an interesting budget cycle for all entities in the county and something I will try and track the best I can here on the blog.