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Bill attempts to distribute state education aid more equitably

Measure has potential to bring an estimated $11.2 million more to Washington Co.

March 18, 2013|By KAUSTUV BASU | kaustuv.basu@herald-mail.com

ANNAPOLIS — A bill introduced by Gov. Martin O’Malley’s administration during the current session of the Maryland General Assembly has the potential to bring an estimated $11.2 million more in state aid to the Washington County Board of Education over the next five fiscal years.

The bill is an attempt by the state to make a more accurate calculation of local wealth, and make the distribution of state education aid more equitable, said Del. Andrew A. Serafini, R-Washington.

Serafini said that many Maryland counties have complained over the years that the Sept. 1 date that was set to calculate the net taxable income of a county meant that many taxpayers who filed for extensions on their income tax returns were not included in the calculations.

This, he said, did not lead to a true picture of the local wealth of counties and jurisdictions, and led to inequities when it came to the distribution of state education aid.

“By only using the data from returns filed by September 1, our current system undercounts total net taxable income, since many returns are not submitted until the Oct. 15th extension deadline,” says a written testimony from the governor’s office in support of the bill. “According to the Department of Legislative Services, the distribution of returns filed by Sept. 1 is not proportionate across the state. Therefore, this change will provide a more complete representation of each county’s wealth and tax capacity.”

Though all counties have individuals who file late returns, the analysis of the bill says, “wealthier individuals, who are clustered in certain counties, file late returns more frequently.”

About 75 percent of the state’s aid to public schools is given on the basis of the wealth of a county, according to the Department of Legislative Services. The more wealthy a jurisdiction, the less aid it receives.

The “bill requires state education aid formulas that include a local wealth component to be calculated twice, once using a net taxable income (NTI) amount for each county based on tax returns filed by Sept. 1 and once using an NTI amount based on tax returns filed by Nov. 1,” according to an analysis of the bill by the legislative services department.

Under the bill, “Each local school system then receives the greater state aid amount of the results from the two calculations,” legislative services says. The bill would phase in the increased state aid over a five-year period, beginning in fiscal 2014.

House Bill 229 received a 136-0 vote during its third reading in the House of Delegates and will now head to the Senate before returning to the House for a vote.

The bill also was cross-filed in the Senate.

The Maryland Association of Boards of Education supports the bill, as does the Maryland State Education Association and the Maryland Association of Counties.

The Washington County Board of Education has filed written testimony supporting the bill.

“Washington County Board of Education supports Senate Bill 277 and House Bill 229 because they provide for the equitable distribution of education funding among all twenty-four (24) local boards of education. All of the students across the State of Maryland will benefit if Senate Bill 277 and House Bill 229 are enacted,” according to written testimony filed by the board.

Justin Hartings, president of the Washington County Board of Education, said the bill would ensure that all counties in the state have their local wealth measured in the same way.

The bill would remove the anomalies in the system, he said.

“I think (the bill) is doing what’s right for students across the state,” he said. “From everything I have seen, this bill is a net positive.”

Chris South, chief financial officer of Washington County Public Schools, said he, too, was closely following the bill.

“Obviously, I feel very positively about the bill and I am closely following it as a finance person,” he said, adding that the extra money would go the county’s board of education and could be used at its discretion.

Ardath Cade, a lobbyist for the Washington County Board of Education, said the bill, as currently proposed, would not take away the money given to any other county.

“It corrects the inequity … but the richer counties do not lose anything,” she said.

Counties that receive a greater share of state education aid because of the new calculations will get 20 percent of the increase in fiscal year 2014.

That number will go up by 20 percentage points every year until counties get the full amount of the increase in fiscal year 2018.

Testimony filed in support of the bill from the governor’s office said that the measure “closes an almost decade-long disparity in education funding” and will “lift all of our local educational systems.”

The state’s General Fund expenditures related to state education aid is expected to rise by $8.3 million in fiscal year 2014 if the bill passes, according to the Department of Legislative Services. That number will be $55.9 million in fiscal year 2018.

Among those who testified in support of the bill at a committee hearing in February was Washington County Commissioner John F. Barr, who said at the hearing that the bill would give a fairer representation of jurisdictions such as Washington County.

“That will mean a fair recognition of our schools and some of the support that we can’t generate at home due to our limited tax base,” Barr said, according to an electronic transcript of the hearing.

Estimated increase in direct education aid because of adjustment to net taxable income affecting Washington County:

Fiscal year 2014: $648,500
Fiscal year 2015: $1.4 million
Fiscal year 2016: $2.2 million
Fiscal year 2017: $3 million
Fiscal year 2018: $3.95 million

* Source: Department of Legislative Services

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