Proposed Budget Moves Maryland Backwards by Cutting Key Investments in Health, Education, Housing

As a whole, the governor’s proposed budget for fiscal 2018 fails to make the investments we need to continue to move our state forward. While the proposal makes some efforts to address unmet needs, such as reducing waiting lists for services for people with disabilities, the budget is largely balanced on the backs of people who need the state’s assistance the most.

Baltimore City, with some of the highest poverty and unemployment rates in the state, stands to lose millions in state assistance that was meant to help the community recover from the 2015 uprising and build a stronger local economy. There is less investment in health care, housing assistance, and teacher pay. And state agencies not only can’t hire additional staff, even in the face of increasing workloads, but also can’t give their employees a pay increase that might keep state workers on the job.

K-12 Education

On paper, it looks like education spending is going up but the reality is a bit more mixed. Most of the increased support for schools is due to enrollment growth and other changes that cause spending to automatically increase under state funding formulas. At the same time, the budget also eliminates some innovative educational programs and halts efforts that provide additional support to new teachers.

• The primary investment in public schools is up $160 million, or 2 percent. This fully funds school aid formulas. However, past failures to adjust for inflation have lowered the bar and the state is at least $1 billion below its currently established standard for “adequate” funding. A more recent outside review of state funding formulas found that Maryland needs to invest about $2.6 billion more to provide a high-quality education to all students. The state is in the process of reviewing its education funding formulas.
  • Baltimore City lost $42 million in school aid, reflecting disparities in the current formula. In past years, the budget has compensated with grants for school districts with declining enrollment.
  • Guaranteed Tax Base funding is down by $4.3 million (8 percent). Baltimore City, Dorchester County, and Prince George’s County lost funding. These cuts are driven by the formula, not this year’s appropriation, but they compound problems inherent in the current formula as well as continued underfunding due to past cuts.
• The governor is proposing increased funding for private and specialized schools, supporting three additional technology-focused P-TECH high schools and one new LYNX high school, a model that focuses on individual student flexibility and choice. The budget also adds $2 million for additional BOOST scholarships for students to attend private schools. Data show that nearly four out of five students who received this funding in the past were already attending private schools, so it has not been effective in helping new students access alternative options.
• The budget cuts funding for three programs for students in low-income areas: extended day and summer enhancement programs, Mentoring and college readiness services for low-income middle school and high school students, and robotics education programs.
• The budget cuts back on a funding pool used to help attract and retain quality teachers and slashes a new pilot program that offers mentoring opportunities for first-year teachers. These cuts come at a time when Maryland faces a teacher shortage in 25 academic areas affecting all 24 of the state’s schools districts. A recent analysis by the Learning Policy Institute found that Maryland is in the bottom 10 states for teacher working conditions and teacher qualifications, with an above-average share of inexperienced teachers in schools with high populations of students of color.

Higher Education

Overall state aid to colleges and universities, including community colleges, is up about 2 percent, on average. The governor said he would cap tuition increases at 2 percent, but it remains to be seen whether the schools will have to cut back on their offerings to be able to balance the books.

On a positive note, the budget would restore funding to the state’s historically black colleges that was cut from the current year’s budget and create a new matching program to help families save for college. The state may have to increase funding to its historically black colleges and universities in the future, depending on the outcome of a current lawsuit.

Health Care

In the area of health care, the governor’s proposed budget makes some important new investments while at the same time going back on promised pay increases for caregivers and support for the Prince George’s County hospital system. While not addressed in the budget, it is important to keep in mind that Maryland also stands to lose about $1.3 billion in the next fiscal year, and much more going forward, if Congress repeals the Affordable Care Act.

Proposed cuts:

• A 2 percent rate increase for caregivers for people with disabilities instead of the 3.5 percent that had been previously promised. These caregivers receive very low wages and the promised 3.5 percent increase was part of a plan to gradually raise the wage to a more sustainable level.
• A major reduction in previously promised support for the Prince George’s County hospital system, cutting operating support in half and eliminating most capital funds expected in the next budget year.
• Cuts funding in half for Community Health Resources Commission, from $8 million to $4 million. This commission provides grants to expand access to health care services in underserved communities.
• Level funding for local health agencies. Funding is normally required to increase based on inflation and population growth.

New investments:

• Reduces—but does not eliminate—the waiting list for assistance for people with developmental disabilities by funding 400 additional Medicaid waiver slots.
• Adds $31 million in additional funding for children and young adults with autism
• Provides $2 million in additional funding for opioid addiction treatment
• Supports an additional 20 inpatient psychiatric beds

Housing

The proposed budget cuts almost all general fund investment in housing programs, dropping to $4.6 million from $51.5 million in the current year’s budget. The spending plan shifts these programs to the already overstretched capital budget, to be funded through bonds. However, the amount of bond funding available for these programs in the next budget year does not make up all the lost funds, and this could be a continued challenge in future years due to competing infrastructure needs.

Programs affected by shifts of general fund dollars include:

• Project CORE – strategic demolition of vacant properties in Baltimore City.
• Baltimore Regional Neighborhoods Initiative, which funds neighborhood revitalization in Baltimore City and neighboring communities. Funding was also reduced by $9 million.
• Seed Community Development Anchor Institution Fund. Funding was also cut by $5 million
• $25.1 million in general fund support for affordable housing and related programs (planned to shift to capital budget)
  • $9 million for the rental housing programs – all cut from capital budget
  • $7.6 million for homeownership programs
  • $5 million for partnership rental housing programs
  • $500,000 for housing and building energy programs
  • $3 million in funding for the transitional housing program

Economic Development

Economic Development is one area that Hogan is greatly increasing spending. While this is an important role for state government to play, at a time when the state’s cash flow is tight, it doesn’t make sense to increase investment in programs that have not proven very effective, like the Enterprise Zones. The budget submission also incorporates the portions of large tax credits to giant corporations that were not included in the current year’s budget — $20 million to Marriott and $5 million for Northrop Grumman.

Spending increases:

• $30 million to the Maryland Economic Assistance Authority Fund, a 50% increase from the current year’s budget.
• $22.4 million for the Enterprise Zone Tax Credit, a 14% increase. A 2014 review of the program found it is ineffective at creating jobs for Enterprise Zone residents – the people it was designed to help.
• $16.9 million for Small, Minority, and Women-Owned Business Investment Account, a 50% increase from 2017.

New programs:

• $2 million for Cybersecurity Investment Incentive Tax Credit
• $1 million on Partnership for Workforce Quality
• $1 million to Maryland Marketing Partnership to establish new state branding

Program cuts:

• $5 million in Film Production Tax Credit, down 56% from the current year.

Transportation

• Increased investment in the Metro system, as grants to the Washington Metro Area Transit Authority increase by 24% to $156 million.
• Decrease in capital funds available for local governments to use on smaller projects – just $77 million, a 16% decrease from the current budget year.