Frequently Asked Questions
What is the difference
between the Operating Budget and the Capital Budget?
What is the relationship between the MCPS
strategic plan and the Operating Budget?
Where does the greatest amount of money
for school system operations come from?
What is meant by the “tax-supported” budget?
Does the county have to give the school
system a certain amount of money?
What share of the county budget does MCPS
receive?
How does the state decide how much state
aid it provides to each county?
What is a grant?
What is the largest amount of the school
system budget used for?
How does the school system decide how
much to give to any individual school?
What factors are responsible for the
increase in the school budget?
How are employee salaries and benefits
determined?
What are budget categories?
What does MCPS do if something needs
to be added to or changed in the budget after the
school year begins?
What has MCPS done to make its budget
more efficient?
How does MCPS get its budget approved?
How are decisions on the budget made?
What opportunities do citizens have to
influence budget decisions?
What information is available from published
budget documents?
What budget information is available
to citizens on the Internet?
Do you have further questions about the MCPS budget?
Ask a Budget Question.
What is the difference between the Operating Budget and the Capital Budget?
The Operating Budget supports the day-to-day operations of the school system, including the provision of teachers and other staff, supplies and materials, and other operational needs of schools and offices. It is paid for largely through current year taxes. In FY 2007, the Operating Budget totals $1.85 billion. The Capital Budget supports school construction and other major projects related to schools and other facilities. It is paid for largely through debt assumed by Montgomery County. In FY 2007, the capital budget totals $185 million, part of a six-year capital improvements program of $933 million.
What is the relationship between the MCPS strategic plan and the Operating Budget?
The MCPS strategic plan, Our Call to Action: Pursuit of Excellence, guides the school system in all its activities to improve student achievement and provides a basis for accountability to the public for the results obtained. The Operating Budget aligns with the goals and strategies of the strategic plan and operationalizes and provides a basis for implementation of the plan. Annual community forums provide one vehicle for citizen involvement in the development of the strategic plan and the operating budget. This alignment is in accord with state requirements and with the quality management principles of the Malcolm Baldrige Quality Management Criteria, issued by the U. S. Department of Commerce. In 2005, MCPS became the first large school system in the United States to win the state U. S. Senate Productivity Award, granted to organizations and corporations that exemplify Baldrige principles.
Where does the greatest amount of money for school system operations come from?
The Montgomery County Council determines how much money the school system will receive each year as part of the overall county operating budget. There is no separate school tax in Maryland. Most county money comes from taxes paid by county residents. The largest sources of revenue are the property tax (30 percent), income tax (25 percent), real estate taxes on the transfer and recordation of property (5 percent), and other taxes on energy, telephone service, hotels, and admissions (4 percent). The average household in Montgomery County pays $7,000 annually in local taxes or about 4 percent of its income. Most of the rest of the revenue raised by the county comes from state and federal sources (18 percent), the largest part of which is state aid designated for schools (9 percent). Revenue from fees, fines, reserves, and other sources totals 18 percent.
What is meant by the “tax-supported” budget?
Two-thirds of county revenue comes from local taxes. However, county law has focused attention on those expenditures paid for in part or in whole by local taxes. This excludes programs paid for entirely by grants or user fees (called enterprise funds, such as food services). The rest of the budget is called the tax-supported budget and is subject to limitations imposed by the county charter related to “spending affordability.” Each year, the County Council sets revenue and expenditure totals for spending affordability that limit the size of the Operating Budget. The Council may exceed that limit only by a super-majority vote of seven of the nine Council members.
Does the county have to give the school system a certain amount of money?
State law obligates each county to provide the local school district with a minimum amount of local money. This is called Maintenance of Effort (MOE). Each district must receive in local dollars a sum at least equal to the same amount per student as it received in the previous year. In other words, if student enrollment increases by 2 percent compared to the previous year, the county owes at least 2 percent more in local taxes to the school system. If any county fails to meet this requirement, it is not entitled to any increase in basic state aid for that year. If a county decides to give a school system extra money for one-time projects, such as opening a new school or a new computer system, that amount does not count toward the requirement, if approved by the Maryland State Department of Education. If a county cannot afford to pay the MOE minimum amount because of serious economic trouble, it may petition the state for a waiver from the MOE requirement.
What share of the county budget does MCPS receive?
In FY 2007, the Montgomery County Public Schools (MCPS) Operating Budget constitutes 48.1 percent of all Montgomery County Operating Budget expenditures. That proportion has remained approximately the same for many years, although there has been a small increase since FY 2000 when MCPS had 47 percent of the Operating Budget. If debt service for capital budget projects paid by the County Government on behalf of MCPS is included, then expenditures for MCPS constitute 50.3 percent of the local budget. In most municipalities, expenditures for public schools are the largest part of the local budget.
How does the state decide how much state aid it provides to each county?
State aid makes up 17 percent of the MCPS budget. Maryland provides aid to each county based on a variety of formulas, including such factors as student enrollment, county wealth, and the number of students eligible for Free and Reduced-price Meals -- an indicator of poverty. Those counties with lower property value or personal income receive a higher proportion of state aid than wealthier counties, called equalization. So while the state pays about 45 percent of total education costs statewide, Montgomery County gets only 17 percent of its funds from the state. Only two counties, Talbot and Worcester, receive a lower percentage.
In 2002, the state passed an innovative new education funding law, the Bridge to Excellence in Public Schools Act. This law aims to guarantee all students adequate educational resources by increasing the overall level of state aid by $1.7 billion, increasing the proportion of aid equalized for local wealth, providing extra support to rural districts, and giving local districts more flexibility in the use of state aid. In return, local districts must annually submit and receive state approval of a local Master Plan with specific goals for student achievement. The Master Plan holds school districts accountable for the use of state aid.
What is a grant?
Grants are funds made available for a specific purpose over a specified term by a federal or state agency or by a private foundation or other private organization. Grants make possible special or enriched programs that might not be possible with annual budgets. The largest grants are funded by the federal government, including the Individuals with Disabilities Education Act (IDEA) for special education, and Title I, which benefits children from low-income backgrounds. Other significant federal grants include Head Start, programs for children with limited English proficiency, technology programs, class size reduction, and programs for staff development. These grants may be used only for the intended purposes and cannot replace or supplant local funding. Most specific state grants were discontinued by the Bridge to Excellence law and folded into general state aid.
What is the largest amount of the school system budget used for?
Nearly 90 percent of the Operating Budget pays for employee compensation. This includes salaries and budgeted employee benefits (health insurance, life insurance, retirement contributions, social security taxes, workers compensation, and unemployment insurance) for teachers, other professionals, administrators, and supporting services staff. According to state law, the level of salaries and benefits is determined through collective bargaining with employee unions. MCPS has three unions:
- the Montgomery County Education Association (MCEA) for teachers and other professional staff,
- the Service Employees International Union (SEIU) Local 500 for supporting services staff, and
- the Montgomery County Association of Administrative and Supervisory Personnel (MCAASP) for principals and other supervisors.
Other than the 89 percent of the budget that goes for compensation, the largest items in the budget are:
- textbooks and other instructional supplies (2 percent)
- tuition for special education students who must attend private schools (2 percent)
- utilities such as electricity and natural gas (2 percent)
- food for school lunches (1 percent)
- school buses (0.5 percent), and
- bus fuel (0.5 percent).
All other operating expenses make up a total of 3 percent.
MCPS devotes 65 percent of its budget to instruction, the largest proportion in Maryland. It spends just 2 percent on central administration, including central technology operations, personnel and business operations, and central school system leadership. Over the last 6 years, the percentage spent on central administration has dropped from 2.7 percent to 2.0 percent.
How does the school system decide how much to give to any individual school?
Most school-based expenses are budgeted centrally for the entire school system. It is necessary to allocate these resources to each school. This is done according to mathematical formulas, most of which are based on student enrollment or the square footage of school buildings. These formulas guarantee that each school gets a fair share of available resources. The allocation formulas are part of the budget set by the Board of Education and published as the “Budgeted Staffing Guidelines” in the Operating Budget and the Program Budget. The resulting allocations are summarized and published in Schools at a Glance.
The allocation formula sets how many staff each school receives each year, generally based on projected student enrollment. As enrollment increases or decreases from year to year, schools may receive greater or fewer staff. If enrollment changes after allocations are completed, schools may receive changes in staffing based on decisions made by the community superintendents. Other staffing adjustments may relate to special programs offered at a school or other particular or unusual circumstances. Some staff, such as building service workers, are allocated according to a formula based on square footage, related to the amount of space that must be maintained. Other resources, such as textbooks and media materials, are allocated according to student enrollment. These formulas also are published in the budget.
What factors are responsible for the increase in the school budget?
Most of the annual increase in the MCPS budget results from the increased cost of providing existing services, not from new or expanded programs. For example, in FY 2007, $119.5 million of the total $136.8 million increase was needed to maintain existing services, while $17.6 million related to new or expanded programs or services. The largest factor increasing cost is employee compensation, which makes up 89 percent of the MCPS budget.
Compensation increases include salaries and employee benefits. Salary increases include continuing salaries, which is the increase paid to eligible employees who maintain satisfactory performance for increased seniority. These are called “steps” because they are specified annually for each pay level up to a maximum negotiated with employee unions. Steps for all employees total approximately $20 million annually. This amount is reduced by “turnover” savings resulting when a senior employee retires or leaves employment and is replaced by a more junior and hence lower paid employee doing the same job. If no other changes in the workforce occurred, turnover savings would match steps in any single year. However, increases in the total workforce and the pattern of seniority usually contribute to the amount needed for continuing salaries.
How are employee salaries and benefits determined?
Collective bargaining agreements with each of the three employee unions determine salaries and benefits for MCPS employees. The three unions are:
- Montgomery County Education Association (MCEA) – teachers and other professionals
- Service Employees International Union Local 500 (SEIU – supporting services employees
- Montgomery County Association of Administrative and Supervisory Employees (MCAASP) – principals and other supervisors
The Board of Education has the responsibility of negotiating with each of the unions that represents employees. The state of Maryland determines which issues can be bargained, which issues may not be bargained (such as curriculum), and which issues may be bargained if both sides agree. Most agreements are multi-year agreements, although some may be “reopened” annually for certain issues. Once an agreement is reached, the County Council must determine annually whether the agreements can be funded. Although usually it agrees to funding, the Council may determine that it will return some issues to the parties for review.
In terms of employee benefits, unions may negotiate the scope of benefits received and the percentage share of premiums that union members will pay, but it may not negotiate the total cost of benefits or the specific identity of third party private providers. MCPS is self-insured for health and life insurance, meaning that it pays charges directly as they occur, instead of having an insurance company pay the charges from premium revenue. Retirement is provided through a defined benefits plan that provides monthly payments to beneficiaries upon retirement. Professional employees receive most of their pension benefits from the state of Maryland with MCPS providing only a supplement. Other employees are covered entirely by MCPS retirement plans.
What are budget categories?
The state of Maryland requires each school district to classify expenditures by category, generally the purpose of an expenditure. This allows consistent comparisons among districts according to each type of expenditure. There are 14 major categories, including such categories as Administration (Category 1), Instructional Salaries (category 3), Special Education (Category 6), and Student Transportation (Category 9). All employee benefits, regardless of the type of salary expenditure with which they are associated, must be budgeted in Category 12 Fixed Charges. The local government in each county allocates funds to public schools by category totals. Within each category total, the Board of Education decides how to spend the allocated dollars. The amounts of the budget allocated to each state category are published in an appendix of the Operating Budget.
What does MCPS do if something needs to be added to or changed in the budget after the school year begins?
Because the budget is a plan for a fiscal year, unexpected circumstances during the year may require changes in how money is spent. If more revenue is received, usually as a grant, from the state or federal government, or from other sources, the Board of Education may request approval to spend the funds by asking for a supplemental appropriation. This appropriation must be approved by the County Council. The Board of Education may not spend any money, no matter what the source, without Council review and approval. If budgeted resources are insufficient, the Board may ask for a supplemental appropriation from local tax revenue sources. While reserves are available for such purposes, a supplemental appropriation is rarely requested during a fiscal year from local sources.
Once the annual budget is approved, the Board of Education may transfer funds from one state category to another only with the approval of the County Council. At the end of each fiscal year, the County Council approves minor categorical transfers to align the official budget with actual expenditures.
If the superintendent of schools requests a transfer during the year within a state category, the Board of Education must approve the request. This type of transfer is between objects of expenditure. An object of expenditure is the form the expenditure takes, such as salaries, supplies, contractual services, equipment, or other. For this type of transfer, the purpose of the expenditure (category) must remain the same. The Board of Education has given the superintendent authority to make such transfers for items up to $100,000. All transfers regardless of amount must be reported monthly to the County Council. Individual managers have authority to move funds within a category and object of expenditure for reasons of managerial efficiency, if, for example, a manager needs to move a position from one unit to another.
What has MCPS done to make its budget more efficient?
MCPS uses zero-based budgeting to review all expenditures annually to make sure that all resources are distributed fairly and used to achieve the goals of the school system’s strategic plan. Based on projected enrollment, number of professional staff, and other established factors, school-based resources are allocated by school annually according to budgeting formulas common to all schools and approved by the Board of Education. All central office departments review the use of all personnel and other resources annually based on their assigned duties.
During the last six years, this scrutiny has resulted in base budget reductions that total over $53 million. The percentage of the budget devoted to central administration has dropped from 2.7 percent to 2.0 percent, the third lowest proportion in Maryland. Increased public participation in the budget process also has helped to identify efficiencies and opportunities to make better use of available resources.
How does MCPS get its budget approved?
After receiving considerable input from staff, parents, and other stakeholders, the superintendent of schools recommends an operating budget in December for the subsequent fiscal year. The budget is published and is available on the MCPS web site. In January, the Board of Education holds public hearings (at which any citizen may speak) and televised work sessions. The Board of Education approves its Operating Budget Request in February and officially submits the request to the County Executive and the County Council on March 1.
The County Executive reviews the MCPS budget and makes funding recommendations to the County Council on March 15 that includes information on the affordability of the budget. Typically, the County Executive does not make recommendations for specific changes in the Board’s request.
If the Board has requested more than allocated as a Spending Affordability Guideline (SAG) (see question 3), it must furnish the Council with a list of potential budget cuts, called non-recommended reductions, that it would make if its budget is funded only at the SAG level. These cuts often are very undesirable, and the Board does not necessarily have to follow them when it makes its final decisions.
The County Council holds its own set of public hearings on the budget in April, after which its Education Committee meets to make a recommendation to the full Council. No later than May 31, the Council decides how much to approve for MCPS, called an appropriation. The Council may only appropriate a total amount by state category. However, if it does not fully fund the Board’s request, it must state what it suggests that the Board cut. Based on the approved appropriation, the Board of Education makes final decisions on the budget in June. It must stick to the Council totals, but it can change the mix of what is approved within each category.
How are decisions on the budget made?
As noted above (Question 14), MCPS reexamines the justification for all resources, including personnel, every year. Many of the decisions depend on established factors, such as projected enrollment, building square footage, and the provisions of collective bargaining agreements. The superintendent of schools makes decisions on other budget changes, including program initiatives, reductions, and other changes (realignments) after receiving extensive input. The superintendent receives recommendations from the deputy superintendents, members of the Board of Education, county elected officials, advisory committees established by the Board of Education, parents, employee organizations, community and business leaders, and interested citizens. The superintendent makes final decisions in consultation with executive staff members.
The superintendent announces his recommendations at a public presentation to the Board of Education in December, which relates the upcoming budget to the state of the school system as a whole. This presentation is available on the MCPS cable channel 34 and on the MCPS web site.
What opportunities do citizens have to influence budget decisions?
Parents, students, staff, community organizations, and other citizens have many opportunities to influence budget decisions. MCPS conducts annual surveys to find out what students, parents, and employees in all schools think about the educational experience. Strategic planning forums in the fall contribute to the development of budget proposals. Public hearings held by the Board of Education in January provide another opportunity to comment on the superintendent’s recommended budget. Council public hearings in April give citizens an opportunity to influence final budget decisions. Citizens do not need to be budget or financial experts to have a viewpoint on what is working and what needs to be changed or improved in the school system.
Ideas for changes in MCPS programs are always welcome. In recent years, for example, citizen initiatives have helped launch the middle school upcounty program for gifted students, intensive reading programs for special education students, training for teachers to assist diverse student populations, and many other successful programs. Budget staff has worked closely with stakeholders to help formulate specific proposals.
What information is available from published budget documents?
The Department of Management, Budget, and Planning publishes many documents to inform the public about the MCPS budget. MCPS may publish as much or more budget information as any school district in the nation. Each of these documents has a distinct purpose, so readers need to know where to look for the information they need.
The Superintendent’s Recommended Operating Budget, published each December, has the most complete information. It provides detail on the recommended budget for each unit in the school system and shows the staffing guidelines that govern allocations of resources to schools. This document also provides detailed narratives for each unit, including its mission, functions, accomplishments, mandates, and a detailed explanation of any changes in the unit’s budget. The Recommended Operating Budget also includes the proposed Special Education Staffing Plan, required by the state of Maryland, as proposed for consideration by the Board of Education.
The Recommended Operating Budget also contains a copy of the separately published Citizen’s Budget. This publication summarizes the main budget issues and contains many charts showing budget trends. It is intended as a concise summary for citizens of what they need to know to evaluate the recommended budget. It shows why the budget has changed and provides explanations of new or expanded programs. It is recommended that all readers consult the Citizen’s Budget before they seek more detailed information.
The Program Budget is a separate document that divides the budget into major programs, instead of budget units. Programs show the resources provided for major program activities, regardless of what unit manages individual parts of a program. The amounts for each program are consistent with the recommended budget. The Program Budget also explains the purpose of each program and how the resources for that program are changing. This is the best way to find out how much MCPS spends for ESOL programs, employee benefits, outdoor education, or other distinct programs.
The Personnel Complement provides detailed information on the allocation of personnel by budget unit, including the job title of each employee, the position grade, state category, and number of employees in each job title in a unit. It provides the basis for managing the number of authorized employees.
The Adopted Operating Budget, published in March, shows what the Board of Education is requesting of the succeeding budget year. It shows any changes that have occurred since the issuance of the superintendent’s Recommended Operating Budget. The County Executive and County Council use this budget as their starting point for making funding decisions.
The Approved Operating Budget, published in July, provides detail by each unit for what the Board of Education has approved for the succeeding fiscal year. It reflects funding approved by the County Council, reductions or other changes made by the Council, and changes in revenue projections that have occurred since publication of the Board of Education’s Budget Request. The Approved Budget includes the approved Personnel Complement. A revised version of the Program Budget shows what has been approved for each program. The Approved Operating Budget also includes the final Special Education Staffing Plan as approved by the Board of Education.
Schools at a Glance is published by the Office of Strategic Technologies and Accountability. It provides much detailed information on each school for the current fiscal year. This information includes budget and personnel information consistent with the approved budget.
What budget information is available to citizens on the Internet?
All budget documents discussed above are available on the MCPS web site: http://www.montgomeryschoolsmd.org/departments/budget/index.shtm
and at public library branches throughout the county. They also are available by request at the office of the Department of Management, Budget, and Planning.
Do you have further questions about the MCPS budget?
Updated March 5, 2008 | Maintained by Web Services
