Budget FY17: Factors Influencing the FY 2017 Budget and Future Budgets

The school system considers a multitude of operational and economic factors as it prepares its budget. These factors were considered in preparing the budget for FY 2017. Notable factors influencing this budget are:

• County Maintenance of Effort (MOE) and state formula funding calculations do not provide funding for student enrollment growth in the year of the growth, which results in underfunding for growing school systems like Howard. If actual enrollment were funded in MOE and state calculations, FY 2016 funding from the county should have been $8.1 million higher and the state’s should have been $4.5 million higher. With similar growth projected in FY 2017, HCPSS will again have to provide for nearly 1,100 new students without per pupil funding provided for these students.
• Student enrollment is projected to continue to increase. The FY 2017 budget is based upon an enrollment increase of 1,061* students in FY 2016 and an additional projected increase of 1,088 students in FY 2017.
• The FY 2017 operating budget includes 69.3 new positions to support enrollment growth and other new initiatives.
• Effective in FY 2017, the state has excluded the increase in pension costs from MOE. The FY 2017 budget includes an increase of $6.3 million for employee pension payments and administrative costs to the state. The school system absorbs the full cost of the pension payment in FY 2017.
• Increases in the cost of employee health and dental benefits continue to comprise a significant portion of the budget. The FY 2017 budget includes an increase in General Fund contributions of $24.3 million to the Health and Dental Fund.
• The financial impact of the prior-year’s negotiated agreements adds approximately $12.7 million to the FY 2017 salary base.
• Investment in our employees includes a placeholder equivalent to a two percent cost-of-living increase, which adds approximately $13.0 million to the FY 2017 budget.
• As a cost-containment measure, the school system offered an Early Retirement Plan (ERP), which allowed nearly 400 employees to retire in FY 2015. The FY 2017 budget reflects a projected ERP savings of $1.2 million.
• A growing segment of our student population carries heavy burdens to school, including poverty, homelessness, and language barriers resulting in the need for increased services. Program budgets in these areas reflect requests for increased funding to meet these critical needs.
• The current and future capital budgets include funding for renovations and additions to existing schools including major systemic renovations to many of the older school facilities as well as the construction of a new elementary school and a new middle school.

* Enrollment adjusted for part-time and other ineligible students as determined by Maryland State Department of Education (MSDE).