- The Washington Times - Saturday, February 21, 2009

ANNAPOLIS | Federal economic recovery money will enable Maryland to avoid 700 state employee layoffs and cuts to an education fund designed to help areas where schooling costs more, Gov. Martin O’Malley said Friday.

Mr. O’Malley, a Democrat, outlined about $720 million that is coming to Maryland for education over two years through the federal economic recovery measure signed by President Obama this week. Local jurisdictions also will receive $392 million in Title 1 and special-education money.

The stimulus money more than makes up for the $69 million reduction in state aid that 16 Maryland school jurisdictions received in Mr. O’Malley’s initial budget proposal last month, cuts that mostly affected Baltimore city and Prince George’s County.

“We are using these dollars for their intended purpose and that is for fiscal stabilization and to protect the education of our kids so that school systems throughout our state are not forced to lay off teachers in a tough recession,” Mr. O’Malley said at a news conference.

Also, Mr. O’Malley said the Geographic Cost of Education Index, which compensates districts where education costs more, will be funded at 100 percent. Maryland will fully fund based on the index in 2010 and 2011 with $176 million.

Before the stimulus money in Congress was approved, Mr. O’Malley had planned to cut the geographic adjustment money through the Board of Public Works, but he put off the reductions in hopes of receiving the aid from Washington.

The governor also said the federal money will contribute $329 million to the growth of teacher pension costs, effectively shelving a debate on whether the counties should shoulder some of the costs, instead of the state paying the whole bill.

To avoid the 700 layoffs, Mr. O’Malley is using $62 million in the federal recovery bill’s discretionary funding over the next two years.

The federal help means the state will have a fund balance of $417 million in the current fiscal year, and a balance of $63 million in fiscal year 2010, the budget on which lawmakers are currently working.

The announcement Friday defined a significant portion of the total $3.8 billion Maryland will receive overall from the stimulus package, which includes money for transportation, Medicaid and education. Mr. O’Malley outlined the first phase of $610 million coming to the state for transportation infrastructure earlier in the week.

The federal aid only lasts for about two years, however, and Maryland is facing a $630 million budget deficit in fiscal year 2011.

Asked whether he was concerned about deficits down the road, Mr. O’Malley said he’d be more worried if he didn’t have the money to plug current budget holes.

“I think the Congress and the president recognize that the states that make up our country can all be partners in spurring on an economic recovery … but we cannot do that if we ourselves are awash or drowning in red ink,” he said.

Despite the huge help, Maryland is still facing budget challenges.

State employees still are not set to receive cost-of-living adjustments, and a furlough plan won’t be affected.

The Maryland Department of Public Safety and Corrections, the Maryland State Police and the Maryland Department of Juvenile Services are still in rough shape.

Also, budget officials are bracing for a significant drop in revenue estimates next month, and a slot machine gambling plan that had created high hopes for future state payoffs has turned out to be a lemon, at least so far.

“There still will be great challenges within the budget as we go forward, but from the education money I think it’s by far the most appropriate and efficient way to spend it,” said House Speaker Michael E. Busch, Anne Arundel Democrat.

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