O’Malley: Stimulus Cash Enables Md. to Avoid State Layoffs

Fri February 27, 2009 - Northeast Edition
Brian Witte - Associated Press




ANNAPOLIS, Md. (AP) 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 announced Feb. 20.

O’Malley outlined about $720 million that is coming to Maryland for education over two years through the federal economic recovery measure signed by President Barack Obama. 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 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,’’ O’Malley said at a news conference.

Also, 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 the GCEI in 2010 and 2011 with $176 million. Before the stimulus money in Congress was approved, O’Malley had planned to cut GCEI 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, 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 lawmakers are currently working on.

The announcement Feb. 20 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. O’Malley recently outlined the first phase of $610 million coming to the state for transportation infrastructure.

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, 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,’’ O’Malley 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,’’ House Speaker Michael Busch said.

While Maryland will receive about $1.3 billion in Medicaid help from Washington, O’Malley said the state still can’t move forward with an extension of health insurance to poor childless adults, under a plan approved in the 2007 special session.

“We’re not going to be able to do that, but unfortunately because of unemployment and displacement there are a lot more people turning to Medicaid, and thanks to President Obama and the Congress we are going to be able to meet the needs of families who are turning to that safety net in greater numbers,’’ O’Malley said.

About 67,000 of the state’s 80,000 employees already have taken two furlough days. Employees who make more than $40,000 a year will take an additional two to three furlough days, depending on their salaries.