Montgomery County Public Schools (MCPS) is facing a $39.3 million shortfall in funding for the ongoing construction of Charles W. Woodward High School in Rockville due to its state aid calculation errors in 2021, but won’t lose out on state funding in the long run, district staff said Thursday.
To close the funding gap, MCPS Superintendent Thomas Taylor is recommending to the school board that $17.7 million be reallocated from other district projects and also asking the County Council to provide an additional $21.6 million for the project.
“I want to make it clear that this issue was entirely MCPS’ fault,” Taylor said at a school board work session on Thursday. “We are working to correct it, and though this will not have a net negative impact on state construction revenues over the long run, it does have an impact on these projects and I’m sorry for that.”
The error was first reported in Taylor’s recommended capital budget and Capital Improvements Program (CIP) amendments, in which he explained this year’s shortfall was due to a mistake in a submission for state aid for the construction of Woodward High.
“MCPS has been informed that we will not be receiving $39.3 million in state aid that was expected due to errors in calculating prevailing wage and bid [awards] across the multiple phases of the project,” Taylor said in the document.
At Thursday’s work session, Taylor said “none of the key personnel” involved in the erroneous submission to the state are still working for MCPS.
Esther McGuire, chief of staff for the school board, explained during the work session that the error resulted from an assumption of a higher level of state aid than the project was able to receive.
Woodward has been constructed in phases and in 2021, McGuire said, and the district assumed it would receive the maximum level of available state aid for each phase. However, not all phases were eligible for that maximum level of aid, she said. The Woodward construction project will cost the district more than $180 million.
Taylor said in the document the district was working with the Interagency Commission (IAC) and the Maryland Stadium Authority, which run the Built to Learn (BTL) program that provided the state funding, to “determine whether a portion of that $39.3 million can be awarded.”
To fill in the gap in funding, Taylor recommended transferring a total of $17.7 million in unspent funding from the district’s Building Modifications for Program Improvements Project and from addition projects for Silver Spring’s William Tyler Page and Bethesda’s Westbrook elementary schools and Takoma Park and Rockville’s Parkland middle schools.
Taylor also recommended the district ask the council for $21.6 million in local revenue to cover the remainder of the $39.3 million shortfall.
While the district faces a gap this year due to the error, it will continue to accrue the same amount of state aid from the IAC’s Built to Learn (BTL) funding program over time, McGuire said. However, according to McGuire, the district has maximized its eligibility for receiving state aid in its Capital Improvements Program this year.
“Because we have to apply [funding] project by project, it will come to us when we have additional eligibility,” McGuire said.
The BTL program authorizes the Maryland Stadium Authority to issue special revenue bonds to provide up to $2.2 billion in school construction funding statewide. Applications are accepted on a rolling basis and approval is based on certain eligibility criteria. According to an IAC frequently asked questions document, MCPS is mandated to receive 21% of the BTL funding, which is estimated to total $357 million awarded on a rolling basis.
When MoCo360 contacted the IAC, the agency said it wasn’t commenting on the issue to allow MCPS the opportunity to make additional statements.
At the beginning of the work session, Taylor said the board made it clear that members want him to focus on transparency, pointing out irregularities if they occur, and he would continue to do so.
“I’m happy to be in a position to address this issue now instead of later when it could be significantly costly,” Taylor said.
Board member Julie Yang asked Taylor how the issue would be prevented in the future. Taylor said the district needed to create internal controls and discipline to prevent similar problems from occurring.
Montgomery County Council of PTAs President Brigid Howe, who raised concerns about the loss of funding on social media, said she appreciated the candor from Taylor and his team.
“It seems to me it’s more of a timing issue than it is an actual gap issue,” Howe told MoCo360. “I’m glad to hear we’ll get the state funding in full at some point. … This does, though, concern me in the short term about the need for the $21 million in local funding.”
