HB 1
Department of Legislative Services
Maryland General Assembly
2020 Session
FISCAL AND POLICY NOTE
Enrolled - Revised
House Bill 1 (The Speaker, et al.)
Appropriations Budget and Taxation
Built to Learn Act of 2020
This bill authorizes the Maryland Stadium Authority (MSA) to issue up to $2.2 billion in
revenue bonds, backed by annual payments from the Education Trust Fund (ETF)
beginning in fiscal 2022, for public school construction projects in the State including to
support a possible public-private partnership (P3) agreement for Prince George’s County.
Construction materials purchased for public school facility projects managed by MSA are
exempt from the State sales and use tax. The bill also expands school construction costs
eligible for State funding and increases or establishes new mandated State funding for other
public school construction programs. The bill takes effect June 1, 2020, contingent on
the enactment of Senate Bill 1000 or House Bill 1300 (Blueprint for Maryland’s
Future); some provisions of the bill have delayed effective dates.
Fiscal Summary
State Effect: General fund expenditures increase beginning in FY 2021 for program
administration. Pay-as-you-go (PAYGO) general fund expenditures increase by
$30 million in FY 2022 and by $40 million annually beginning in FY 2023, with special
fund revenues and expenditures increasing commensurately. General fund revenues
decrease beginning in FY 2022 due to the sales tax exemption. Dedicated ETF revenue,
phasing up to $125 million annually, and related expenditures are not shown in the table.
The bill increases or establishes mandated appropriations beginning in FY 2022.
(in dollars) FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
GF Revenue $0 ($2,400,000) ($4,800,000) ($5,880,000) ($5,880,000)
SF Revenue $0 $30,000,000 $40,000,000 $40,000,000 $40,000,000
GF Expenditure $290,400 $231,300 $237,100 $245,200 $253,600
SF Expenditure $0 $30,000,000 $40,000,000 $40,000,000 $40,000,000
PAYGO GF exp $0 $30,000,000 $40,000,000 $40,000,000 $40,000,000
Net Effect ($290,400) ($32,631,300) ($45,037,100) ($46,125,200) ($46,133,600)
Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
Local Effect: Local revenues for public school construction projects increase by an
estimated $2.0 billion over several years beginning in FY 2022, in addition to the
State P3 availability payment. Local expenditures increase for the local share of school
construction projects, including Prince George’s County expenditures for its share of the
P3 availability payment. An additional $20 million is authorized for school construction
projects in Baltimore City under an existing program. Local expenditures may also increase
to conduct required capacity studies. The bill may impose a mandate on a unit of local
government.
Small Business Effect: Potential meaningful for the construction industry.
Analysis
Bill Summary
Education Trust Fund
The bill codifies the provisions of the constitutional amendment approved by the voters at
the 2018 general election, known as the ETF lockbox. The purposes for which ETF can be
used are altered to specify that it may be used only (1) to provide funding for public
elementary and secondary education through the continuation of existing education
funding formulas and (2) to provide supplemental funding for education and public
schools. It defines supplemental funding as funding that:
 ensures access to public education that allows students to compete in the global
economy of the future;
 provides high-quality early childhood education programs;
 provides opportunities for public school students to participate in career and
technical education programs that lead to an identified job skill or certificate;
 allows students to obtain college credit and degrees while in high school at no cost
to the students;
 supports the advancement and professionalization of public educators; and
 maintains, renovates, or constructs public schools.
It requires the Governor’s annual budget submission to include at least the following
amounts as supplemental funding for public education from ETF:
 $125.0 million in fiscal 2020;
 $250.0 million in fiscal 2021;
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 $375.0 million in fiscal 2022; and
 100% of the funds in ETF beginning in fiscal 2023.
Built to Learn Revenue Bonds
The issuance of a bond under the bill is not directly, indirectly, or contingently a moral or
other obligation of the State, MSA, or any other governmental unit to levy or pledge any
tax or to make an appropriation to pay the bond. A bond issued by MSA to finance
improvements, construction, or renovations to a public school facility:
 is a limited obligation of MSA and is payable only with money pledged by MSA
that is made available to MSA for that purpose;
 is not a debt, liability, or pledge of the faith and credit or taxing power of the State,
MSA, or any other governmental unit; and
 may not give rise to any pecuniary liability of the State, MSA, or any other
governmental unit.
The bill authorizes MSA to issue bonds to finance public school construction beginning
January 1, 2021. Before each issuance of bonds to finance school construction projects,
MSA must obtain the approval of the Board of Public Works (BPW) of the aggregate
amount of the proposed bond issue. At least 45 days before seeking approval from BPW
for the sale of revenue bonds, MSA must provide specified written notice to the fiscal
committees of the General Assembly.
Total debt service for all bond issuances may not exceed $30 million in fiscal 2022,
$60 million in fiscal 2023, and $125.0 million annually thereafter; it may not exceed
$100.0 million annually if Prince George’s County enters into a P3 agreement.
Beginning January 15, 2021, and each year thereafter, MSA must report to the Governor,
BPW, and the fiscal committees of the General Assembly on the progress of public school
construction and renovation projects funded by the revenue bonds. By July 1, 2030, MSA
must complete a 10-year evaluation of the effectiveness of the issuance of bonds to finance
construction and renovations of public school facilities.
Allocation of Bond Proceeds
All projects funded under the bill must be approved by the Interagency Commission on
School Construction (IAC) using the same process used for the Public School Construction
Program (PSCP). Construction contracts funded by the bond proceeds are not subject to
approval by BPW.
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Proceeds of MSA’s sale of revenue bonds (including bond premiums) must be allocated to
local school systems as shown in Exhibit 1, based on the sale of $2.0 billion in bonds (as
explained below) for public school construction projects approved by IAC. The allocation
for Baltimore City must include a specified amount for a specified project, subject to a
specified local matching requirement. Any allocation must be used within 10 years or be
subject to reallocation. The bond proceeds provided to each school system represent the
State share of eligible public school construction costs, as discussed further below.
Exhibit 1
Allocation of Bond Sale Proceeds under the Bill
($ in Millions)
Percent of Total Proceeds
Anne Arundel 12.5% $250.0
Baltimore City 21.0% 420.0
Baltimore 21.0% 420.0
Frederick 5.1% 102.0
Howard 6.6% 132.0
Montgomery 21.0% 420.0
Prince George’s * *
All Other Counties 11.5% 230.0
Unallocated/MSA 1.3% 26.0
Total 100.0% $2,000.0
MSA: Maryland Stadium Authority
*Under the bill, Prince George’s County receives $25.0 million annually for up to 30 years to supplement
local funds for an availability payment if it enters into a public-private partnership agreement, subject to
other provisions in the bill.
Source: Department of Legislative Services
Project Management
In general, MSA is responsible for the construction and improvements to local school
facilities financed with the proceeds from the revenue bonds. However, except for
Baltimore City, MSA may authorize a local school board to contract for, manage, and
oversee public school facility projects under its jurisdiction. Before authorizing a local
school board to manage its projects, MSA must consider the board’s (1) track record of
managing public school facility projects and (2) expertise and capacity to manage the
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proposed projects. Projects managed by MSA and local school systems are subject to the
same requirements and procedures that govern PSCP.
Subject to the approval of MSA, IAC must approve State reimbursement of eligible costs
for projects that begin construction on or after the bill’s effective date. Before projects are
approved for funding under the bill, MSA and IAC must enter into a memorandum of
understanding (MOU) with specified provisions. Also, each county, county board, and
MSA must enter into a “project MOU” with specified provisions. One of the required
provisions in the project MOU is that priority must be given to schools that (1) are the
oldest buildings in a school system; (2) have high concentrations of low-income students;
(3) have a large number of relocatable classrooms; (4) have high utilization based on the
school’s State rated capacity; or (5) need space for full-day prekindergarten or career and
technical education (CTE) programs. Project MOUs must include a comprehensive plan for
local hiring and a plan to maximize utilization of State-certified locally based minority and
women-owned businesses for approved projects. The first projects funded must be projects
that IAC has deemed eligible for funding but for which State funding has been deferred due
to fiscal constraints. IAC may not approve reimbursement to a county from the proceeds of
MSA bonds for a school construction project that has already been completed.
Any power granted to MSA under the bill may not in any way interfere with the enumerated
powers of a local school board. However, the powers of a local school board may not limit
the ability of the authority to carry out its obligations under the bill. Unless otherwise
specified in a project MOU, local school systems must deliver buildable sites that meet
specified conditions and that are free from any specified conditions that may affect the
funding or construction schedule.
Prince George’s County P3 Agreement
A P3 agreement is defined as one in which a county government and county board of
education contract with a private entity for the acquisition, design, construction,
improvement, renovation, expansion, equipping, or financing of a public school. It may
include provisions for the operation and maintenance of a school, for cooperative use of a
school or an adjacent property, and for the generation of revenue to offset the cost of
construction or use of the school.
Before Prince George’s County enters into a P3 agreement that is financed in part with
State funds for an availability payment, it must be reviewed by MSA and approved by IAC.
If Prince George’s County enters into a specified P3 agreement by July 1, 2022, MSA must
deposit $25.0 million annually, beginning in fiscal 2024 and not after 2053, into the
Prince George’s County P3 Fund. However, in order for Prince George’s County to receive
these annual payments, the P3 agreement must include:
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 a minimum of six schools that will be improved, constructed, or renovated and
operated and maintained under the P3 agreement; and
 a commitment by the Prince George’s County Government and the Prince George’s
County School Board to provide the local share of the availability payment.
The bill includes specified reporting requirements related to the Prince George’s County
P3 agreement and related payments. It also requires IAC to complete an evaluation of the
P3 agreement by July 1, 2027, and to report on the results of the evaluation to the Governor
and fiscal committees of the General Assembly by December 31, 2027.
Facilities and Financing Funds
The bill establishes two nonbudgeted funds, administered by MSA, to finance
improvements to public school facilities in the State: the Supplemental Public School
Construction Facilities Fund and the Supplemental Public School Construction Financing
Fund. Both funds are continuing, nonlapsing funds. The Treasurer must invest assets of
both funds in the same manner as other State funds; all investment earnings accrue to each
respective fund. No part of either fund may revert or be credited to the State’s general fund
or any special fund. As needed to pay debt service and other specified purposes, monies
may be transferred between the funds. Both funds must be used to supplement, but not
supplant, money appropriated to PSCP. However, State funds from other sources, grants,
or programs may be combined with money from both funds to pay for projects.
The financing fund includes (1) proceeds from the sale of bonds for public school facilities
that are not under a trust agreement; (2) revenues collected or received from any other
source; (3) interest earnings of the fund; and (4) any additional money from any public
source. Monies in the financing fund are pledged to and used to pay (1) debt service on
bonds issued by MSA; (2) debt service reserves under a trust agreement; (3) the annual
payment of $25.0 million to the Prince George’s County P3 fund, if required; (4) all
reasonable charges and expenses related to the issuance of bonds; and (5) all reasonable
expenses related to MSA’s management of the fund and its project oversight
responsibilities. MSA may not use any current sources of funds, whether appropriated or
nonbudgeted, to pay for any costs related to financing public school facilities under the
bill, except for specified start-up costs before bond revenues are available. Any
expenditures for start-up costs must be reimbursed from the financing fund. In fiscal 2021,
$500,000 must be provided from ETF to MSA for start-up costs.
The facilities fund includes (1) revenue transferred from the financing fund; (2) interest
earnings of the fund; and (3) any additional money made available from any public sources.
MSA may use the facilities fund as a revolving fund to pay (1) debt service on bonds;
(2) design and construction costs relating to public school facilities; (3) to the extent
authorized by federal law, any start-up costs, administration, overhead, and operations
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related to management of improvements to public school facilities; (4) all reasonable
charges and expenses related to MSA’s oversight and project management responsibilities;
and (5) all reasonable expenses related to its review of the Prince George’s County
P3 agreement, if needed.
Baltimore City 21st Century Schools Program
MSA may use the following funds to supplement funding for additional Baltimore City
projects under the 21st Century Schools Program: (1) $10.0 million in available funds in
the Baltimore City Public School Construction Facilities Fund; and (2) $10 million held in
reserve for Baltimore City in the Baltimore City Public School Construction Financing
Fund.
Also, MSA may use up to $1.0 million of available revenues in fiscal 2021 from the
Baltimore City Public School Construction Facilities Fund for start-up costs related to the
Built to Learn Program, which must be reimbursed from the Supplemental Public School
Construction Facilities Fund.
Supplemental Capital Grant Program
The bill makes several changes to the existing Capital Grant Program for Local School
Systems with Significant Enrollment Growth or Relocatable Classrooms (EGRC). First, it
raises the mandated annual funding level from $40.0 million to $80.0 million beginning in
fiscal 2027. Second, it specifies that funding provided for EGRC above $40.0 million be
allocated to eligible school systems based on their proportionate share of the percentage of
enrollment growth above the State average. Third, it changes the definition of “significant
number of relocatable classrooms” to mean an average of more than 250 (instead of 300)
relocatable classrooms over the past five years, beginning June 1, 2020. Finally, it requires
the Governor to include funding for the program in either the operating budget or the
capital improvement program of PSCP.
Healthy School Facility Fund
The bill extends mandated funding for the Healthy School Facility Fund by three years,
through fiscal 2024, with at least $30.0 million mandated in fiscal 2022 and at least
$40.0 million mandated in each of fiscal 2023 and 2024. For fiscal 2021 through 2024,
50% of money appropriated to the fund must be awarded to public schools in Baltimore City.
The bill also specifies that funding priority must be given to resolve any severe issue that
results in a school being closed, in addition to speci