SB 958
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
Senate Bill 958 (Senators Zucker and Peters)
Budget and Taxation Appropriations
Nonpublic Special Education Schools - State Contribution - Increase
This bill requires the Governor to include in the annual budget bill an appropriation to
provide, in fiscal 2023, an increase in funding for nonpublic special education placements
that amounts to (1) an increase of 4% over the amount approved by the Maryland State
Department of Education (MSDE) in fiscal 2022, exclusively for direct classroom
positions, related services positions, and general support positions; and (2) an additional
increase of not less than 2% or the Consumer Price Index for All Urban Consumers
(CPI-U), whichever is greater, over the amount approved by MSDE in fiscal 2022 for all
other categories of expenditure. The appropriation must be made from the unexpended
appropriation for the nonpublic placement program within MSDE that was included in the
fiscal 2020 or 2021 operating budget. The bill takes effect July 1, 2021.
Fiscal Summary
State Effect: General fund expenditures increase by an estimated $4.3 million annually
beginning in FY 2023. General fund expenditures may increase less beginning in FY 2024,
as discussed below. This bill increases a mandated appropriation for FY 2023.
(in dollars) FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
Revenues $0 $0 $0 $0 $0
GF Expenditure 0 4,278,700 4,278,700 4,278,700 4,278,700
Net Effect $0 ($4,278,700) ($4,278,700) ($4,278,700) ($4,278,700)
Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
Local Effect: None in fiscal 2023. The local share of nonpublic placement costs may
increase beginning in FY 2024 if the FY 2023 costs under the bill are included in future
year total costs on which the local share is calculated, as discussed below. The amount
cannot be reliably estimated but may be approximately $2.2 million in total.
Small Business Effect: Nonpublic placement providers that are small businesses benefit.
 Analysis
Current Law: The State and local governments share in the costs of nonpublic placements
for special education children who cannot receive an appropriate education in public
school. For those children in nonpublic placements approved by MSDE, the county
(including Baltimore City) contributes an amount equal to the local share of the basic cost
of educating a child without disabilities plus two times the total basic cost. Any costs above
this base amount are split on a 70% State/30% local basis.
State Expenditures: State funding through the nonpublic placements formula has been
close to level-funded in recent years, ranging from $123.5 million in fiscal 2017 to the
fiscal 2021 working appropriation of $123.9 million. However, MSDE’s recent monthly
disbursement report from March 2021, which is for fiscal 2020, indicate that disbursements
are running approximately $40 million below the appropriation level. In response, the
budget committees adopted a $7.5 million fiscal 2020 general fund reversion from the
program in House Bill 589, the Budget Reconciliation and Financing Act of 2021.
Further, although MSDE approved a 1.4% increase in nonpublic placement provider
budgets for fiscal 2022, the program was level funded at $123.9 million in the fiscal 2022
allowance. The final budget provides $127.0 million for the program in fiscal 2022, which
reflects $3.6 million added to the budget specifically for higher teacher salaries at
nonpublic placement schools (the General Assembly also restricted $500,000 of the
appropriation for another purpose). Given the fiscal 2022 increase for teacher salaries, this
analysis assumes that under current law, the higher teacher salaries will continue to be
funded in the out-years; thus, annual funding for nonpublic special education will total at
least $127.0 million each year beginning in fiscal 2023.
The bill requires, as compared to the MSDE-approved amount for fiscal 2022, a
4% increase for the portion of nonpublic placement costs associated with classroom,
related services, and general services positions, and at least a 2% increase for other costs.
This analysis assumes that CPI-U will not exceed 2.0% for fiscal 2023.
According to MSDE, the costs associated with the positions to which the 4% increase under
the bill is applied represent approximately 68% of the annual costs for nonpublic
placements and, thus, the 2% increase under the bill for remaining costs is applied to the
remaining 32% of annual costs, resulting in a weighted 3.4% increase to total State
nonpublic placements in fiscal 2023 over fiscal 2022. Exhibit 1 shows this increase by
county, totaling $4.3 million in fiscal 2023.
Although the bill specifies that the increase be funded from unexpended appropriations in
fiscal 2020 or 2021, practically those funds would revert to the general fund at the end of
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the fiscal year and a new appropriation would be included in the fiscal 2023 budget to
satisfy the bill’s required mandated appropriation.
Although the increase under the bill is only required for one year (fiscal 2023), it is assumed
that the fiscal 2023 funding level under the bill is maintained in subsequent years,
especially given that this funding predominantly supports personnel costs. Thus,
general fund expenditures increase by $4.3 million annually beginning in fiscal 2023.
Depending on how the MSDE-approved costs are calculated in future years, however, the
fiscal 2023 increase may become part of the total approved costs beginning in fiscal 2024,
which would then be subject to cost sharing with local governments (as described above
under current law) with the State picking up the remaining costs after the local share is
deducted. In that case, general fund expenditures increase by less than $4.3 million due to
the bill in future years; however, the amount cannot be reliably estimated.
Local Expenditures: There is no impact on the local share of nonpublic special education
costs in fiscal 2023 since the bill requires the State to fund the mandated increase. However,
as discussed above under State expenditures, beginning in fiscal 2024, the local share of
costs paid by school systems may increase if the bill’s required increase in fiscal 2023 is
incorporated into total approved costs for the out-years. The amount of increase for each
school system cannot be reliably estimated but in total will likely be no more than
$2.2 million (approximately 50% of the total increase).
SB 958/ Page 3
 Exhibit 1
State Funding of Nonpublic Placements
FY 2023 Under the Bill
FY 2022 Required Percent
County Budget Increase Increase Total
Allegany $1,705,912 $57,383 3.4% $1,763,295
Anne Arundel 9,541,411 320,954 3.4% 9,862,365
Baltimore City 11,741,229 394,951 3.4% 12,136,180
Baltimore 20,560,078 691,600 3.4% 21,251,678
Calvert 845,932 28,455 3.4% 874,387
Caroline 266,925 8,979 3.4% 275,904
Carroll 3,079,673 103,594 3.4% 3,183,267
Cecil 793,578 26,694 3.4% 820,272
Charles 1,195,142 40,202 3.4% 1,235,344
Dorchester 171,093 5,755 3.4% 176,848
Frederick 4,818,736 162,093 3.4% 4,980,829
Garrett 50,174 1,688 3.4% 51,862
Harford 5,359,284 180,276 3.4% 5,539,560
Howard 5,619,476 189,028 3.4% 5,808,504
Kent 153,772 5,173 3.4% 158,945
Montgomery 18,134,229 609,999 3.4% 18,744,228
Prince George’s 22,171,386 745,801 3.4% 22,917,187
Queen Anne’s 240,835 8,101 3.4% 248,936
St. Mary’s 657,278 22,110 3.4% 679,388
Somerset 18,263 614 3.4% 18,877
Talbot 160,556 5,401 3.4% 165,957
Washington 1,054,153 35,460 3.4% 1,089,613
Wicomico 91,818 3,089 3.4% 94,907
Worcester 37,630 1,266 3.4% 38,896
Unallocated 18,530,837 630,048 3.4% 19,160,885
Total $126,999,400 $4,278,714 3.4% $131,278,114
Note: Unallocated costs include $3.6 million provided in the fiscal 2022 budget for teacher salary increases
and Maryland State Department of Education costs not associated with cost sharing by county, including
classroom public private partnerships, preventative service initiatives, and grants supporting wraparound
services.
Source: Annual Budget; Department of Legislative Services
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 Additional Information
Prior Introductions: None.
Designated Cross File: HB 1365 (Delegate Korman) - Appropriations.
Information Source(s): Montgomery and Prince George’s counties Maryland State
Department of Education; Department of Budget and Management; Department of
Legislative Services
Fiscal Note History: First Reader - March 18, 2021
rh/rhh Third Reader - April 6, 2021
Revised - Amendment(s) - April 6, 2021
Revised - Updated Information - May 17, 2021
Revised - Budget Information - May 17, 2021
Revised - Other - May 17, 2021
Analysis by: Scott P. Gates Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 958/ Page 5


Statutes affected:
Text - First - Nonpublic Special Education Schools - State Contribution - Increase: 2-030 [], 8-406 Education, 8-415 Education
Text - Third - Nonpublic Special Education Schools - State Contribution - Increase: 2-030 [], 8-406 Education, 8-415 Education