A Proposal To Finance A Full Scale Modernization Of Baltimore City Public School Facilities

This ACLU report shows that the current funding system is wholly inadequate to bring city school buildings to healthy and educationally appropriate standards. However, there are innovative financing strategies that could comprehensively and feasibly address the $2.8 billion need. Increasingly, innovative financing is being used by jurisdictions to solve infrastructure problems. The ACLU presented one of these financing models used by Greenville, South Carolina, which allowed for a complete modernization of the county’s schools in a timely and adequate way.

The Maryland Budget and Tax Policy Institute is proposing a similar financing model for Baltimore City, which involves a partnership organization that would issue bonds and manage the $2.8 billion school construction program to be completed over 10 years. The partnership could be a government agency, an independent public authority, or a state‐chartered nonprofit organization.

The debt would be repaid over 30 years through a combination of the following sources:

• Direct lease payments to the partnership by the State of Maryland and the City of Baltimore.

• Proceeds from two new local revenue measures:                                                                                                          o A 1% local sales tax                                                                                                                                     o A 1% tax on meals and beverages sold within the city.

• A share of impact aid paid to Baltimore City from proceeds of video lottery terminal (slot machine operation).

The state would increase its current contribution to Baltimore City school infrastructure to total $100 million in annual payments towards debt service over the first 10 years, and $50 million for the remaining 20 years. The city’s revenue streams would generate an average of S165 million per year towards the school construction program over 30 years. The financing strategy also allows for inflationary increases over the lease period and a sound income‐to‐debt ratio each year for security on the debt payments.

To implement a sales tax and meals and beverages tax of 1%, the City would need state authorizing legislation. These revenue sources illustrate just one potential financing plan. There are many other revenue options available. Most require legislative approval at the city and state levels.

The modernization of Baltimore City Public School facilities is needed to achieve Maryland’s Constitutional standards for a “thorough and efficient” education. It is needed to provide thousands of Baltimore City students with their chance for a successful life as independent, productive adult citizens. And it will provide substantial economic benefits for the city and its neighborhoods.

The expense of fixing the school buildings is substantial. The cost of prolonging their neglected condition is much greater still.