Maryland State Board reviews FY 2026 budget and flags federal funding uncertainty

The Maryland State Board of Education met in July at the Nancy S. Krasnik State Education Building for a two-part session that included an executive session followed by a public presentation on the proposed fiscal 2026 budget and an update on federal education funding.

The board heard that the department’s total budget remains heavily weighted to aid to education, which staff said represents about 95.8% of the department’s total budget. An unnamed Maryland State Department of Education (MSDE) budget presenter said the department’s headquarters budget was about $426,900,000 with roughly $106.9 million in general funds and about $295 million in federal funds, noting that a large federal share reflects federal grant-funded positions that pass through to local education agencies (LEAs). The presenter said, “the general fund increase in ’23 is a direct result of a statewide employee salary increase of 4.5 COLA plus step increases,” and described a net increase of 13 new regular positions in the department for FY 2026.

The presentation listed major new initiatives requested in the legislative session, including a Grow Your Own teacher program funded at $19,400,000, a $1,000,000 teacher relocation program, roughly $600,000 for teacher recruitment, and increases to community schools funding. Staff also identified a $5,700,000 childcare credentialing proposal and a driver education mandate now appearing in the FY 2026 budget because of timing of legislative mandates.

Mary Gable, assistant state superintendent for federal programs and student support, told the board that federal ESEA (Title) allocations for the 2025–26 school year were delayed and issued irregularly over the preceding days and that MSDE had just begun to receive grant award notifications (GANs). “Title 4 b is for the most part for community agencies that fund out of school, after school, before school, summer enrichment activities,” Gable said, describing the particular impact on community-based organizations.

Gable and other MSDE staff described a pattern of late, changing, and sometimes reversed guidance from the U.S. Department of Education that complicated local planning. Staff said they had asked superintendents to inventory carryover funds and staffing commitments so LEAs could plan while allocations were uncertain. MSDE staff also advised LEAs to retain all documentation for ESSER and other federal projects that may be pending reimbursement.

MSDE reported on ESSER (pandemic relief) liquidation and reimbursement activity. Staff said that following guidance changes in March and subsequent legal and guidance actions, the state had paid roughly $185 million to $188 million to LEAs for projects that had not yet been reimbursed by the federal government. After later guidance changes and negotiations, the department in consultation with the Department of Budget and Management (DBM) issued additional reimbursements totaling about $63 million, but staff said they had paused new reimbursements until federal reimbursements were forthcoming and directed LEAs to hold documentation while MSDE continues discussions with U.S. Department of Education officials and the Office of the Attorney General.

Board members raised questions about program specifics and potential downstream effects. Board member Michael Lewis asked for clarification about the statewide average local wealth per pupil and its calculation; staff replied it was the statewide average of total local wealth divided by total enrollment. Board member Barnes asked about hunger and school nutrition in light of federal changes: “I do have a really pressing concern about, how we're gonna help, feed hungry children,” Barnes said. MSDE staff said there were no proposed cuts to the National School Lunch Program at that time but that changes to SNAP or Medicaid eligibility in federal legislation could affect families and, indirectly, schools.

Board member Greer corrected a figure discussed in the presentation about a private school voucher provision in recent federal legislation, noting his understanding that the voucher would be $1,700 per student rather than $17,000, and urged the department to begin planning how to administer any potential block-grant structure or voucher opt-in decisions at the state level.

MSDE staff summarized items the department is watching through FY 2026, including childcare scholarship enrollment surges, Medicaid waiver changes affecting services for students with disabilities, and the year-to-year variability of non-public placements for high-needs special education students. Staff said they would continue to work with the governor’s office, DBM, the Department of Health, and local finance teams to refine cost estimates and reimbursement strategies.

The public session closed after questions about federal funding impacts and follow-up work; formal board business at this meeting was limited to procedural motions to adjourn to executive session and to adjourn the July meeting.

Looking ahead, MSDE staff said they would continue to brief the board as federal allocations are finalized and as MSDE and LEAs receive additional guidance and reimbursements.