Queen Anne's County board hears budget warning as proposed state changes could cut school funding

Queen Anne's County Board of Education members reviewed a draft FY2026 operating budget during a Jan. 22 working session and were warned that proposed state legislation could reduce the school system's state aid by an estimated $1.3 million, creating an immediate shortfall while costs for salaries, benefits and utilities rise.

District staff said the proposal under consideration in Annapolis would delay a timeline tied to a Blueprint for Maryland's Future requirement — specifically the phased change to teachers’ in‑class time — and reduce the foundation per‑pupil amount by $163 (from $9,226 to $9,063 per pupil in the district’s calculation). Staff also said the governor’s proposal would reallocate roughly $57 million over four years to the Maryland State Department of Education to create about 60 MSDE positions, a move the district said would shift resources away from local school systems.

The reduction in foundation funding would cut several other state funding buckets because compensatory education and multilingual learner allocations are calculated as percentages of the foundation amount. District staff presented a draft summary showing an overall state aid increase of about $1.426 million in the governor’s budget picture, but said the pending legislation could wipe out roughly $1.3 million of that increase.

Officials emphasized the district's operating budget is separate from capital spending. They urged caution about assuming county support that is not yet final: the presentation included a $5 million placeholder above last year’s county contribution (the county provided $6.2 million above maintenance of effort last year), which staff said the district has counted in early planning but cannot legally budget as certain revenue until the commissioners' appropriation is approved in June.

The working session covered revenue assumptions and cost pressures. Staff said enrollment is essentially flat and that state aid formulas depend on September 30 enrollment counts and a suite of student categories (for example, compensation for multilingual learners, special education and students eligible for free and reduced‑price meals). The district's negotiated salary enhancements — part of multi‑year collective bargaining agreements — were estimated at about $4.0 million in additional recurring cost; staff said health insurance premiums are being re‑priced higher (a health insurance placeholder moved from 7.5% to roughly 10%) and energy costs are expected to rise (staff cited a roughly 15% increase for utilities). A four‑year laptop lease will increase this year compared with last year’s first payment.

Staff reviewed steps taken last year to close a shortfall, including four district‑wide furlough days that staff said saved roughly $350,000 per day (about $1.4 million total). They said furloughs prevented more extensive layoffs but left the district with remaining structural budget pressure. Staff warned that without assumed revenues the budget gap could require cutting dozens of positions; they used examples and district comparisons to note that similar state cuts have forced larger systems to eliminate hundreds of positions.

Board members and staff also discussed grants and the fiscal management of grant‑funded positions. Staff explained many grants are issued through 18‑month awards with staggered notice‑of‑grant‑award timing; that timing can delay or create mid‑year obligations and requires amending restricted funds when award details change. Staff said some positions funded with temporary grants (for example, COVID relief and targeted program grants) were always time‑limited and that communities have expressed concern when those positions ended.

On facilities and capital, staff reminded the board that capital funds are bonded and legally distinct from operating funds, so county or bond capital appropriations for roofs, HVAC or building projects cannot legally be transferred to pay operating costs such as teacher salaries.

Board members asked for more detailed, line‑level information and asked staff to provide a set of reports at the next meeting: an updated, regularly maintained budget summary, a five‑year trend workbook the staff already circulated, and a transactional report showing purchasing‑card (P‑card) transactions for the most recent month (the board requested November P‑card statements as a starting point) plus a monthly list of expenditures to improve oversight and transparency. Staff agreed to provide those reports and to bring the specific legislative bill number to the board’s legislative committee meeting next Monday.

The district’s next steps, as described at the session, are to continue refining the operating budget, update the board each month with the draft summary and trend data, monitor the legislation through April (when session activity traditionally concludes), and work with county commissioners and state delegates to explain local impacts if the bill proceeds. The commissioners make final county funding decisions in June; staff said they will continue to present a working budget that shows current best estimates and alternate scenarios if the $5 million placeholder does not materialize.

At the start of the meeting the board approved procedural items to begin the session; no final votes on budgets, layoffs, or policy changes occurred at the Jan. 22 working session.