IAC tells Appropriations Committee Maryland schools face widening funding shortfall as construction costs surge

During a briefing to the Appropriations Committee, Alex Donahue, executive director of the Interagency Commission on School Construction (IAC), said Maryland’s school facilities are deteriorating faster than current funding can repair them and that rising construction costs have erased purchasing power.

"A typical elementary school now cost more than $40,000,000 to build," Donahue said, and he reported the IAC’s statewide facility-condition index averages about 52 percent — a level at which problems multiply and maintenance costs accelerate. Donahue told lawmakers replacing the entire inventory of roughly 1,400 school facilities today would be worth about $73,000,000,000.

The IAC identified five buckets of need: ongoing condition and maintenance work; alterations to meet modern educational programs; new seats to serve local enrollment growth; additional classrooms for pre‑K expansion tied to the state's Blueprint; and the long‑term cost of decarbonizing school buildings to meet state climate goals. Donahue said construction costs in Maryland rose roughly 199 percent since 2003, with school construction increasing faster than general inflation, producing a large affordability gap.

Arabia Davis, the IAC’s director of funding programs, told the committee statutory targets for fiscal 2027 total at least $450,000,000. She said school districts submitted CIP requests of about $747,000,000 and that the governor’s proposed budget would provide about $380,000,000 in CIP, leaving many projects unfunded and likely deferred into 2028. Davis said the Built to Learn program’s special-purpose bonds have added capital — an estimated $1,700,000,000 — but that without an adjustment for construction inflation the historic legislative target has eroded.

Donahue described how the IAC awards funding: projects must be requested by local education agencies (LEAs) and supported by county matches, and the IAC applies a county target allocation (adjusted for county wealth and enrollment) to eligible LEA priorities. He said the IAC uses a seven‑factor cost‑share formula that yields state shares that range roughly from 50 percent in wealthier counties to 100 percent in the least wealthy counties, updated every two years.

The IAC also flagged near‑term fiscal pressure from multi‑year projects. Donahue said the commission tracks out‑year state‑share obligations; with projected fiscal 2027 appropriations assumptions the outstanding estimated state share on current projects would be about $482,000,000, close to the IAC’s self‑imposed cap of $500,000,000.

Lawmakers pressed the presenters on several issues. Delegate Smith asked how indoor‑air and health concerns factor into project prioritization; Donahue said LEA prioritization drives selection but that the IAC has been funding high‑priority HVAC projects to address indoor air quality when districts identify those needs. Several members asked about Montgomery County’s low out‑year balance on a snapshot slide; Donahue said Montgomery has tapped Built to Learn funding and will have large future requests as projects advance. Members also asked about public–private partnerships in Prince George’s County; Donahue said the IAC is "P3 agnostic," has supported Prince George’s P3 work, and that contracts include handback and verification guardrails.

On pre‑K, Donahue estimated districts may be about 200 to 500 classrooms short of full implementation under the Blueprint and said a new pre‑K classroom costs on the order of $1,000,000; he said the state share of that demand could be in the neighborhood of $200,000,000 to $350,000,000 spread over several years. On decarbonization, Donahue said the IAC is working with the Maryland Energy Administration on a study to scope retrofit needs and costs and that retrofits, not just new construction, could be substantially expensive.

Donahue urged preventive maintenance as the greatest immediate opportunity for savings and noted a statutory incentive: LEAs that meet maintenance‑effectiveness thresholds receive a five‑percentage‑point increase in state share for projects at those schools. He said many projects in the current CIP are already getting that bump, but that roughly 30 percent of districts lack the operational funding or staff to qualify.

The IAC offered to provide committee members with spreadsheets and links to the 2025 annual report, CIP and Built to Learn publications, and a GIS map of facility conditions. The IAC will finalize the CIP following the state budget process and its May 14 meeting once appropriations are known.

The briefing generated no formal votes; presenters said they would supply further data on allocations and the EGRC/ETRC program formulas on request.