If a Maryland county appropriated more than required for its public schools one year, does that whole higher amount become the mandatory minimum funding floor for the next year?

Plain-English summary

Howard County's County Executive asked the Attorney General about Maryland's "maintenance of effort" law, which requires each county to appropriate at least as much local money to its public school operating budget as a statutory formula demands, using the higher of two figures: an enrollment-adjusted per-pupil calculation, or simply the county's own highest prior-year school appropriation. Howard County had been appropriating far more to its schools than the bare statutory minimum required, and as the county faced a revenue shortfall heading into a tighter budget year, it needed to know exactly how much it was legally required to keep spending. Specifically, the County Executive asked what categories of spending count toward the "highest local appropriation to the school operating budget" that sets next year's floor, and what actually happens to a county's state aid if it falls short.

On the first question, the opinion concluded that the maintenance of effort baseline includes all local expenditures fairly related to the ongoing educational functions of the public school system, not just the narrower category of "basic current expenses" (a term that specifically excludes debt service, capital outlay, and certain categories of state aid) that the county's own solicitor had proposed using. The opinion reasoned that the General Assembly used the term "school operating budget," not "basic current expenses," when it wrote the maintenance of effort formula, even though the legislature used "basic current expenses" repeatedly elsewhere in the very same statute, showing it knew the difference between the two terms and chose the broader one deliberately. The opinion did allow two kinds of exclusions: one-time capital-type costs that technical budget rules happened to place in the operating budget (such as start-up costs to equip a new school library), and appropriations for things unrelated to public education, such as costs of parochial school student transportation or community-group use of school facilities. Public school student transportation, by contrast, had to be counted, since Maryland's courts have treated it as an integral part of modern public education.

On the second question, the opinion found the statute's consequence for missing the maintenance of effort requirement straightforward: the county simply does not receive the increase in state aid it would otherwise have gotten that year above what it received the year before. There is no separate fine or additional penalty beyond forgoing that increment.

Currency note

This opinion was issued in 1991. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. An editor's note attached to the opinion in the bound volume records that the maintenance of effort provision was significantly amended after this opinion issued, particularly by Chapter 175 (House Bill 7) of the Laws of Maryland 1996; verify the current text of the Education Article's school funding provisions before relying on any specific rule described here.

Common questions

If a Maryland county gave its schools more money than the legal minimum one year, did that become the new required minimum the next year?
Largely yes, according to the opinion. It concluded the maintenance of effort baseline is the county's full prior-year school operating budget appropriation, not a narrower "basic current expenses" figure, though a county could exclude genuinely one-time capital costs or spending unrelated to public school operations.

Did school bus transportation costs count toward a county's required school funding minimum?
Yes, for public school students. The opinion concluded that public school transportation must be counted in the maintenance of effort calculation, citing a Court of Appeals decision treating student transportation as an integral part of modern public education, while transportation costs for private or parochial school students could be excluded since they are not costs of public education.

What happened to a county's state school aid if it failed to meet its maintenance of effort requirement?
The statute's consequence was straightforward: the county simply would not receive the increase in state aid it would otherwise have gotten that year over what it received the prior year, with no separate additional penalty described in the opinion.

Background and statutory framework

Maryland's public school system was financed by a combination of roughly 40% state funds, 55% local funds, and about 5% federal aid. ED §5-201 directs state school appropriations into the General State School Fund, including the state's share of "basic current expenses" under ED §5-202, with ED §5-201(c)(11) specifically referencing that share. For fiscal years 1985 through 1990, ED §5-202 calculated the state's share as full-time-equivalent enrollment times a set dollar amount; starting fiscal year 1991, it shifted to an "average statewide per pupil expenditure" formula, with ED §5-202(b)(2)(i) itemizing specific inclusions and exclusions (excluding food subsidy, teacher retirement and social security paid by the state, student activities, community services, pupil transportation, adult education, school construction, and debt service, while including instruction, pupil personnel and health services, plant operation and maintenance, administration, and certain fixed charges) and ED §5-202(b)(2)(iv) capping the per-pupil increase at 108 percent of the prior year absent a legislative affirmation when state aid exceeds 31.5 percent of projected general funds.

Before 1984, a county's only funding obligation under ED §5-202(b)(4) was tied to the county's wealth and a statutory contribution rate. Chapter 85, Laws of Maryland 1984 added the maintenance of effort requirement (ED §5-202(b)(3)(ii)) and its enforcement mechanism (ED §5-205(b)). Under ED §5-202(b)(3)(ii)1, a county must appropriate local school operating funds at least equal to the greater of an enrollment-adjusted per-pupil figure or its own highest prior-year school operating budget appropriation, with ED §5-202(b)(3)(ii)2 barring counties from artificially satisfying the requirement through program shifts between the general county budget and the school budget (and ED §5-202(b)(3)(iii) adding a since-expired special rule for the 1987-88 and 1988-89 school years). Howard County's own experience illustrated the "ratchet" effect: its fiscal year 1990 appropriation of $120,730,700 became a baseline, but a higher enrollment-adjusted figure of $126,198,766 actually governed fiscal year 1991, and the county in fact appropriated $140,467,110, well above either figure, raising the question of what portion of that higher, voluntary appropriation would lock in as the fiscal year 1992 floor.

Applying ordinary statutory construction principles from Brodsky v. Brodsky, ANA Towing v. Prince George's Co. (quoting Kaczorowski v. City of Baltimore), and Davis v. State, the opinion read "school operating budget" according to its plain meaning as an inclusive term covering all ongoing educational expenditures as distinct from capital costs, noting the word "operating" was added by amendment before the 1984 law's passage and that the term is used the same broad way elsewhere in the Education Article (ED §§12-105(a)(2) and 16-401(a) through (d)), citing a legislative budget handbook definition and Powell v. City and County of San Francisco's broad construction of "operating expenses" in a city charter. It declined to import the narrower "basic current expenses" definition from ED §5-202(a)(3) (which excludes debt service, capital outlay, transportation, and certain categories of state aid) into the maintenance of effort provision, reasoning that the General Assembly used "basic current expenses" repeatedly elsewhere in the very same section (ED §5-202(b)(1), (b)(2), (b)(3), (b)(5), (e), and (f), and even once within the maintenance of effort provision itself at ED §5-202(b)(3)(ii)2) but chose the different, broader term "school operating budget" for the maintenance of effort baseline, showing that omission was deliberate rather than an oversight.

The opinion nonetheless agreed with Howard County's solicitor that some items appropriated to the operating budget for technical or charter-driven reasons, such as one-time library start-up equipment costs, could fairly be treated as capital expenditures and excluded, as could spending unrelated to public school operations, such as appropriations for parochial school student transportation or for community-group use of school facilities under ED §5-101(c)(2)(vii). It rejected excluding public school transportation itself, however, citing McCarthy v. Board of Education of Anne Arundel County's holding that student transportation is integral to modern public education, and noting ED §5-203 and §8-412 establish a separate state grant program for pupil transportation precisely to avoid double payment through the basic current expenses formula, which does not mean transportation is irrelevant to a county's own maintenance of effort spending. Finally, ED §5-205(b)(3) provides the enforcement mechanism: if the State Superintendent certifies noncompliance, the State Comptroller suspends the portion of state aid due that year in excess of what the county received the prior year, until compliance is shown, a straightforward forfeiture of the increment rather than any additional penalty.

Citations and references

Statutes:

• §5-202(b)(3)(ii) of the Education Article, the maintenance of effort funding requirement
• ED §5-201, directing state school appropriations into the General State School Fund
• ED §5-201(c)(11), referencing the state's basic current expenses share
• ED §5-202, the basic current expenses and state aid formula
• ED §5-202(a)(3), defining "basic current expenses"
• ED §5-202(a)(7), defining "full-time equivalent enrollment"
• ED §5-202(b)(2)(i), itemizing inclusions and exclusions in the average statewide per pupil expenditure
• ED §5-202(b)(2)(iv), capping the per-pupil increase absent legislative affirmation above a fiscal threshold
• ED §5-202(b)(4), the pre-1984 county funding obligation tied to county wealth
• Chapter 85, Laws of Maryland 1984, adding the maintenance of effort requirement and sanction
• ED §5-205(b), the maintenance of effort enforcement mechanism
• ED §5-202(b)(3)(ii)1, the enrollment-adjusted or highest-prior-appropriation formula
• ED §5-202(b)(3)(ii)2, barring artificial program shifts to satisfy the requirement
• ED §5-202(b)(3)(iii), an expired special rule for the 1987-88 and 1988-89 school years
• ED §12-105(a)(2) and ED §16-401(a) through (d), other Education Article uses of "operating budget"
• ED §5-202(b)(1), (b)(2), (b)(3), (b)(5), (e), and (f), repeated uses of "basic current expenses" in the same section
• ED §5-202(a)(3)(i), excluding transportation from basic current expenses
• ED §5-101(c)(2)(vii), listing "student transportation" as a school budget subcategory
• ED §5-203, the separate state grant program for public school transportation
• ED §8-412, transportation for handicapped children
• ED §5-205(b)(3), the state aid suspension mechanism for noncompliance
• Chapter 175 (House Bill 7) of the Laws of Maryland 1996, later significant amendments to the maintenance of effort provision (noted in the editor's note)

Cases:

• Brodsky v. Brodsky, 319 Md. 92, 98, 570 A.2d 1235 (1990), on statutory language as the starting point of construction
• ANA Towing v. Prince George's Co., 314 Md. 711, 715, 552 A.2d 1295 (1989), on examining the language the legislature used to achieve its goal
• Kaczorowski v. City of Baltimore, 309 Md. 505, 513, 525 A.2d 628 (1987), quoted within ANA Towing on statutory language analysis
• Davis v. State, 319 Md. 56, 61, 570 A.2d 855 (1990), on when legislative history and other sources may supplement plain language
• Powell v. City and County of San Francisco, 62 Cal. App. 2d 291, 144 P.2d 617, 621 (1944), on a broad construction of "operating expenses" in a city charter
• McCarthy v. Board of Education of Anne Arundel County, 280 Md. 634, 649, 374 A.2d 1135 (1977), holding student transportation integral to modern public education

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1991/Volume76_1991.pdf (this opinion appears at printed pages 153-162 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Education - Public Schools - Scope of "Maintenance of
Effort" Funding Requirements - Consequence of
Failure to Meet Requirements

                         March 6, 1991

The Honorable Charles I. Ecker
County Executive of Howard County

You have requested our opinion on the "maintenance of effort"

requirements of §5-202(b)(3)(ii) of the Education Article ("ED" Article).
Specifically, you ask:

1. What categories of local expenditures are to be considered in
   determining the "highest local appropriation to the school operating
   budget," the key element in calculating a county's maintenance of effort
   amount?

2. How is the amount of the reduction in State aid calculated, if
   a county is not able to meet its maintenance of effort funding
   requirement?

For the reasons stated below, we conclude as follows:

1. All local expenditures that are related to the on-going
   educational functions of the public school system must be included in
   calculating the "highest local appropriation to the school operating
   budget" under ED §5-202(b)(3)(ii).

2. If a county is not able to meet its maintenance of effort funding
   requirements, that jurisdiction will not receive any increase in State aid
   under ED §5-202 - that is, the county forfeits whatever increment would
   otherwise be due in the current fiscal year above the amount that the
   county received in the prior fiscal year.

                                    I
   
                             Background
   

   The State's public school system is primarily financed by a
   combination of State and local tax revenues.1 ED §5-201 provides (with
   certain exceptions) that all State funds appropriated by the General
   Assembly for the support of the public schools shall be included in the
   General State School Fund. The statute also directs payment from the
   Fund for a number of specified public school expenses, including the
   State's share of "basic current expenses as provided in ED §5-202 of this
   subtitle." ED §5-201(c)(11).

   Under ED §5-202, the State's share of basic current expenses for
   each fiscal year from 1985 through 1990 was equal to the product of the
   full-time equivalent enrollment and a specified dollar amount.2
   Beginning with fiscal year 1991, the State's share is equal to the product
   of the full-time equivalent enrollment and a formula using the "average
   statewide per pupil expenditure." The statute specifically lists certain
   items to be included and certain items to be excluded in calculating the
   average statewide per pupil expenditure.3 If the State aid for public

   1
     The State's share is approximately 40%; the local government's, 55%.
   

   Federal aid is minimal, presently constituting approximately 5% of the total.
   2
   The terms "basic current expenses" and "full-time equivalent enrollment"
   are defined in ED §5-202(a)(3) and (7). See Part IIB below for a further discussion
   of "basic current expenses."
   3
   ED §5-202(b)(2)(i) provides that the statewide aggregate of expenditures
   for basic current expenses shall:
   1. Exclude disbursements for food subsidy programs and
   food service, employer contributions to teachers' retirement
   and social security paid by the State, student body activities,
   community services, pupil transportation, adult education,
   school construction, and debt service;
   2. Include disbursements for instruction, kindergarten
   through grade 12, pupil personnel services, health services,
   operation of plant, maintenance of plant, administration, and
   fixed charges, including teachers' retirement and teachers'
   social security contributions paid by the subdivisions; and

elementary and secondary education exceeds 31.5% of the projected
general funds of the State in any fiscal year, the statute requires
legislative affirmation that the additional State aid is within the State's
fiscal resources.4

Prior to 1984, to be eligible to receive the State's share of basic

current expenses, a county was only required to provide an amount of
revenue equal to the product of the wealth of the county and a local
contribution rate statutorily determined for each fiscal year. See ED §5-
202(b)(4). In 1984, the General Assembly amended the public school
funding law by adding a local government maintenance of effort
requirement and by providing a sanction for failure to comply with the
maintenance of effort provision. Chapter 85, Laws of Maryland 1984,
codified at ED §§5-202(b)(3)(ii) and 5-205(b).

 In an opinion accompanying your request, the County Solicitor

explained that, in previous years, appropriations by Howard County to
the board of education far exceeded the amount needed to satisfy each
year's maintenance of effort requirement. Opinion of the County
Solicitor No. 91-02, at 2 (February 21, 1991). That opinion also noted
that previously no attempt was made to determine whether all or part of
the total appropriation in the Howard County budget was for categories
of expenses contemplated by the maintenance of effort requirements.5

    3 (...continued)

           3. Be reduced by the following revenues to the
      subdivisions: State drivers' education aid, compensatory
      education funds. State handicapped education aid, all federal
      aid except that for adult education, food subsidy, school
      construction, youth services, multiservice centers and any other
      aid not applicable to the expenditure categories noted in sub-
      subparagraph 2. of this subparagraph.
    4
       If a joint resolution is not enacted, the statute provides that the per pupil

amount for basic current expenses in which the State shall share for the next fiscal
year shall be the lesser of the per pupil amount for basic current expenses as
provided in the statutory formula or an amount equal to 108 percent of the prior
year's per pupil amount for basic current expenses. ED §5-202(b)(2)(iv).
5
Each year every local board of education is required to submit a
certification statement to the Maryland State Department of Education verifying the
amount of local funds appropriated for the public schools. The total amount

This year, however, Howard County, like many other jurisdictions, is
entering the budget preparation process facing a shortfall in the
estimated revenues for the current fiscal year and projecting a further
decline in revenues for the upcoming fiscal year. Accordingly, hard
choices about resource allocation must be made. In order to prepare the
proposed county budget as a whole, you need to determine the amount
of the minimum funding required by State law.

                                     II

        A County's Maintenance of Effort Requirements

A. Introduction

The county maintenance of effort requirements for public school

funding are found in ED §5-202(b)(3)(ii):

              1. The county governing body shall appropriate
        local funds to the school operating budget in an
        amount no less than the greater of the product of the
        full-time equivalent enrollment used in calculating the
        current expense aid for the current fiscal year and the
        local appropriation on a per pupil basis for the prior
        fiscal year or the highest local appropriation to the
        school operating budget in the prior fiscal year.

              2. For purposes of this paragraph, the local
        appropriation on a per pupil basis for the prior fiscal
        year for a county is derived by dividing the county's
        highest local appropriation to its school operating
        budget for the prior fiscal year by the full-time
        equivalent enrollment used to calculate the current
        expense aid for the county for the prior fiscal year.
        For example, the calculation of the current expense
        aid for fiscal year 1985 shall be based on the highest
        local appropriation for the school operating budget for

    5
      (...continued)

appropriated to the public school budget (less an amount for debt service for bond-
financed capital projects) has been traditionally used on the certification statement
submitted by the Howard County Board of Education.

     a county for fiscal year 1984. Program shifts between
     a county operating budget and a county school
     operating budget may not be used to artificially satisfy
     the requirements of this paragraph.6

 The recent history of Howard County's spending for its public

schools illustrates the working of this statutory ratchet. In fiscal year
1990, the county appropriated $120,730,700 in operating funds to the
school board. This figure became the baseline for fiscal year 1991 - the
appropriation could not fall below the prior year's actual appropriation.
But because school enrollment in Howard County continued to grow, the
alternative calculation in ED §5-202(b)(3)(ii)1 yielded a higher number,
$126,198,766. Therefore, Howard County, its board of education, and
the State Superintendent all assumed that the county would satisfy its
maintenance of effort requirements if it appropriated at least
$126,198,766 of operating funds in fiscal year 1991.

In reality, Howard County chose to be more generous to its public

schools than the minimum required by ED §5-202(b)(3)(ii). The county
in fact appropriated $140,467,110 in operating funds. The question,
then, is whether this amount is necessarily the baseline for fiscal year
1992, or whether some elements of this appropriation may permissibly
be excluded when the county's maintenance of effort requirement for
fiscal year 1992 is calculated.

B. Meaning of "School Operating Budget"

The beginning point of statutory construction is the language of the

statute itself. See Brodsky v. Brodsky, 319 Md. 92, 98, 570 A.2d 1235
(1990). "The initial inquiry must be an examination of the language
used, 'because what the legislature has written in an effort to achieve a
goal is a natural ingredient of analysis to determine that goal.'" ANA
Towing v. Prince George's Co., 314 Md. 711, 715, 552 A.2d 1295
(1989) (quoting Kaczorowski v. City of Baltimore, 309 Md. 505, 513,
525 A.2d 628 (1987)). To be sure, if one suspects that the statutory
language does not accurately convey the General Assembly's objective,
one may look to legislative history and other relevant sources, but often
the language itself is sufficiently expressive of the legislative purpose or
goal. See, e.g., Davis v. State, 319 Md. 56, 61, 570 A.2d 855 (1990).

    6
     The statute contains an additional requirement that applied only to the

1987-88 and 1988-89 school years. ED §5-202(b)(3)(iii).

Here, the General Assembly has used the term "school operating

budget" as a referent for calculating the county's maintenance of effort
amount. We find it instructive that the word "operating" was inserted by
amendment and that the bill passed the General Assembly in the
amended form. Chapter 85, Laws of Maryland 1984.

On the face of it, the General Assembly evidently intended the term
"school operating budget" to have its plain and ordinary meaning - the
expenditures for the on-going educational functions of the public school
system, as distinct from capital expenditures. The term is used in this
sense elsewhere in the Education Article. See ED §§12-105(a)(2) and
16-401(a) through (d).

An "operating budget" is a broadly inclusive term, as the General

Assembly surely knew when it used the term in ED §5-202(b)(3)(ii).
One good working definition comes from the Department of Fiscal
Services' handbook for legislators: "[t]he ongoing costs of running the
state government which apply to all expense and outlays for a fiscal
year, with the exception of capital outlays and non-budgeted funds ...."
The Budgetary Process 8 (1986). Cf. Powell v. City and County of San
Francisco, 62 Cal. App. 2d 291, 144 P.2d 617, 621 (1944) (defining the
term "operating expenses" in a city charter broadly). The State's own
budgetary process is organized in terms of an inclusive operating budget
and a separate capital budget. See, e.g., State Government Serving the
People - Budget Highlights Fiscal Year 1992 at 10 (1991).7

We cannot find an indication that the General Assembly was using the
term "school operating budget" in a special or narrow sense. To the
contrary, the admonition in ED §5-202(b)(3)(ii)2 that "[p]rogram shifts
between a county operating budget and a county school operating budget
may not be used to artificially satisfy the requirements of this paragraph"
reflects the General Assembly's understanding of the realities of the
budgetary process and the breadth of an operating budget.

In her opinion, the County Solicitor concluded that the term "highest

local appropriation to the school operating budget" should be construed
to reflect only those elements constituting "basic current expenses." This
latter term is defined as follows in ED §5-202(a)(3):

    7
       "The operating budget for the State of Maryland for fiscal year 1992

exceeds eleven billion, five hundred million dollars. ... Maryland's capital budget is
$815,544,451...."

         "Basic current expenses" means the expenditures
     made by a county from State and county revenue for
     public elementary and secondary education exclusive
     of:

         (i) Payments for debt service, capital outlay, and
     transportation of students;

        (ii) State aid for handicapped children

        (iii) State aid for driver education ...; and

        (iv) State aid for food services.

While we understand the County Solicitor's argument that, on policy

grounds, this limitation ought be be imported into the undefined term
"highest local appropriation to the school operating budget," we have
difficulty seeing that the General Assembly in fact made that choice. In
the very section that incorporates the maintenance of effort requirement,
the General Assembly repeatedly used the term "basic current expenses."
See ED §5-202(b)(1) (characterizing State share), (b)(2) (defining
"average statewide per pupil expenditure"), (b)(3) (describing State
share), (b)(5) (describing State share), (e) (calculating compensatory
education funds), and (f) (describing vocational-technical set-asides).
Indeed, the term is used once in the maintenance of effort provision
itself. See ED §5-202(b)(3)(ii)2.

  In short, it would have been a simple matter for the General

Assembly to phrase the maintenance of effort requirements in terms of
a county's "highest local appropriation for basic current expenses." But
it did not do so, despite its focus on the details of the wording of this
particular term.

C. Reasonable Exclusions From The School Operating Budget

At the same time, we agree with the County Solicitor that a county's
compliance with its maintenance of effort requirements need not be
determined solely by reference to the number of dollars in the prior
year's appropriation. A county complies with its maintenance of effort
requirements, in our view, even if it excludes items that, for one or
another reason, were part of that appropriation but were not really for
public school operating needs.

 For example, some categories of expenses normally considered

capital in nature might nevertheless be placed in the operating budget
because of certain technical requirements in the local budget process or
for other reasons. The County Solicitor's opinion indicated that,
pursuant to charter requirements, Howard County must include start-up
costs to equip a new library in a new school in the county's operating
budget, even though such costs are not recurring expenses. In our view,
such one-time costs can fairly be viewed as capital expenditures that may
be excluded when calculating the local maintenance of effort amount.

The County Solicitor also suggested that transportation costs for both
public and private school students should be excluded from the school
operating budget for calculation of the local maintenance of effort. This
suggestion follows from the fact that pupil transportation is excluded
from the calculation of the State share of basic current expenses. ED
§5-202(a)(3)(i).8

As discussed in Part IIB above, it is our view that the General
Assembly intended the county's maintenance of effort amount to be
calculated on the basis of all of the operating expenditures for the public
school system. In McCarthy v. Board of Education of Anne Arundel
County, 280 Md. 634, 649, 374 A.2d 1135 (1977), the Court of
Appeals found that the transportation of public school students is "an
integral part of education as we know it today." Furthermore, "[s]tudent
transportation" is a specified subcategory of a county board of
education's annual school budget. ED §5-101(c)(2)(vii). Accordingly,
we conclude that any amounts for transporting public school children
included in the county's appropriation for the school operating budget
must be counted for purposes of the maintenance of effort requirements.

However, the County Solicitor's opinion indicated that the Howard
County Board of Education's 1991 operating budget included an
appropriation for the costs of transportation for parochial school
students. Since those costs are not necessary costs for public education,

    8
       ED §5-203 is a separate statutory provision for State grants to provide

transportation services for public school students and handicapped children for
whom transportation is to be provided under ED §8-412. Because there is a
separate statutory scheme for State grants for public school transportation, the
General Assembly naturally excluded it in the calculation of the State aid for basic
current expenses, to avoid double payment.

we believe that they may be excluded from the calculation of local
maintenance of effort.

Finally, the County Solicitor noted that the Howard County school
operating budget also includes appropriations for costs attributable to the
use of public school facilities by community groups. So long as these
costs are not for uses related to the curriculum or to the on-going
educational functions of the public school system, we believe that they
too may be excluded from the maintenance of effort calculation.

D. Summary

 In our view, the term "highest local appropriation to the school

operating budget" includes all items fairly related to the on-going
educational functions of the public schools, including transportation of
public school students. The total amount of a county's appropriation to
the school operating budget in the prior fiscal year can be presumed to
be the baseline for the maintenance of effort requirements.

However, a county may show that some items in the operating budget
are in reality either one-time capital costs or are unrelated to public
school activities. In that event, the State Superintendent may accept the
county's compliance with the maintenance of effort provision even
though the exclusion of these items lowers the amount of the county's
required appropriation.

                                III

          Reduction of State Aid For Failure to
         Meet Maintenance of Effort Requirements

 When the General Assembly enacted the maintenance of effort

requirements in 1984, it also enacted ED §5-205, which addresses the
reduction in State aid if a county fails to comply. The statute provides
that upon certification by the State Superintendent of Schools that a
county has not complied with the maintenance of effort provisions of ED
§5-202, the State Comptroller "shall suspend, until notification of
compliance is received, payment of any funds due the county for the
current fiscal year, as provided under §5-202 of this article which are
appropriated in the General State School Fund, to the extent that the
State's aid due the county in the current fiscal year under that section in
the Fund exceeds the amount which the county received in the prior
fiscal year." ED §5-205(b)(3).

The statutory language is straightforward. If a local government does
not meet its maintenance of effort requirements, it will not receive the
increase in State aid that it would have received had it complied with
those requirements.

                              IV

                          Conclusion

In summary, it is our opinion that local expenditures to the school

operating budget for the on-going educational functions of the public
school system must be included in determining the "highest local
appropriation to the school operating budget" under ED §5-202(b)(3)(ii).
If a county is not able to meet the maintenance of effort funding
requirements, the county will not receive the increase in State aid that
it would have received under ED §5-202 had it met those requirements.

                                          J. Joseph Curran, Jr.
                                          Attorney General

                                          Jack Schwartz
                                          Chief Counsel
                                            Opinions & Advice

                                          Valerie V. Cloutier
                                          Assistant Attorney General

Editor's Note:

 The "maintenance of effort" provision has been significantly

amended since this opinion, particularly by Chapter 175 (House Bill 7)
of the Laws of Maryland 1996.