A massive capital construction and improvement plan to repair or replace dozens of underutilized or dilapidated school buildings in Baltimore City has won the support of legislative leaders in
On Monday, House Speaker
The financing mechanism envisioned by backers of the proposal differs significantly from that of an earlier plan originally offered by city schools CEO Andrés Alonso. That suggestion hinged on an innovative arrangement, never before tried in Maryland, under which the state would have guaranteed to maintain its recent levels of commitment to school construction — about $32 million a year — and to provide it in a block grant to a new, independent nonprofit entity. That agency would use that money, plus additional funds from the city, to float bonds that would pay for the new schools.
Lawmakers in Annapolis didn't like that idea because it essentially amounted to using borrowed money to finance additional borrowing. Even if that didn't somehow affect the state's credit, as some legislators feared, it might well have driven up borrowing costs for the school construction project. Others questioned whether the independent, nonprofit entity envisioned by Mr. Alonso to issue the bonds and oversee construction would have the financial and management experience to handle such a huge project in a way that protected the state's investment, especially in light of reports last year of waste and lax financial controls in the school system.
The plan lawmakers have come up with largely overcomes those concerns, first by making the Maryland Stadium Authority, a known quantity, responsible for issuing bonds and overseeing construction; and second by funding the state's $20 million contribution out of lottery proceeds and requiring the city and the school system to each match it out of their annual operating budgets. That's a bit more than the school system would have shelled out under Mr. Alonso's plan, but if having some additional "skin in the game" enables the school system to leverage more than $100 million a year in additional construction and renovation funds, the trade-off makes a lot of sense.
The advantages of such an arrangement are hard to overstate, especially since the plan now under discussion would not cause Baltimore to lose its eligibility to apply for state school construction funds under the normal procedure followed by every other school district in the state. That would allow the system to continue performing routine maintenance, such as fixing leaking roofs and repairing faulty heating and air-conditioning equipment, while the Stadium Authority undertakes major construction and renovation projects aimed at creating substantially refurbished or completely new schools.
Lawmakers from Maryland's 23 other jurisdictions might reasonably ask why they should support a plan that benefits only Baltimore. After all, the $20 million in lottery funds going to support it would otherwise have been spent on other state needs. The answer is that the state pays a disproportionate share of the cost of Baltimore's school system, among other things, and unless there is a substantial turn-around in the city's population and tax base, it always will.