You are on page 1of 5

Douglas E.

11913 Ambleside Drive
Potomac MD 20854-2107

December 14. 2009

Open Letter to Montgomery County Public School Employees

RE: Lost COLAs, Unfunded Benefits, and Potential Layoffs and Furloughs

Dear Montgomery County Public School Employees:

I am writing this letter to all MCPS employees who may be concerned about layoffs,
furloughs, lost COLAs and step increases, and the funding status of their health, pension and other
benefits plans. I think that covers you all.

The County's recent violation of the State's Maintenance of Effort (MOE) law has prompted a
lot of discussion. As often happens in cases like this, the story that people are choosing to tell is not
the one that needs to be told.

While the basic information about the MOE waiver request contained in the joint FAQ sheet
published online by Montgomery County Education Association (MCEA), SEIU Local 500 and
MCAAP appears to me to be accurate, it is not the whole story ( In order to fully
understand how this issue affects you, I believe you need to know the whole story. Once you
understand what has occurred. I am confident that you will be better able to take appropriate steps
to protect your interests and. by extension, the interests of the County's schoolchildren.

Q: Was this the first time Montgomery County applied to the State Board of Education for
a waiver of MOE?

A: Yes.

Q: Was Montgomery County's MOE waiver request the largest one submitted to the State
Board in FY10?

A: Yes. It started at $94 million and was reduced to $79.5 million on the day the State Board
considered Montgomery County's request.

Q: What was the State Board's deadline for submitting public comments on the waiver

A: April 10, 2009.

Q: When did Montgomery County first make its written waiver request public?

A: April 10,2009.

Q: Did the County Council ever hold a public hearing on the waiver request?

A: No.

Q: Did the MCPS Board of Education ever hold a public hearing on the waiver request?

A: No.

Q: Did MCEA, SEIU Local 500 or MCAAP submit comments on the waiver request to the
State Boa rd?

A: No.

Q: Did unions in the other 7 counties with pending waiver requests file written comments
with the State Board?

A: Yes, with the sole exception of Wicomico County, whose waiver request was for only
$577,000, the teachers' union in each County submitted written comments to the State
Board in connection with every other waiver request.

Q: What was the basis for Montgomery County's waiver request?

A: In a word, Montgomery County pled poverty, claiming the "recession" made it impossible for
the County to fully fund its MOE obligations.

Q: Can a County's self-inflicted financial problems justify the waiver of MOE?

A: No.

Q: When the State Board denied Montgomery County's waiver request, was Montgomery
County engaged in any activity that could be considered as creating self-inflicted
financial hardship?

A: Yes. The County was spending hundreds of millions of dollars on County Executive
Leggett's "Smart Growth Initiative."

Q: What did that involve?

A: The Smart Growth Initiative required the purchase of four properties in Montgomery County
as part of a half-billion-dollar plan to relocate numerous County facilities.

Q: What did those properties cost?

A: The Finmarc Property cost $32.7 million; the Casey 6 & 7 Property cost $30 million; the
Webb Tract Property cost $48.3 million; and the GE Tech property cost $76.3 million.

Q: Were there any other costs associated with the Smart Growth Initiative?

A: Yes. In addition to purchasing the properties, there were substantial costs associated with
planning, design and construction of facilities associated with them. For example, the month
before the County submitted its waiver request, at the request of Mr. Leggett, the County
Council approved $36 million in such expenditures for FY09.

Q: Had all of the land purchases been completed when the waiver request was

A: All except one: the GE Tech Property.

Q: What was the status of the GE Tech Property when the waiver request was submitted?

A: On the same day Mr. Leggett and then-County Council President Phil Andrews sent the
MOE waiver request to the State Board, they also moved forward with funding for the GE
Tech Property. At the request of Mr. Leggett, Mr. Andrews introduced a resolution before the
County Council calling for funding the GE Tech Property project in the amount of $ 107.4

Q: What happened to that resolution?

A: It was approved by the Council on May 13, 2009 - two days before the State Board denied
the County's waiver request.

Q: Is there any reason to believe that the County's funding of the Smart Growth Initiative
influenced the State Board's decision to deny the waiver request?

A: Yes. In a November 4, 2009 opinion concluding that the County had violated the MOE law,
Maryland Attorney General Doug Gansler used the example of funding "a new county office
building" to explain how the purpose of the MOE law could be defeated by allowing County
education funds to be diverted to other purposes.

Under state law, the Attorney General advises the State Board on all matters pertaining to
MOE waiver requests, including the legal standards to be applied when reviewing them.

Q: What does the Attorney General's reference to "a new county office building" have to
do with the Smart Growth Initiative?

A: The GE Tech Property is the site of a large office building that Mr. Leggett intends to
renovate for use as a county office building.

Q: How does all of this affect me?

A: It already has, in at least two ways.

First, last year you gave back $89 million in COLAs an amount more than sufficient to
cover the $76.3 million purchase of the GE Tech Property.

Second, last year the MCPS budget was reduced by $31.1 million - the same amount of
money requested by Mr. Leggett to renovate the Tech Property. Almost all of the $31.1
million removed from the MCPS budget involved reduced payments to MCPS employee
health, retirement and other benefits plans.

Q: How might all of this affect me in the future?

A: It will get even worse:

1. The FY11 MCPS budget submitted by Dr. Weast assumes no COLAs again this year.

2. In the FY10 MCPS budget. the Council reserved the right to call back $12 million in retiree
health benefits funding to cover any potential budget shortfalls. Given the County's need to
fund MOE and the penalty the County faces for violating the MOE law in FY10, a budget
shortfall is almost certain to occur - leading to the forfeiture of that $12 million.

3. On November 17, the Council approved a $30 million FY10 "savings plan" proposed by Mr.
Leggett. At that time Mr. Leggett said no additional budget cuts were planned. Two weeks
later. Mr. Leggett announced he was preparing a second "savings plan" for FY10 in the
amount of $100 million -- three times the size of the first "savings plan".

According to recent press reports, those cuts could include furloughs or layoffs for County
employees in the current fiscal year (i.e., before June 30, 2010).

The County is projecting a $608 million FY11 deficit. At the same time, the Smart Growth
Initiative will require an additional $150 million in funding. Things are going downhill quickly­
and steeply. Where will all of this money come from?

Q: What is my union doing to protect me?

A: I don't know.

Unlike the State Board and the Maryland Attorney General, your unions appear to be
satisfied with the County's explanation that it was, and remains, too "broke" to fund its
obligations under the MOE law.

Your unions also appear to be satisfied with the County's explanation that it was, and
remains, too "broke" to fund your COLAs.

Finally, your unions appear to be satisfied with the County's explanation that it was, and
remains, too "broke" to fund your health, retirement and other benefits plans.

All while the County continues to find ways to fund Mr. Leggett's $500,000,000 Smart Growth

Q: What are you doing to help?

A: On November 16, 2009 I sent a letter to the MCPS Board raising these issues. I have not
yet heard from the MCPS Board.

On November 30, 2009 I sent a letter to the State Board raising these issues. I have yet to
hear from the State Board.

I have told both the MCPS Board and the State Board that it is my position that Mr. Leggett
and Mr. Andrews sought the MOE waiver for the unstated purpose of advancing the Smart
Growth Initiative.

I have informed the State Board that I stand ready to prove this assertion and that if I can do
so, the State Board would be justified in forgiving any MOE-related penalty that it might
otherwise assess against the residents of this County.

Q: What do you think will happen next?

A: I expect to be attacked by people with a political interest in protecting the Smart Growth
Initiative. That is what happened to the State Board when it denied the waiver request. That
is what happened to the Attorney General when he issued his opinion. And that is what is
now happening to the law itself. By blaming the law and seeking a legislative "fix" Mr.
Leggett, Mr. Andrews and all of those associated with them can divert attention from the real
question: Why did the County submit the MOE waiver request in the first place?

Q: What questions need to be asked?

A: There are so many. Here are a few.

,. Will the County pay to MCPS the $79.5 million in MOE funds that it "shorted" MCPS in
FY10? Is this what the County intends to do with the money it saves in the next FY10
"savings plan"?

,.. If the County does pay that $79.5 million to MCPS in FY10, where will the money go? Will
the County restore to MPCS employees the FY1 0 COLAs that the unions agreed to forego?

,.. If the County now pays to MCPS the $79.5 million in MOE funds that it "shorted" MCPS in
FY10, will the MOE penalty disappear because the County will have satisfied its FY10 MOE
obligations? After all, FY10 is not over yet.

,.. If the County does incur a penalty, can it legally take back the $12 million it appropriated for
retiree health benefits in the FY10 MCPS budget, which the County attempted to reserve the
right to do in the event of a "budget shortfall"?

,.. If the County attempts to take back that $12 million for any purpose, will the MCPS Board of
Education sue to protect that money? Will the unions sue to protect that money?

Q: Who is in the best position to get answers to these questions?

A: Your unions. That is what you pay them for.

You have been asked to make extraordinary sacrifices to help bail the County out of what
you have been told is serious fiscal distress, and will be asked to make more. I suggest to you that
the County is not dealing with you in good faith. The lack of public review of the novel and
substantial MOE waiver request speaks for itself. The County's massive expenditures on the Smart
Growth Initiative, made at the same time the County is cutting the MCPS budget, beg the question:
What is really going on here? The State Board and the Attorney General didn't buy the County's
story of "financial hardship." Why do your unions continue to do so?

/ /~/ (
_ ////,7
// / / ._/,
·/,..-FZ~(,',,"' / ( ~ / ) ~ .• ~",;;::-:.ckk
\/OOUQlaS E. Rosenfeld U