Reply to Report: County Council announces plan to fund 99.8% of MCPS budget request without tax increase

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[quote=Anonymous]SOURCE: https://bethesdamagazine.com/2025/05/13/mcps-budget-retirement-proposal/

[QUOTE]The Montgomery County Council announced Tuesday morning a proposal drafted in partnership with Montgomery County Public Schools (MCPS) that would fund 99.8% of the school system’s $3.65 billion budget request for fiscal year 2026 without requiring an income tax increase.

The funding would be made possible by reallocating money from the school system’s retiree health benefit trust, according to officials.

Tuesday’s announcement follows Montgomery County Executive Marc Elrich (D)’s proposal last month for a controversial income tax rate increase from 3.2% to 3.3% in order to fund the MCPS budget request.

The proposed income tax increase is part of Elrich’s recommended $7.65 billion county operating budget plan for fiscal year 2026, which begins July 1. The spending plan represents a substantial increase of 7.4% from the county’s current $7.1 billion operating budget.

“We have developed a path forward that will provide Montgomery County Public Schools with the resources it needs in the fiscal year ahead… these are very, very difficult times we are all facing,” council President Kate Stewart (D-Dist. 4), who is leading the proposal, said Tuesday morning at a press conference at the Rockville council office building.

MCPS maintains a retiree health benefit trust to provide a funding reserve for health benefits for retirees in future years. However, the need for spend more now for current health benefit needs for employees and retirees is a major pressure on the proposed MCPS budget, according to the officials.

Stewart’s proposal would allow the school system to use some of the money that is typically reserved for the future to fulfill current employee health benefit needs. Specifically, this plan would allow MCPS to receive an additional $50 million – $25 million in both fiscal years 2025 and 2026 — by increasing the school system’s annual draw down from the retiree health benefit trust.

According to Stewart and council staff, this use of one-time funds will assist MCPS in meeting its payments for retiree benefits, address cash flow issues and make other funds available to MCPS to address needs.[/QUOTE][/quote]

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