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As the 2011 General Assembly session approaches, the state's moment in the sun when it snagged federal Race to the Top funds soon may be a distant memory for education in Maryland. The cold chill of money woes soon could take its place.

Legislators remain adamant that Maryland's teacher pension system must be reformed in some fashion because of unfunded liabilities. But a gauntlet of issues related to tight money confronts legislators. Those range from declining state funds for school construction, to reforming the maintenance-of effort requirement that — at a minimum — per-student spending match the previous year's level, to simple questions about how much money will be available from the state.

"It's a real possibility that we could make some cuts from education," said Sen. Nancy J. King (D-Dist. 39) of Montgomery Village, a member of the Senate Budget & Taxation Committee's Education Subcommittee.

The state's fiscal 2011 budget contains $5.7 billion in education aid for K-12 public schools, including a $210 million increase from fiscal 2010 driven largely by a growing number of low-income students and $90 million in teacher pension contributions.

But Maryland is losing approximately $425 million in federal education funding through the stimulus program that it received for fiscal 2011, with $233 million designated for district operating budgets and $192 million directed toward teacher retirement funds. The stimulus also helped fund the Geographic Cost of Education Index at $253 million over the past two fiscal years. The GCEI provides more money to jurisdictions with the highest cost of living, such as Montgomery and Prince George's counties.

Maryland got something of a reprieve in August, when it received $175 million from Washington, D.C., through the Education Jobs Fund to fill school positions. But since the state already has distributed $30 million of that to schools, legislators are still facing a $280 million drop-off in funds.

"It is really tough to conceive of how we're supposed to be racing anywhere," said John Woolums, director of government relations for the Maryland Association of Boards of Education.

But King referred to teacher pension reform as the most contentious education-related issue the General Assembly will confront in the upcoming session. Legislators appear firm in the belief that some reforms are necessary. Unfunded liabilities in the state pension system for teachers and other government employees are expected to reach $18 billion over the next 30 years. For fiscal 2013, teachers are projected to provide $1.15 billion of the $1.79 billion in base pension contributions to the state system.

"We're not going to be able to continue paying the current system that we have," said Del. John L. Bohanan Jr. (D-Dist. 29B) of California.

But contrary to perceptions, monthly benefits for teachers under the current system ($1,457 per month) are significantly down from levels paid out in the former teacher retirement system that stopped accepting new members in 1980 ($2,600 in average benefits per month), said David Helfman, executive director of the Maryland State Education Association, the state's largest teachers union.

"The process has been really shoddy," Helfman said in a media briefing Thursday in Annapolis, referring to the Public Employees' and Retirees' Benefit Sustainability Commission convened to reform the pension system. "I've described it as offensive."

Among the options presented by the commission are the elimination of cost-of-living adjustments for five years (bringing $452 million in savings to the teachers' pension system in fiscal 2013), implementation of age-based cost-of-living adjustments ($347 million in savings) and a change in the way benefits are calculated ($167 million in savings).

Proposals to shift pension costs to counties, meanwhile, would end up hurting teacher quality, said Doug Prouty, president of the MSEA's Montgomery County affiliate, because counties would simply make cuts to school funding to make up for it.

"You'll lose better candidates to other places," Prouty said, referring to Virginia and the District of Columbia.

Discussing the state's maintenance-of-effort law, King said legislators may look to ensure that county governments, rather than school systems, as is currently the case, are penalized if the previous per-student funding levels are not met.

Montgomery County, for example, had to receive a waiver from the state to avoid a $51 million financial penalty for fiscal 2011.

"A good number of counties won't make it this year," King said.

Officials also are dealing with declining state construction funds that help local school systems build or renovate schools.

The state allocated $400 million in fiscal 2008 for school construction, but Gov. Martin O'Malley (D) has budgeted an estimated $250 million in his preliminary fiscal 2012 spending plan. Requests for state aid for construction also have declined — from $893 million in fiscal 2008 to $596 million for fiscal 2012.

The shift in the numbers, King said, could mean that schools will have to scale back construction projects in the short term.

"When we modernize a school, we really do it over the top. We do a beautiful job," King said. "I'm not saying that that's bad. But I am saying that maybe we can't afford to do it that fancy anymore."

As for Race to the Top itself, legislators will keep a close watch on crucial decisions that now rest in the hands of state Superintendent Nancy S. Grasmick and O'Malley, Sen. Paul G. Pinsky (D-Dist. 22) of University Park said.

Problems already have appeared since the $250 million was awarded in August, including a likely delay in pilot programs and uncertainty about how much student academic progress ultimately will count in the state's redesigned teacher evaluation system.

Pinsky chaired a commission that voted in November to declare unlawful new Maryland State Department of Education regulations that dealt with teacher evaluations. But he still believes a fair deal on evaluations can be struck without endangering the money, and he believes informal conversations already are taking place with that in mind.

aujifusa@gazette.net