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With all the confusion surrounding the state's complicated mandatory school funding law, one thing is certain: The topic has caused great contention between politicians in Maryland's two largest counties and put their respective school systems in a serious financial bind.

Under the so-called maintenance of effort law, local governments are required to fund their school systems at the same level as the previous fiscal year. As enrollments grow, budgets grow. As enrollments fall, spending can fall.

Governments that don't provide school funding at the same level face fines and reduced state aid.

In April, government leaders from Prince George's and Montgomery counties sought waivers from the maintenance of effort requirement for fiscal 2010, saying that the recession made it tough for them to meet the obligation.

Both counties proposed alternate means for satisfying their maintenance of effort requirements, but the state school board denied their plans. The state could now fine the counties for not complying with the law.

Soon after, school officials in the two counties chastised their respective government leaders, because even if they can't afford to fund education, it's the school system that gets hit with the fine and reduced state aid.

The latest twist in the maintenance of effort saga occurred Wednesday night, when the Prince George's County school system released a $1.67 billion operating budget for fiscal 2011. That proposal is roughly $42 million less than its current spending plan, according to school system information. Prince George's expects fewer students.

The proposed budget, which still faces scrutiny by the county school board and the County Council, proposes furlough days for all school system employees, and increases class size by one student in most elementary school and high school grades. The budget also cuts 490 positions to save $110 million.

Also in the Prince George's school system's budget, Superintendent William R. Hite Jr. assumes that the County Council will give $609 million to the school system.

If the council does not fully fund the budget, and requests another waiver of $11.8 million, then the school system would look to increase class sizes even more and cut programs, said Matthew Stanski, chief financial officer for the Prince George's school system.

As proposed, Stanski said, the operating budget does not cut popular programs like International Baccalaureate and AVID, which prepares students for higher education.

The Prince George's budget also includes a possible $26 million penalty from the state, resulting from the attorney general's decision that the county failed to meet its maintenance of effort requirement.

Stanski said Wednesday that a second opinion regarding the possible penalty has been requested from Attorney General Douglas F. Gansler, but a response has not been issued.

"I think they are trying to find a way for Montgomery and Prince George's [counties] to not meet maintenance of effort requirements and not be completely wiped out," Stanski said Wednesday.

The Montgomery County school system could be fined as much as $46 million.

Last week, Superintendent Jerry D. Weast proposed a $2.26 billion operating budget that assumes the County Council will give $79.5 million to the school system for maintenance of effort.

If the county does not give up that amount, then Weast has identified $43 million in potential cuts, including a reduction of 240 classroom teacher and 30 central office administrator positions, among other items.

"We can't pay the fine and cut the budget again midyear," Weast has said.

Changing the law

Sen. Richard S. Madaleno Jr. (D-Dist. 18), a Montgomery County legislator on the Budget and Taxation Committee, said Monday that a local bill is in the works to exempt the county from its maintenance of effort requirement for fiscal 2010.

The delegation's bill would not exempt the county from its maintenance of effort requirement for the next fiscal year, Madaleno said.

Prince George's County lawmakers are taking a different path. Sen. Douglas J.J. Peters (D-Dist. 23), chairman of the county's Senate delegation, said Wednesday that County Executive Jack B. Johnson (D) and the County Council would work through the Maryland Association of Counties to address the maintenance of effort law.

Last session, MACo sought a one-year waiver of maintenance of effort for all Maryland counties. But "we're not sure we know our exact strategy for the upcoming year," said Michael Sanderson, MACo's executive director.

MACo would prefer a change to the maintenance of effort law to allow waivers to be granted if counties can't afford to fund their school system, Sanderson said.

On Monday, House Speaker Michael E. Busch said lawmakers plan to consider ways to rework the law and the criteria for getting a waiver from payment.

"That'll be one of the undertakings that we take up during the General Assembly session," said Busch (D-Dist. 30) of Annapolis.

Staff Writers Megan McKeever and Sean R. Sedam contributed

to this report.