Hold-harmless boosts K–12 funding while disparity grants and retirement shifts squeeze some counties

Legislative analysts told the Budget and Taxation Committee the governor's FY27 plan increases state support for public schools while leaving some county-level grants reduced.

Presenters said K–12 funding grows by about $228.4 million — a 3.7% increase — driven largely by a discretionary decision to hold harmless community eligibility schools under a change in state law that would otherwise reduce free-and-reduced-price-meal counts. DLS said the hold-harmless provision adds about 34,000 students to the free-and-reduced-price-meal count and increases compensatory and concentration-of-poverty grants.

At the same time, the disparity grant is level-funded at the FY26 formula level, saving the state an estimated $27 million and cutting allocations to some counties; presenters identified Prince George's County as losing about $17.5 million and Allegany County as losing about $6.0 million under the proposal. Staff cautioned those reductions will have a significant fiscal impact on low-wealth counties.

Romans also explained a shift in local retirement costs for teachers, librarians and community colleges that asks local jurisdictions to pick up roughly half of the state's increased contribution for a combined local cost near $39 million; DLS noted this is smaller in magnitude than last year's teacher retirement shift but still material for some local budgets.

Committee members asked for local-level projections of blueprint costs between FY27 and FY31; DLS said it would provide the requested numbers to quantify how the exhausted Blueprint fund balance would translate into local obligations if the general fund were to assume remaining costs in future years.