Slot Machines, Schools, and The $718 million Thornton Gap

In the special legislative session that opened today, Governor Martin O’Malley and Maryland’s legislative leaders are promoting expanded gambling as a way to help Maryland’s schools. The Governor asserts that expanded gambling will provide $100 million for Maryland’s public schools.

So it’s important to look at how gambling revenue affects school funding. Even though 48.5 percent of casino proceeds go to an “Education Trust Fund,” it’s not quite right to say that this has increased funding for education. In fact, the typical public school classroom now gets $21,000 less in state funds than the amount intended by the landmark 2002 "Thornton Formula."

 

 

 

 

Here is what has Happened

The “Thornton Formula,” enacted in 2002 increased and reformed Maryland system of providing state funding for local schools. It was supposed to provide adequate funding for the “thorough and efficient” system of public education required by Maryland’s constitution, and to eliminate gaps in student achievement between richer and poorer school systems.

The program operated as intended from 2003 to 2008, increasing state aid to schools by nearly 80%.

After that time, the formula was supposed to adjust annually to keep pace with enrollment and education costs.

In 2008, Maryland voters approved slot machine gambling with the promise that the bulk of the funds would go to support schools. The legislature established the “Education Trust Fund” to receive these funds.

At the same time, the national recession hit, throwing Maryland and almost every other state into a severe revenue shortfall.

The Thornton Gap 

Part of Maryland’s budget balancing strategy was to freeze or limit the inflation factor in the per-pupil amount. The per-pupil amount, which drives the total funding, did not increase in fiscal years 2009, 2010, 2011, and 2012. The legislature allowed a 1 percent increase in the current fiscal year 2013. The increases are limited to 1 percent through fiscal year 2015. So, funding levels have adjusted for increases in student population, but not for cost increases.

What about the money from the slot machines? It did go to public schools, as advertised. But an equivalent amount of tax money went away to help balance the state budget.  The “Education Trust Fund” turns out to be a shell game.

If the formula had been adjusted for actual inflation and enrollment, the state’s school aid would be $718 million more than it is now. That comes to a difference of more than $21,000 for a typical classroom of 25 students. The graph above shows the “Thornton Gaps” for Maryland’s largest school systems.

Without this money, schools have increased class sizes; eliminated programs in foreign languages, physical education, and art; cut supplies and equipment in classrooms, libraries and labs; and reduced after-school and summer program opportunities. These cuts have hit all of Maryland’s schools systems, and they have fallen hardest on those that serve the most disadvantaged kids.

"For Maryland, for our Future"

That was the slogan Governor O'Malley and other gambling proponents used to support the 2008 slot machine referendum. At MBTPI, we understand that the state has to balance its budget, and we appreciate that Maryland’s Governor and legislature have protected education funding from the deepest and most severe cuts. Places like Virginia, Ohio, Arizona and Hawaii have cut their local schools much more severely.

But now there is a need to repair the damage. We need to make good on the promises for Maryland's future - and especially to Maryland's students. If the legislature and Maryland’s voters approve gambling expansion now, they must also make a commitment to restore the formula amounts to the levels required by the original Thornton formula over a reasonable period of time. If we leave the Thornton Gap open we break our promise to today’s kids and we disinvest in Maryland’s future.