MCPS Reports a Preliminary $31.7 Million FY2026 Fund Balance, Far Above Spring Projections

Montgomery County Public Schools finished the 2026 fiscal year on June 30 with $27,939,337 of its operating budget unspent and a fund balance of $31,720,955, according to a year-end report on the Board of Education’s Sept. 24 consent agenda. MCPS calls the figures preliminary until the books close.

The $27.9 million and $31.7 million figures measure different things. The $27.9 million is spending authority MCPS did not use, 0.8% of its $3.39 billion general fund budget. The $31.7 million fund balance is what MCPS ended the year holding: that $27.9 million, plus $2.8 million in revenue above budget, plus $978,157 left from its $21.5 million starting balance after two mid-year withdrawals.

The $31.7 million balance far exceeds the spring projections in council staff reports and in MCPS’s monthly financial reports.

The spring projections: $6 million, then $11.7 million

On April 13, as the council’s Education and Culture Committee opened its MCPS budget review, council staff reported that the MCPS fund balance at the end of FY2026 “is estimated to be $5,970,730.” The $5,970,730 estimate came from MCPS’s March 26 monthly financial report, which used figures through Jan. 31 and projected a $6.9 million spending deficit driven by the late-January storm that closed schools for a week, according to the council staff report. Council staff repeated the $5,970,730 estimate in the committee’s May 1 packet.

MCPS’s next monthly report, with figures through Feb. 28, went to the Board of Education on April 30 and projected a fund balance of $11,738,005. MCPS credited mainly the State Board of Education’s waiver of three added school days. We did not find the $11.7 million figure in the council staff packets for the MCPS budget sessions through the council’s May 15 vote. MCPS says its monthly reports are sent to the council.

The MCPS projections kept rising after the vote: to $14,153,609 in a report presented May 21 (figures through March 31) and $17,396,083 in one presented June 25 (figures through April 30). The May 21 and June 25 reports credit the central services spending restrictions MCPS imposed March 4, savings from unfilled positions and a spending cut-off at the end of April. The final $31.7 million balance is 2.7 times the $11.7 million projection the board received April 30.

The biggest late swing was in Fixed Charges, $13.3 million more underspent than projected through April 30. MCPS cited lower workers’ compensation and Social Security costs and grants covering more of the state retirement obligation.

How a fund balance works

MCPS cannot spend its leftover money on its own. “As State law prohibits MCPS from ending the year in a deficit, the district must end each year in a surplus. These funds can only be spent by MCPS following Council appropriation,” council staff wrote in the April 13 report.

The council has re-appropriated the balance every year, the same report shows: $25 million a year from FY2019 through FY2024, $18.9 million in FY2025 and $21.5 million in FY2026.

For FY2027, the Board’s request “does not include any assumed fund balance as a resource for the operating budget,” council staff wrote, and the council’s May 21 resolution approving the MCPS budget states: “This resolution does not include re-appropriation of the FY 2026 MCPS Current Fund balance.”

The council’s FY2026 resolution contained the same language for the FY2025 balance, and the council re-appropriated most of that money mid-year instead.

Mid-year use takes a supplemental appropriation. The council approved two from the MCPS fund balance during FY2026: $12 million for the employee benefit plan on March 10 and $8.5 million for storm costs on May 12, MCPS’s monthly reports show.

Maryland’s maintenance of effort law requires the county to give schools at least as much local money per pupil as the year before. Council staff wrote that the fund balance appropriation “is not part of MOE, as it does not affect the per pupil amount and cannot be counted towards the County’s MOE contribution.”

The $36 million shift

The FY2027 budget the council approved in a May 15 straw vote gave MCPS $143 million more than the year before, $36 million short of what the district asked for, Bethesda Magazine reported. Part of that increase came from money moved out of the MCPS capital budget.

A May 15 council staff addendum laid out a $36 million reduction in current revenue for MCPS capital projects: $15.4 million from HVAC replacement, $5 million from roof replacement, $9.3 million from outdoor play space and athletic fields, $2.5 million from facility planning and $3.8 million from school security systems. Because state aid is assumed to match county money 50/50, the six-year HVAC budget fell by $25.4 million.

Councilmember Will Jawando moved to shift that $36 million to MCPS operating expenses, funding two $18 million tranches of the district’s request that would otherwise have been cut, and the motion passed 7-4, Bethesda Magazine reported. The Board of Education adopted a budget on June 4 that included the reduction of 415 positions, The MoCo Show reported.

Montgomery Perspective’s Adam Pagnucco warned on May 15 that capital cash moved into the operating budget would be locked in under maintenance of effort, calling it “tantamount to using one-time revenue for ongoing spending.” In a May 15 statement, MCPS said the council’s funding level “relies on one-time financial measures.”

Maintenance and the benefits fund

MCPS underspent its Maintenance of Plant budget by $9,366,716, or 15.1%. MCPS said the $963,926 rise in that surplus after April 30 came “primarily” from “reduced spending for maintenance supplies due to the less than anticipated cost of roof and heating, ventilation, and air conditioning system supplies.” Maintenance of Plant is an operating category, separate from the capital HVAC and roof projects the council trimmed.

Of the $31.7 million, MCPS has assigned $337,806, from a Blueprint career advising grant. Separately, the employee benefits fund, which pays employee and retiree health claims, was projected at negative $97.0 million for FY2026 in a Sept. 15 presentation to the board’s Fiscal Management Committee. Montgomery Perspective reported on that deficit Oct. 12.

Still unanswered

• When did MCPS send the council its reports with figures through Feb. 28 and March 31, and did council members have the $11.7 million projection before the May 15 vote?
• What did the March 2026 spending restrictions cover, how much did they save, and are any still in effect?
• Will MCPS ask the council to re-appropriate the $31.4 million unassigned balance during FY2027, and for what?
• Why did Fixed Charges swing $13.3 million after April 30?
• When will the council take up the $12.6 million in transfers among budget categories that the Sept. 24 report requests?

We have not yet put these questions to MCPS or the County Council; this story will be updated with any response.

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