Maryland lawmakers’ education spending plans received a report card of sorts this week from Wall Street: all ‘A’s.
The state’s Triple-A bond ratings were reaffirmed by the three main bond rating agencies – Moody’s, Fitch and S&P – ahead of the planned August sale of up to $550 million in general obligation bonds.
In publicly available ratings reports, Fitch and S&P took note of anticipated state funding increases for recommended school reforms from the Kirwan Commission, which are expected to cost up to an additional $3.8 billion annually once fully implemented.
S&P analysts wrote that “cost pressures related to health and human services spending as well as education funding could exacerbate future budget gaps,” but noted that the state of Maryland has generally made proactive budget adjustments to assuage any such concerns.
Fitch analysts anticipated that state leaders would be able to manage increased Kirwan Commission funding with commensurate revenue increases or reductions, “consistent with its track record of responsible budget management.”
The Fitch analysis also looked at massive school construction funding plans proposed both by Gov. Lawrence J. Hogan Jr. (R) and the Legislature. A school construction program of about $2 billion would not affect the agency’s rating of Maryland’s long-term liability burden, the analysts wrote.
The reports looked at broad areas of Maryland’s operating and capital budgets, ultimately awarding the state with the top fiscal ratings it has held from all the ratings agencies for decades.
“We are pleased that Maryland continues to be recognized as a triple-AAA state, a distinction that reflects Maryland’s fiscal strength and longstanding commitment to prudent, proactive financial management,” State Treasurer Nancy K. Kopp (D) said in a news release.
In awarding the bond ratings, the agencies noted Maryland’s highly educated workforce, above-average wealth and high-performing economy, though the analysts noted a deep reliance on local, state and federal government employment.
The top-level credit ratings mean the state will be able to save millions on interest costs for the $550 million general obligation bond sale, which will be overseen by the Board of Public Works on Aug. 14 in Annapolis. The bond sale will be used for capital projects throughout the state, including for public schools, colleges and hospitals.