Could Maryland's State Board for Community Colleges split a supplemental funding appropriation by a different formula than it uses for the regular annual budget?

Plain-English summary

The Board of County Commissioners of Frederick County asked the Attorney General whether it was legal for the State Board for Community Colleges to distribute a special fiscal year 1982 deficiency appropriation for higher-than-expected community college enrollment using its existing "redistribution" procedure, which allocates extra funds based on each college's actual enrollment in the prior fiscal year, rather than the current year's enrollment. Frederick Community College had objected that this approach shortchanged it relative to colleges with more favorable prior-year enrollment figures, and argued the funds should have been distributed as if they were part of the original budget. The opinion concluded the State Board acted lawfully and within its broad statutory discretion. The regular funding formula in §16-403 of the Education Article governed the initial annual appropriation, but the separate statute governing supplemental funding requests, §16-404(c)(2), gave the Board discretion both over whether to seek extra money at all and over how to allocate whatever the General Assembly appropriated, so the Board's choice to keep using its established redistribution method, one it had already applied to a similar 1981 supplemental appropriation without objection, was a reasonable exercise of that discretion rather than a violation of state law.

Currency note

This opinion was issued in 1982. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The opinion applied Maryland's community college funding statutes, particularly §§16-403 and 16-404 of the Education Article, and the State Board's own enrollment-projection Procedures, as they stood in 1982. Maryland's community college financing formulas, the composition and authority of the State Board for Community Colleges, and the applicable appropriations statutes have all had decades to change since then. Anyone researching how Maryland currently allocates supplemental state aid to community colleges should verify the current version of these statutes and regulations rather than relying on this opinion's 1982 analysis.

Common questions

Did Maryland community colleges get their full share of state funding automatically based on enrollment?
Not exactly. The opinion explained that the annual state aid formula in §16-403 applied a statutory percentage or dollar ceiling per full-time-equivalent student to each college's "current expenses," but because the state's aid appropriation had to be requested and set before the school year began, it was based on projected, not actual, enrollment, with a "redistribution" process reallocating funds among colleges if some exceeded and others fell short of their projections.

Why didn't Frederick Community College get more money when enrollment ran higher than expected?
Because the redistribution process the State Board used to allocate the FY 1982 supplemental appropriation was based on each college's actual enrollment in the prior fiscal year, not the current year in which the extra enrollment occurred, so a college's individual current-year enrollment surge did not translate dollar-for-dollar into its share of the extra money. The opinion found this a permissible, previously used approach, not a legal violation.

Did the law require the State Board to use the same §16-403 formula for supplemental appropriations that it used for the regular budget?
No. The opinion found nothing in the statutory framework requiring the Board to apply §16-403's formula, or any other enrollment-proportional formula, to a supplemental appropriation, since §16-403 by its terms governs the initial projected appropriation, while the separate provision on supplemental requests, §16-404(c)(2), simply gives the Board discretion over whether to seek added funds and left the allocation method open.

Did Frederick Community College's objection change anything going forward?
Somewhat. Although the State Board declined to change the allocation method for the already-completed FY 1982 supplemental funding, it did adopt a revised process, based on current-year rather than prior-year enrollment, effective for FY 1983, while keeping the original prior-year-based process for the routine within-year redistribution of excess enrollment slots.

Background and statutory framework

Maryland's community college system, formally recognized in 1961 with each local board of education also serving as a college's board of trustees, was financed through a three-way split between the state, the supporting locality, and student tuition, with the state's share subject to a statutory ceiling. The 1968 creation of the State Board for Community Colleges gave it "full statewide responsibility" for the system, general policymaking authority, and administration of the state aid program, including, per prior AG opinions, the power to prescribe methods for determining state aid amounts and to interpret the governing statutory terms. Under §16-403 of the Education Article, a college's regular state aid is the lesser of a statutory percentage of its "current expenses" or a statutory dollar ceiling multiplied by its full-time-equivalent ("FTE") enrollment, both calculated from a systemwide enrollment projection the State Board develops each year in consultation with the colleges before that projection becomes "final" under §16-404(c)(2). Because actual enrollment can diverge from the projection, the Board's Procedures for Determining Community College Enrollment Projections provided a "redistribution" mechanism reallocating any excess or shortfall in FTEs among colleges based on each college's actual enrollment in the fiscal year before the year in which the excess enrollment occurred.

When enrollment ran higher than projected in FY 1981 and again in FY 1982, the General Assembly appropriated supplemental "deficiency" funds to cover the shortfall, and the State Board, with the concurrence of the community college presidents (including Frederick's, who raised no objection in 1981), applied its existing prior-year-based redistribution formula to allocate both supplemental appropriations. Frederick Community College first objected in early 1982, after the FY 1982 supplemental funds had already been requested, arguing the funds constituted "deficiency funding" that should instead be distributed proportional to current-year enrollment, a change that would have roughly tripled the college's share of that specific appropriation. The State Board declined to change the method for the already-processed FY 1982 funds but agreed to study the issue, and in June 1982 adopted a revised current-year-based process for future supplemental allocations while retaining the prior-year basis for ordinary within-year redistribution.

The opinion concluded the Board's original approach was lawful because §16-403's formula, by its own terms, governs the initial annual appropriation, while §16-404(c)(2) commits both the decision whether to request supplemental funds and, by clear implication, the method of distributing whatever is appropriated to the Board's discretion; citing Fleishman v. Kremer and Maryland-National Capital Park and Planning Comm'n v. Silkor Development Corp., it read the statute's permissive "may" as confirming that discretion. The opinion also rejected Frederick Community College's underlying assumption that state aid tracks enrollment alone, noting that a college's "current expenses" reflect largely fixed operating costs that do not rise proportionally with a late-year enrollment bump, and that the marginal cost of extra students is often offset by their additional tuition and fees. Citing Holy Cross Hospital v. Health Services Cost Review Commission for the deference owed to an agency's longstanding construction of the statutes it administers, and noting the college's own delay in raising the objection until after the funds had effectively already been allocated under a method it had earlier accepted without complaint, the opinion concluded the State Board's exercise of discretion was reasonable and consistent with state law.

Citations

Statutes:

• Chapter 134, Laws of Maryland 1961
• Former Article 77, §300(a) and (h) of the Maryland Code
• Former Article 77, §304(a)
• Former Article 77, §304(b)
• Chapter 454, Laws of Maryland 1968
• §16-104 of the Education Article
• §§16-401 and 16-402 of the Education Article
• §16-402(c)(1)
• Article 15A, §14 of the Maryland Code
• §16-403 of the Education Article
• §16-403(c)
• §16-403(b)(2)
• §16-403(b)(3)
• §16-404(b)
• §16-404(c)(1)
• §16-404(c)(2)
• Chapter 845, Laws of Maryland 1982
• Chapter 773, Section 1 [§16-403(c)(5)] and Section 3, Laws of Maryland 1981
• Chapter 125, Laws of Maryland 1982
• §16-405 of the Education Article
• Former Article 77A, §7(a) of the Maryland Code (1969 Repl. Vol.)
• Article 15A, §1 of the Maryland Code

Cases:

• Fleishman v. Kremer, 179 Md. 536, 541 (1941)
• Maryland-National Capital Park and Planning Comm'n v. Silkor Development Corp., 246 Md. 516, 524 (1976)
• Holy Cross Hospital v. Health Services Cost Review Commission, 283 Md. 677, 685 (1978)
• Roberts v. Police and Firemen's Retirement and Relief Board, 412 A.2d 47, 50 (D.C. 1980)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1982/Volume67_1982.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

Education—Community Colleges-State Aid-Supplemental Appropriations-State Board For Community Colleges Has Broad Discretion in Asking For and Allocating Supplemental State Aid

September 29, 1982

Ms. Mary G. Williams
President
Board of County Commissioners of Frederick County

On behalf of the Board of County Commissioners of Frederick County, you have requested our opinion on the legality of the formula used by the State Board for Community Colleges ("State Board") to distribute a deficiency appropriation in the State's Fiscal Year 1983 Budget for additional aid to community colleges.

For the reasons given below, it is our opinion that the distribution was a reasonable exercise of the discretion vested in the State Board and did not violate State law.

I
The Community College System and the State Board for Community Colleges

Until 1961, local, i.e., county and Baltimore City, boards of education operated community colleges under their general authority over public education. In that year, the General Assembly gave formal recognition to a new State system of community colleges, with each local board of education also constituting a college board of trustees. Chapter 134, Laws of Maryland 1961.

The State Department of Education and the State Superintendent of Schools were given power to approve the creation of a college and to set entrance requirements and minimum standards for curriculum. [Former Article 77, §300(a) and (h) of the Maryland Code.] Each community college was to be financed "on the general basis" of receiving reimbursement for its current expenses equally from the State, the locality that supported it, and student tuition and fees. [Former §304(a).] However, the State's participation was (and continues to be) subject to a statutory ceiling, with the locality and the students responsible for any difference between a college's current expenses and the State's maximum contribution. [Former §304(b).]

Perhaps the most significant change in this system was the later creation of the State Board for Community Colleges. Chapter 454, Laws of Maryland 1968. In addition to certain coordinating functions, the State Board is specifically charged with (1) "full statewide responsibility for the community colleges", (2) establishing "general policies for their operation", and (3) administering the program of State financial support to the colleges. §16-104 of the Education Article of the Maryland Code.

Although each college retains considerable autonomy in its own governance and in matters of local concern, the cumulative effect of these grants of authority to the State Board has been to vest it with broad regulatory power, considerably greater than had formerly been reposed in the State Department of Education and State Superintendent of Schools.1 Thus, for example, this Office has advised that the State Board has general authority to make and enforce rules and regulations in furtherance of its statutory obligations. Opinion No. 76-188 (October 11, 1976) (unpublished). More particularly, the State Board's obligation to administer the State aid program "empower[s it] to prescribe methods by which the amounts of State aid to community colleges shall be determined" and, in furtherance of the statute's purpose, to define and interpret the relevant statutory terms. 62 Opinions of the Attorney General 360, 362 (1977).

1 The State Board's authority does not extend to local budgetary control, however. Under §§16-401 and 16-402 of the Education Article, the governing body of the locality that supports the college approves its operating and capital budgets and controls the expenditure of funds for operating expenses. Like other public bodies, the college may not spend in excess of the funds appropriated to it. §16-402(c)(1). Cf. Article 15A, §14 of the Maryland Code ("No . . . institution of the State shall at any time spend in excess of the total amount of its appropriation.").

II
Financing of Community Colleges—Regular Appropriations

A. State Aid Formula

Throughout the existence of the public community college system, financing has been predicated on a statutorily prescribed formula, presently set forth in §16-403 of the Education Article. Under this arrangement, a college receives its revenues from three primary sources: the State, the locality or localities that support it, and its students. As noted earlier, the State pays a share of "current expenses", subject to a prescribed ceiling amount. §16-403(c).

The term "current expenses" is defined as "the product of the per student operating cost of the . . . college for the current fiscal year multiplied by the number of full-time equivalent students enrolled at the . . . college in the current fiscal year." §16-403(b)(2). "Per student operating cost" is derived from the total fiscal year operating costs of the college, reduced by federal or other reimbursements and by any inappropriate charges. See 62 Opinions of the Attorney General 360 (1977) (federal funds under CETA program reduce operating costs). The "number of full-time equivalent students" is "the quotient of the number of student credit hours produced in the fiscal year divided by 30". §16-403(b)(3).

If the State's statutory percentage of the operating cost per full-time equivalent student ("FTE") is less than the statutory dollar ceiling per FTE, the State's contribution is simply the statutory percentage applied to current expenses.2 However, if the State's percentage share of operating cost per FTE exceeds the statutory dollar ceiling, as, we understand, it does for sixteen of the seventeen colleges in the system, the State's contribution is that ceiling multiplied by the number of eligible FTEs. Under these formulas, the State ordinarily contributes less than half of a college's operating costs, a result consistent with the apparent legislative intent.

2 The State percentage share is generally 50%; the dollar ceiling, as most recently raised by Chapter 845, Laws of Maryland 1982, is generally $878 per FTE. Higher State shares and ceilings, however, are provided for some colleges. §16-403(c).

B. Development of the State Aid Budget

The State's share of support of the community college system, included each year in the budget of the State Board, is derived by using the formula contained in §16-403. As discussed above, an essential component of this formula is student enrollment. Because the budget request is submitted by the Governor to the General Assembly in advance of the fiscal year in which the funds are to be expended, the number of FTEs necessarily must be projected. For this purpose, the State Board is charged each year with computing a systemwide FTE projection, "in consultation with the State Board for Higher Education and each community college and with the concurrence of the State Department of Budget and Fiscal Planning". §16-404(b).

Acting under this mandate, the State Board has developed its "Procedures for Determining Community College Enrollment Projections and Redistributions for State Aid Purposes" (the "Procedures"), a policy that has been followed since June, 1978. Under the Procedures, preliminary systemwide enrollment projections are developed more than a year in advance of the fiscal year to which they are to be applied; these projections are then refined throughout the following months. During this process, the Executive Director of the State Board discusses with each community college president the college's enrollment projection for the succeeding fiscal year, focusing on the factors and rationale underlying the projections.

Usually, agreement is reached with each community college on its projected enrollment; the total of these projected enrollments eventually becomes the proposed systemwide FTE projection. This proposed projection and supporting data are then formally submitted to the State Board for its approval.3 As required by §16-404(c)(1), the approved projection is converted into the total annual State appropriation for aid to community colleges and submitted to the Governor, for inclusion in the Governor's budget request to the General Assembly.

3 Although this cooperative process has worked successfully, consensus on the allocation of FTEs is not a legal prerequisite to State Board approval. We have no doubt about the State Board's authority to make these determinations itself, after the required consultations, if agreement cannot be achieved.

Thus, the systemwide enrollment projection and the underlying negotiated enrollment projection for each community college are critical numbers. They are subject to considerable analysis, debate, and refinement and are expected to be the best possible estimates, estimates within which the colleges are expected to operate, at least as far as financial aid from the State is concerned.4 Under §16-404(c)(2), the budget request submitted to the Governor by the State Board "is final".

4 Because the enrollment projection fixes the maximum amount of potential State aid, it is an essential component of the budget preparation and approval process. With this information, a local governing body can assess the college's budget in light of the locality's own ability to contribute beyond the minimum prescribed by statute.

C. Redistribution of Annual Appropriation

Until Fiscal Year 1981, the colleges within the system were able to accommodate the systemwide projection, without the need to request supplemental funds from the State. When a college exceeded its individual projected enrollment, the State Board permitted it to receive additional State aid for its "excess" enrollment to the extent that one or more other colleges in the system fell short of their projected enrollment. A community college had no assurance, however, that it would receive any additional funds through this "redistribution" process, because its excess enrollment might not be compensated by underenrollment at other community colleges.

The formula for redistribution of State aid is embodied in the Procedures:

"On December 15, March 15, and June 1 of each year, each community college will be given the opportunity to submit, in writing . . . , either a request for an enrollment projection increase or a reduction in the college's approved projection for the current fiscal year and/or the succeeding fiscal year. If any college voluntarily requests a reduction in projection, these FTEs . . . will be placed in a pool and reallocated proportionately to those institutions requesting increases based upon actual institutional enrollment for the prior fiscal year. These revised enrollment projections will be presented to the State Board for Community Colleges for approval at each respective succeeding Board meeting. Any FTEs remaining at the end of the fiscal year, after final audits have been completed and each college has been fully reimbursed up to its approved projection level, will be allocated proportionately to colleges exceeding projections based upon actual enrollment for the prior fiscal year."

A hallmark of this redistribution procedure is allotment based on actual enrollment in the prior, rather than the current, fiscal year. Thus, there is a reasonable probability under this procedure that a college exceeding its enrollment will receive less State aid than if its original enrollment projection had been entirely accurate.

III
Financing of Community Colleges—Supplemental Appropriations

A. Introduction

Additional State funds for the system can be made available only through a supplemental appropriation. Under §16-404(c)(2), "on or before February 10 [of each fiscal year], the State Board for Community Colleges may request additional funds to be included in any supplemental budget." The State Board has interpreted this as permissive: changed circumstances, e.g., an increase in actual system enrollment, do not impose on it any obligation to request additional funds or, if it chooses to do so, to request only the amount that literal application of the statutory formula to the increased enrollment would yield.

As indicated above, the colleges have generally been able to operate under the regular annual appropriations and the systemwide enrollment projection. Until Fiscal Year ("FY") 1981, therefore, the State Board did not request supplemental funds.

B. Supplemental Appropriations for FY 1981

During FY 1981, for the first time, the State Board requested through the Governor, and the General Assembly granted, a $1-million supplemental appropriation to defray some of the costs of unexpectedly increased enrollment in FY 1981. These funds were made available for use in FY 1982. Chapter 773, Section 1 [§16-403(c)(5)] and Section 3, Laws of Maryland 1981.

We understand that, at a March 31, 1981, meeting of the Executive Director with community college presidents, including the President of Frederick Community College, those present agreed that the redistribution process provided for in the State Board's Procedures, as described above, would be applied to those supplementally appropriated funds, even though, under the Procedures, the allocation would be proportional to enrollment in the fiscal year prior to the year in which the excess enrollment occurred. In accordance with that agreement, the supplemental appropriation was later distributed under the Procedures' redistribution process.

At a meeting on August 10, 1981, the community college presidents again discussed with the Executive Director the redistribution process, including its applicability to the allocation of supplemental funds. No changes were proposed, and it was agreed that the existing redistribution process would continue to apply. The President of Frederick Community College, we understand, was present at that meeting and voiced no objection.

C. Supplemental Appropriations for FY 1982

Revised enrollment projections submitted by the colleges through mid-November, 1981, in accordance with the Procedures, indicated a year-end system enrollment of 1,541 FTEs more than the 58,700 FTEs on which the State's FY 1982 aid appropriation was based. Approximately $1.5-million more appeared to be necessary to fully fund the total enrollment, including those "excess" FTEs, on the basis of the formula set forth in §16-403. This amount ($1,515,000) was included by the Governor in his supplemental budget request.

Subsequently revised enrollment statistics, as submitted by the colleges, indicated that an even higher total of about $2-million would be required if the §16-403 formula were to be applied to total enrollment. The State Board therefore requested yet an additional $500,000 on February 17, 1982. Governor Hughes replied that he was not optimistic about the availability of the additional $500,000, and, in fact, this additional sum was not appropriated.

In sum, a total of $1,515,000 in State aid was ultimately appropriated to the State Board, under the category of a 1982 Deficiency Appropriation, "to become available immediately upon passage of this budget to supplement the appropriation for fiscal year 1982 to provide funds to cover higher than anticipated enrollment". Chapter 125, Laws of Maryland 1982.

D. The Frederick Community College Complaint

In late March, 1982, the President of Frederick Community College requested that he be allowed to propose to the State Board a change in the method of allocating supplemental funds. This item was placed on the agenda of the State Board for its meeting of April 13, 1982.

At that time, and for the first time, the President of Frederick Community College objected to applying the Procedures' redistribution process to supplemental funds. Instead, he proposed that distribution be proportional to current rather than prior year enrollment.5 He maintained that the supplemental funds constituted "deficiency funding" and should be allocated as if they had been included in the original FY 1982 State Budget for aid to the system.6 Using the redistribution formula, he complained, was "unfair, unjust, contrary to [the State Board's] established Procedures, and is not consistent with state law". Presentation of Jack B. Kussmaul to State Board, April 13, 1982, at 2.

5 We note that the proposal advanced on behalf of Frederick Community College would have increased its share of the supplemental appropriation from $49,000 to $162,000, with corresponding reductions in the shares of other colleges.

6 The General Assembly treated the supplemental funding as a deficiency appropriation so that it would be expended in FY 1982; otherwise, the appropriation would not have been available until the following fiscal year. Certainly, in this sense, the General Assembly funded a "deficiency" in the budget of the State Board. It does not follow, however, that the appropriation or any part of it was to constitute "deficiency funding" for any college in the system. Although your letter to this Office suggests that "Frederick Community College will . . . suffer great financial loss", we are aware of no evidence to suggest that Frederick Community College or any other college in the system expected to incur in FY 1982 any expenses beyond its approved budget.

The State Board declined to change the method of allocation for the then current FY 1982, although it indicated that consideration would be given to a revision in policy for subsequent years. The supplemental appropriation for FY 1982, therefore, was distributed in accordance with the redistribution process to fifteen of the seventeen colleges. As promised, however, the State Board did consider revisions to its policy; and, on June 1, 1982, the State Board approved a revised process for the allocation of supplemental funds, based on current year enrollment, to become effective in FY 1983. The basic redistribution process, based on prior year enrollments, was retained for reallocation of excess FTEs.7

7 If the FY 1982 deficiency appropriation had included "full funding" to cover the increased enrollments at the statutory State aid rate, each eligible college would have received the same allocation, whether the redistribution process or the revised policy adopted by the State Board in June, 1982, had been used. It is only when less than full funding is available that the results differ.

Although the State Board evidently felt the allocation mechanism could be improved, it did not find that the use of the redistribution formula to distribute the FY 1982 supplemental funding was contrary to law. We concur.8

8 We have reviewed on their merits all of the issues raised on behalf of Frederick Community College. A threshold question might well be the timeliness of the complaint. All of the contentions could have been raised in 1981, when the redistribution process was first used for allocation of supplemental funding. However, the College did not suggest any revision when the FY 1981 $1-million supplemental appropriation was acted on or when the community college presidents discussed the process in August, 1981. We think that the State Board in effect decided that the college's later objections were not timely, a conclusion with which we would not disagree.

IV
The State Board's Exercise of Discretion

The statutes governing the operation of the community college system do not support the conclusion that, if a supplemental appropriation is made because of increased enrollment, it must be distributed in accordance with the statutory formula of §16-403 or any other formula that relates State aid proportionally to the increased enrollments. By its terms, the formula of §16-403 is to be used to project and to disburse the initial State aid appropriation, but the statute does not require that it be used to project or disburse supplemental appropriations.

The provision specifically applicable to supplemental funding, §16-404(c)(2), affords the State Board broad discretion to determine whether or not even to request any additional funds at all. The word "may" in a statute like §16-404(c)(2) bears its ordinary significance of permission unless the context or the purpose of the statute "compels" a construction that it is meant to be imperative. Fleishman v. Kremer, 179 Md. 536, 541 (1941). See also Maryland-National Capital Park and Planning Comm'n v. Silkor Development Corp., 246 Md. 516, 524 (1976). We have found nothing in the statutory framework to suggest a mandatory interpretation here.

To the contrary, §16-404(c)(2) refers to the State Board's budget request, and, thus, the systemwide FTE projection from which it is derived, as being "final". A request for supplemental funds presumably is to be made only when unforeseeable circumstances have overtaken the projection. Obviously, the determination of whether circumstances exist to justify a departure from the finality of the original appropriation requires the exercise of an informed judgment. Section 16-404(c)(2) vests that decision, at least initially, in the State Board's discretion.

It follows, then, that the method of distributing that appropriated supplemental aid also is a matter for the exercise of the State Board's discretion. Having analyzed the factors that led it to conclude that such an appropriation was justified, the State Board is in the best position to judge how those, or other, factors should enter into the allocation of the supplemental appropriation among the colleges.

For example, the formula of §16-403 is used to distribute the annual total State appropriation during the year in which current expenses are incurred, with final settlement at year-end. [§16-405.] The State Board could find sufficient similarities between aid distributed in that fashion, on the one hand, and supplemental aid distributed in a lump sum at the end of the fiscal year, on the other, so as to warrant the use of the §16-403 formula to allocate the supplemental appropriation.

Conversely, the State Board could reasonably determine that funds distributed near the close of a fiscal year, after most if not all current expenses have been incurred, stand on an entirely different footing and that, consistent with the statutory scheme, these funds may be allocated under a different rationale from that underlying §16-403. The State Board evidently did so in applying the redistribution process to the supplemental funding.9

9 Until 1971, all State aid was calculated by multiplying per student operating costs for the preceding year by current year enrollment. See former Article 77A, §7(a) of the Maryland Code (1969 Repl. Vol.). If the General Assembly deemed such a formula appropriate, the State Board's choice of a similar procedure cannot readily be termed irrational or arbitrary. Moreover, if the redistribution process is fair and reasonable in reallocating excess FTEs, and no one has contended that it is not, then we do not see how that same process can be considered unfair or irrational when it is used to allocate a supplemental appropriation.

The objection by Frederick Community College to the State Board's decision is apparently based on the incorrect assumption that State aid is enrollment driven and only enrollment driven.10 Although enrollment is indeed a critical component, State aid is also dependent on "current expenses". Unexpected increases in enrollment cannot be expected to affect significantly fixed operating costs, which make up a substantial part of a college's operating budget. Rather, the marginal impact on current expenses is likely to be substantially less than the budgeted per student operating cost and, in some cases, may be substantially covered by the additional tuition and fees generated. In making judgments regarding the allocation of supplemental State aid, the State Board may take such considerations into account.11

10 We think this misconception about the basis of State aid was responsible for the unfortunate circumstances described in 62 Opinions of the Attorney General 360 (1977) and 62 Opinions of the Attorney General 743 (1977). Both Opinions dealt with overpayments of State aid that resulted from inclusion of ineligible FTEs in certified requests for State aid. The argument of Frederick Community College suggests that this misconception still exists.

11 For example, it may also consider whether to offset local funding contributions that exceeded the statutory minimum in localities in which such additional contributions were made necessary because per student operating costs exceeded the statutory ceiling for the State's contribution.

The State Board may properly exercise its discretion based on these or other legitimate factors. Its application of the redistribution process to the supplemental funding was well within its authority "to prescribe methods by which the amounts of State aid to community colleges shall be determined". 62 Opinions of the Attorney General 360, 362 (1977).12

12 All State funds must be expended for the purposes for which they are appropriated and not otherwise. Article 15A, §1 of the Maryland Code. The supplemental appropriation in question was made "to provide funds to cover higher than anticipated enrollment". In our view, the distribution formula used by the State Board conforms with this mandate.

We also believe that, in using this formula, the State Board did not "violate" its Procedures, as contended by Frederick Community College. These Procedures are themselves directly applicable only to reallocation within the original State aid appropriation; they do not at all expressly address the method by which supplemental aid is to be distributed. The State Board simply adapted a portion of the Procedures to the problem before it. It was free to do so, just as the State Board could have, if it thought it to be appropriate, adopted any other reasonable method of distribution.

When the responsible agency exercises its authority to choose among alternative means of implementing a law, its choice is entitled to great weight. "In the matter of statutory construction it is well understood that the view taken of a statute by administrative officials soon after its passage . . . should not be disregarded except for the strongest and most urgent reasons." Holy Cross Hospital v. Health Services Cost Review Commission, 283 Md. 677, 685 (1978). See also Roberts v. Police and Firemen's Retirement and Relief Board, 412 A.2d 47, 50 (D.C. 1980); 2 K. C. Davis, Administrative Law Treatise §7.14 (2d ed. 1979).

V
Conclusion

In summary, it is our opinion that use of the redistribution process in this case was a reasonable exercise of the discretion vested in the State Board and did not violate State law.

Stephen H. Sachs, Attorney General
William A. Kahn, Assistant Attorney General
Avery Aisenstark
Chief Counsel,
Opinions and Advice