Gov. Larry Hogan has decided to take $68 million that lawmakers set aside for schools and use it to shore up the state's pension system instead — disappointing school officials in Baltimore and other large districts around the state.
He said giving the extra money to schools instead of putting it into what he said is an unfunded pension system would be "absolutely irresponsible, and it will not happen on my watch."
Mayor Stephanie Rawlings-Blake, House Speaker Michael E. Busch, teachers union officials and parents had held news conferences and rallies in recent weeks to urge Hogan to spend the money as earmarked for the state's most costly school districts.
Rawlings-Blake said she was "disheartened" by Hogan's decision. Baltimore would have received $11.6 million.
"Given how the needs of our children have been highlighted by the events of the past few weeks, I hoped that the governor would have agreed with the General Assembly that these dollars are critical for expanded educational opportunities," she said in a statement.
Hogan accused the teachers union of launching "a heavily financed smear campaign" against him.
"Recently, the misleading rhetoric has shifted to something like, 'Why won't the governor release the money?'" he told reporters in Annapolis.
"There is no magical pot of money that can simply be released or doled out. They're asking us to rob from the pension fund."
Hogan said weekly news conferences by the union and their allies distorted the choice before him.
In a play on Hogan's "Change Maryland" campaign slogan, advocates pleaded: "Don't Shortchange Maryland."
At a rally in Baltimore on Monday, Rawlings-Blake urged the governor: "Write that check. You can do it today. … There's nothing holding you back.
Hogan pointed out that Maryland is spending record amounts on education at a time when it is cutting spending to most state agencies. Maryland spends $7.5 billion on K-12 education each year.
Busch said bond rating agencies have given no indication that the state had underfunded the pension system.
The House speaker told reporters that Hogan's decision was "disappointing." Busch said the governor had overruled the will of the majority of the General Assembly, and in doing so alienated the three largest political jurisdictions in the state. Delegations from Baltimore City and Prince George's and Montgomery counties — which would have seen a total of more than $49 million in additional funding — make up 45 percent of the legislature.
"It's hard to figure out what the overall game plan is for the governor and where he stands on valuing the education system that we have," Busch said.
Sean Johnson, a lobbyist for the teachers union, said Hogan's choice would require some districts to cut teachers. He said it could also mean higher fees for parents, larger class sizes and the elimination of summer programs in other districts.
Johnson declined to respond to Hogan's accusation that the union was spreading misinformation. He accused the governor of turning school funding into "a political football."
"We have the facts on our side, so we'll let him resort to name-calling," Johnson said.
Hogan said he would not veto a separate bill that would require him in all future years to send that money to the 13 districts with the highest costs of educating children.
He called the legislation an "unreasonable mandate," but he said he knows the Democratic legislature would override his veto, and it was not worth putting the public through a "protracted fight."
The political implications of Hogan's choice were unclear, St. Mary's College political scientist Todd Eberly said.
While Democrats could hammer him for underfunding education, the bill he declined to veto would require him to fully fund the schools for the remaining three years of his term.
"If you're a governor, do the things that are controversial in your first year," Eberly said. "By the time the election comes around, people forget about it."
Hogan's decision ends a fight that roiled the General Assembly during its final days, but could spark another.
Hogan suggested Baltimore mismanaged the resources it already had. He accused officials of "losing" $70 million over the course of a year and cited a Baltimore Sun investigation that showed schools paid out $42 million in generous leave policies.
He also pointed out that many local governments spend roughly half their budgets on education, but the city spends less than 15 percent of its budget on schools.
"Baltimore City, unlike the rest of the state, is underfunding education," Hogan said.
City schools CEO Gregory Thornton declined to address Hogan's accusation of financial mismanagement. But he said that the loss of the $11.6 million would mean some schools would not get funding increases to cover cost-of-living adjustments for staff.
He called the decision a "blow to Baltimore City Public Schools at a time when the district can least afford it."
In Baltimore County, schools Superintendent Dallas Dance didn't count on getting the extra money — about $3 million — when he crafted his budget. But he expressed concern that Hogan's choice could diminish the state's reputation for quality education.
"Long term, Maryland's been one of the best states for education because of funding," Dance said.
The money at issue was part of about $200 million that lawmakers set aside for their top priorities — extra school funding, preventing a pay cut for state workers and paying for a range of health-care initiatives that include Medicaid coverage for more pregnant women and funding for heroin addiction.
Hogan said Thursday that he would provide money for the health-care related items. That drew praise from mental health advocates.
"This funding help keep the door open for some of our most vulnerable Marylanders to receive the critical services they need," said Dan Martin, spokesman for a coalition that lobbied the governor for more spending on health care.
Hogan announced this month that he would release money to prevent a 2 percent pay cut for state workers.
But he drew the line Thursday at the increased education funding. He said he was elected to exercise fiscal restraint.
"It is clear that many out-of-touch politicians simply have not gotten the message," he said.
Baltimore Sun reporters Erica L. Green and Pamela Wood contributed to this article.