Transcript Document

The Risks to Education Funding
in FY 2010
and the 2010-12 Biennium
VACO Education Steering Committee
Fiscal Analytics, Ltd.
August 14, 2009
Summary
• The State already reduced K-12 funding by over $600 million GF in
FY10 – only partially offset by federal stimulus funding.
• Expect additional FY10 K-12 cuts because of an est. further $1.1 bil.
GF shortfall. K-12 aid is 35% of state GF. FY10 support position
funding will not likely be restored.
• State and local revenue problems will be compounded when federal
stimulus funding ends after FY11. (See Appendix 1)
• Localities are holding Virginia’s public education system together by
spending $3 billion more per year than required by the state.
In total, localities spend 82% more than required by state.
This excess pays for 22% of all K-12 spending.
• Due to falling real estate and car values, and reduced sales and business
taxes and fees, it will be difficult for localities to continue backfilling
declining state support.
• Even with only minimal preliminary rebenchmarking costs ($138 mil.),
major policy changes will be required to align funding levels with
revenues, unless state and/or local taxes are significantly raised.
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FY 2010 K-12 Direct Aid* Changes
FY 2010 Education Changes
FY 2010 Original Distribution incl. lottery
Technical: ADM, Sales Tax, Census, and
Lottery Revisions
$6,543,818,612
($138,464,023)
Benefit & Compensation Changes
($74,289,696)
Modify Lottery to Support GF Programs
($55,805,042)
Set Support Position Cap at 4.03 Instructional
Positions per Support Position
Remove School Construction Grants
Total Adopted FY10 K-12
Change from Original
% Change from Original
Appropriated ARRA Stimulus
Adopted Total with ARRA Funding
$ Change with ARRA Funding
% Change with ARRA
*DOE distributions, including lottery, VPSA and other non-general funds
($340,934,092)
($27,499,997)
$5,906,825,763
($636,992,849)
-9.7%
$365,187,984
$6,271,334,747
($272,483,865)
-4.2%
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Preliminary K-12 Rebenchmarking of
$138 Million Reflects the Recession
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Major Inputs that Decreased Cost
Compared to 2008-2010:
– Funded Instructional
Salaries
– Funded Support Salaries
– Special Education Child
Counts
– Statewide Average SOL
Failure Rate
– Inflation Factors
– Health Care Premium
– Textbook Expenditures
Source:July 22, 2009 DOE Presentation
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Major Inputs that Increased Cost
Compared to 2008-2010:
– Enrollment Projections
– Free Lunch Eligibility
– Federal Revenue Deduct
Per Pupil Amount
– Pupil Transportation
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2010-12 Preliminary Rebenchmarking Summary
Update:
Nonpersonal Inflation Factors
2010-12 Total
($113,299,147)
Prevailing Textbook Per Pupil Amount
($50,468,005)
SOQ Funded Instructional Salaries
($35,025,405)
Special Education Child Count
($30,714,680)
Support Position Cap
($25,338,363)
Support Personal Costs
$46,737,500
Health Care Premium
$70,837,284
Support Nonpersonal Costs
$74,188,009
Per Pupil Transportation Costs
$80,540,063
ADM Counts
$89,660,979
All Other
$31,526,173
Total 2010-12 Preliminary Rebenchmarking
$138,644,408
Remove Support Position Funding Cap
$754,301,683
Source:July 22, 2009 DOE Presentation
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The Severe Revenue Shortfall Makes It
Likely the State Will Further Alter
K-12 Policies
• There are seven key components to the SOQ funding formula:
Number of students
Staffing ratios for teachers and other funded positions
Salaries of teachers and other funded positions
Fringe benefit rates
Standard and prevailing support costs
Inflation factors
Prevailing federal revenues related to support costs
 Approximately 79 percent of SOQ funding is for salaries and benefits
 FY10 budget reduced support cost funding by $341 mil. - unlikely to
restore in 2010-12 biennium.
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Examples of Previous Proposals for
State K-12 Budget Reductions
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Adopted
One-third reduction in support position funding (1:4.03 instructional
positions) adopted for FY 10 appropriations ($341 mil.). Still
considering policy for 2010-12.
Proposed
2004 Governor proposal to deduct 100% of federal revenue from
SOQ ($177 mil.). 2008 House proposal to remove cap on the federal
deduct ($22 mil.)
2004 House proposal to lower state contributions for teacher
retirement by capping the contribution rate.
2008 House proposal to recognize only state funded salary increases
in re-benchmarking process ($227 mil.).
2009 Committee discussion to defer state textbook funding ($79 mil.)
2009 Governor’s proposal to supplant remaining additional lottery
support for school construction and operating costs ($61 mil.)
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Fundamental K-12 Policy Changes
Needed to Save Large Dollars
• Increase class sizes and reduce # of teachers
• Decrease salaries and/or benefits for teachers,
administrators and support personnel
• Defined benefit to defined contribution retirement
• Change special education and/or ESL requirements
• Eliminate most or all of SOL testing requirements
• Eliminate or reduce busing requirements
• Eliminate all but required education programs, e.g.
sports, specialized courses, etc.
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P ossible K -12 O perating F unding S cenario
$8,000,000,000
Lo c al
$7,000,000,000
$6,000,000,000
S tate
$5,000,000,000
$4,000,000,000
$3,000,000,000
$2,000,000,000
F ed eral
C harges fo r S ervic es
$1,000,000,000
$0
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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F Y 2 0 0 8 L o c a l R e ve nue So ur c e s - $ 1 6 ,6 5 2 .5 m il.
Se rv ic e Ch a rg e s , Fe e s ,
Fin e s , In te re s t, M is c .
17%
A ll O th e r T a xe s *
4%
Co n s u me r
M e a ls T a x
2%
U tility /Co mmu n ic a tio n
Re a l Pro p e rty
Sa le s
$8,385.3 m - 51%
4%
BPO L
4%
Lo c a l O p tio n Sa le s T a x
6%
Pe rs o n a l a n d O th e r
Pro p e rty T a xe s
12%
F Y 2008 K -12 Total Spe nding = $13.2 B il.
F Y 2008 L oc al Spe nding = $6.5 bil.
F ederal A id
($887 m - 7% )
R equired Local K -12
M at ch Sp ending
($3,572 m - 27% )
St at e A id t o School
D ivis ions
($5,801 m - 44% )
Local Sp ending A bove
R LE, Including C ap it al
$2,941 - 22%
So u rc e : Ja n 2009 D O E RLE Re p o rt, A PA Co mp a ra tiv e Re p o rt - FY 08
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Standards of Quality Already Push
Localities to Pay More for Education
• State does not pay for all Board of Education approved
standards.
• The state methodology (LWA) overemphasizes the
generally lower values in the more numerous/smaller
school divisions in calculating prevailing costs for teacher
and support positions.
• FY08 base year for 2010-12 re-benchmarking does not
reflect real-time salary costs. There were also no state
teacher compensation supplements in 2008-10.
• Most localities go beyond state mandates, especially for atrisk student funding, including lowering class sizes to help
meet SOL and SOA requirements.
• Expect the new state support position cap to increase local
overfunding.
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Board of Education Standards Not Funded
by the General Assembly - $185 mil/yr.
• A full-time principal for each elementary school;
• A full-time assistant principal for every 400 students in the school;
• A reduction in the caseload of speech-language pathologists;
• One reading specialist for every 1,000 students in the school division.
• One mathematics specialist for every 1,000 students in K-8;
• A data manager-test coordinator for every 1,000 students in K-12;
• Instructional positions for students who are blind or vision impaired.
Also, the Standards of Quality do not adequately reflect the costs of
meeting the Standards of Learning and the Standards of Accreditationincluding the upcoming new requirement for an individualized academic
and career plan for 7th graders.
Source: http://www.doe.virginia.gov/boe/meetings/2008/11_nov/agenda_items/item_g.pdf
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SOQ Prevailing Salaries Significantly Lower than
in Most Large Urban Localities
Statewide Prevailing Salaries*
Elementary Teacher
Secondary Teacher
Elementary Principal
Secondary Principal
FY 2008
$41,990
$44,037
$72,827
$79,649
* Does not include NoVA cost-of-competing adjustment
Selected School Division Average Salaries **
Henrico County Teachers
Henrico County Principals
Loudoun County Teachers
Loudoun County Principals
Pittsylvania County Teachers
Pittsylvania County Principals
** 2008-09 Teacher Salary Survey Results
$48,776
$91,995
$57,518
$115,816
$40,924
$75,171
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Appendix 1
ARRA Education Stimulus Funding
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ARRA Provides Temporary K-12 Education
Assistance - ½ FY10, ½ FY 2011
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SFSF Education - $984 mil. ($730 mil. K-12)
Title 1 Part A - $165.3 mil.
Title 1 School Improvement Grants - $47.9 mil.
IDEA Part B State Grants – $281.4 mil.
IDEA Part B Preschool Grants - $9.5 mil.
Education Technology - $10.8 mil.
Education for Homeless - $1.0 mil.
Equipment Assistance for School Nutrition - $1.9
mil.
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K-12 Fiscal Stabilization Fund (SFSF)
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K-12 education will receive about $365 mil. in each of FY 2010 and FY 2011.
SFSF funds may be used for:
Salaries to avoid layoffs
Modernization, renovation, or repair, or new construction of
school buildings (no maintenance, vehicles, or athletic facilities)
Any activity authorized under the Elementary and Secondary
Education Act (ESEA), the Individuals with Disabilities Education
Act (IDEA), the Adult Education and Family Literacy Act, or the
Carl D. Perkins Career and Technical Education Act
With US DOE approval, may be used to meet MOE for Title 1 or
IDEA.
US DOE guidance encourages funding progress on activities that drive lasting
results without unsustainable recurring cost, including:
College and career-ready standards and reliable assessments for all
students.
Pre-K to Higher Ed data systems
Teacher effectiveness and equitable distribution of effective teachers
Intensive support and effective interventions for lowest-performing
schools
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Title I Part A Funding
• Funding to implement innovative strategies to
improve education for at-risk students and to close
the achievement gap for students in economically
disadvantaged Title I schools.
• Funds used the same as regular program
requirements, including:
- strengthen early childhood programs
- Identify and train effective teachers
- develop core infrastructure in technology
- develop longitudinal data systems
- expand extended learning opportunities
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Individuals with Disabilities Education
Act (IDEA)
• Funding to implement innovative strategies to
improve outcomes for infants, toddlers, children,
and youth with disabilities
• Funds used the same as regular program
requirements, including:
- intensive professional development for special
education teachers
- improve capacity for collecting and using data
to improve teaching
- expand placement options for preschool
children with disabilities
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