Ability to pay drives the composite index
How is the composite index created for school divisions?
A school division’s composite index — which drives how much state money divisions receive every year — is determined by three factors related to a locality’s economy.
“The composite index is calculated by three indicators: true value of real property, adjusted gross income and taxable retail sales,” said Buckingham’s Division Superintendent Dr. Cecil Snead.
According to the Virginia Department of Education (VDOE), the composite index is used to determine a school’s ability to pay educational costs based on the Standards of Quality (SOQ) set by the state.
“Basically, the amount of funding a school district receives is based on the average enrollment as well as the composite index (property value, income and retail taxes),” said Michelle Stoll, a communications project coordinator with the VDOE.
“Generally speaking, a locality with more resources — like higher property values (and) taxes — will contribute more and the state contributes less. The opposite is true for a county with fewer resources — the locality puts in less and the state puts in more.”
Snead said the composite index in Buckingham has changed from 0.3347 in fiscal year 2016 to 0.3405 for fiscal year 2017.
According to the VDOE, Buckingham’s true value of real property is just over $2.3 billion, with an adjusted income slightly greater than $217 million and taxable retail sales of around $50 million.
“Each locality’s index is adjusted to maintain an overall statewide local share of 45 percent and an overall state share of 55 percent,” according to information from the department.
The composite index for Cumberland County Public Schools comes in at .2817 for fiscal year 2017 and Prince Edward County will see a composite index of .3377 for fiscal year 2017, according to the VDOE.
According to the department, Cumberland has a true value of real property totaling almost $1 billion, an adjusted gross income around $146 million and taxable retail sales of about $27 million.
Prince Edward’s taxable retail sales trumped each of the localities reviewed at around $282 million. The true value of real property within the county is over $1.5 billion and the adjusted gross income holds at about $304 million.
The figures are based on the 2016-18 composite index of local ability- to-pay provided by the department.