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Virginia’s current school funding formula claims that Prince Edward, Cumberland and Buckingham counties should all be able to pay more for education. The argument is that as the economy improves in each area, the state should pay less and counties should pay more. However, a report from the state’s own legislative research group contradicts that, claiming Virginia has actually shortchanged counties when it comes to education funds. 

A Joint Legislative Audit and Review Committee report argues that Virginia’s method of doling out money for secondary education places too much burden on localities. The JLARC report shows Virginia school divisions receive less K–12 funding per student than the 50-state average, the regional average, and three of Virginia’s five bordering states.

“School divisions in other states receive 14% more per student than school divisions in Virginia, on average, after normalizing for differences in cost of labor among states,” the JLARC stated in its findings. “This equates to about $1,900 more per student than Virginia.”

Three state-specific benchmark models sited in the commission’s report found the state doesn’t providing the funding needed to provide students a quality education. 

“Depending on the benchmark, Virginia school divisions were estimated to need 6% to over 30% more funding,” the report stated. “Between 73% and 89% of the state’s school divisions receive funding that is below benchmarks, depending on the model and assumptions used.”

The money just isn’t there for counties

Prince Edward County Administrator Doug Stanley said that like many rural localities, the county has struggled to adequately fund public education.

He pointed to paying for school capital improvements as one of the biggest areas of concern.

“That is a big reason we find ourselves in the current situation,” Stanley said. Providing the financial support for local school districts to provide needed services to students with special needs is an area the report and local officials agree needs to be updated.

Buckingham County Administrator Karl Carter and Charlotte County Administrator Dan Witt both point to the state’s funding for salaries as areas where the state needs to do more.

Carter pointed to the most recent  2% salary increase that schools are getting as an example.

“We stand behind our school employees as with most localities, the school system is normally in your top three of the largest employers in the county,” he said. “So, we know the invaluable work they do and we want to support them in any way we can.”

Carter pointed out that the state is not funding raises for all school district employees, meaning providing the 2% then falls on the localities to pick up the difference.  

“As I said with the school system being one of your largest employers then that means a lot of employees so that 2% can be a big dollar amount for smaller localities,” he explained. “So, the 2% is not a ‘mandate’ but the workers deserve it and that means the entire school system, from teachers, aides, to cafeteria workers, they all play an important role in our educational system.”

In talking about looking ahead at the next year’s school budget, Witt said this is an area of concern for Charlotte County.

“Teacher salaries continue to be a major area that needs to be addressed,” he said.

Education funding formula makes some mistakes 

The JLARC study found that the SOQ formula not only underestimates the number of K–12 staff needed, but also school divisions’ compensation costs. The report found the formula makes low assumptions on the costs for staffing, due to a variety of factors including the related ones such as health care and the smaller localities’ difficulties to see the economies of scale that larger ones can.

“Virginia’s SOQ formula provides no additional funds to small divisions to account for their higher per student costs,” the report stated. These burdens on smaller communities are particularly higher in divisions with less than 2,000 students.

“Research literature shows that small school divisions with less than 2,000 students tend to spend more per student than larger divisions, after accounting for differences in cost of labor,” JLARC reports. These higher costs are found in areas such as transportation, administration and facilities.

“Small, rural counties have especially high transportation costs because of their large geographic size and small student populations,” the JLARC findings state. “Small school divisions also need to employ more staff per student because of the need to offer a broad range of classes but with fewer students per class.”

Stanley said Prince Edward Board of Supervisors continues its support for a local option to help with meeting the school division’s funding needs.

“Our board continues to hope that this will be recognized by the General Assembly and they will give us the local 1% option sales tax authorization so our voters can decide if that is how we want to fund the much-needed improvements,” Stanley said.

In addition to calling for changes in the state’s K-12 funding formula, the state board of education also called on the General Assembly to provide flexible funding options for math and literacy education, allowing high school students to make their own plans on academics and career options and to provide funds for an individualized education program.

Counties start budgeting process

As 2024 begins, officials in all four counties must now begin the process of preparing budgets for the 2024-25 fiscal year.

Most county administrators said it’s too early in the process to get a handle on what their school budgets will look like. School administrators were off for the Christmas-New Year’s break and not available to provide their insight at this point.

In Charlotte County, Witt said it is too early to provide an accurate estimate of school funding from the state, particularly with the legislature set to convene Jan. 9.

“Superintendent Robbie Mason does not foresee any significant changes in what the school funding requests will be from the board/County,” Witt said. “However, the school board could have additional priorities.”

All of the region’s localities have seen population growth and improvement in local economic factors, which under the current funding formula could mean the counties will need to come up with more money for schools.

A ‘no-win’ situation for counties

Carter called the scenario where a locality is growing and doing better a “no-win situation.”

Stanley agrees.

“That is the way the composite index works — the better a locality is performing financially, the larger share of education it is expected to pay,” Stanley said.  “Fortunately we are only looking at about a 1% shift in funding.”

In Buckingham, Carter said county and schools officials have not met yet on the new budget. He expects departments to begin this process in March when they are “deep into budget season.”

Stanley echoed this noting it is now too early to tell how the county’s local share of school funding could need to increase.

“Obviously we have some significant capital improvement projects that we need to continue to prioritize in order to keep making progress including the Sandy River project, elementary school renovation project, and now the emergency radio system upgrade,” Stanley said. “With the budgetary decisions the board put in place in 2023, it should give us some breathing room.”

Gee noted that she doesn’t yet have the state’s estimates, only some guidance for the broad priorities outlined in Gov. Glenn Youngkin’s budget.

Carter said the county is open to looking at anything that would reduce the burden on local taxpayers.

“If the state will provide more funding to help with that goal, then we would definitely take a long look at it,” he said.

JLARC findings

The study, authorized under a Senate joint resolution, returned with 20 recommendations and five policy options from its review of the cost of education in Virginia and the charge to make an accurate assessment of the SOQ costs.

Among the key findings that JLARC called on lawmakers to address in the near term over the next two state biennial budgets are addressing technical issues with the state funding formula, discontinuing Great Recession-era cost reduction measures, calculating prevailing costs using division averages, changing the local composite index to a three year average, converting non-SOQ at-risk add-on funding to SOQ-required funding, replacing outdated and inaccurate free lunch measures, consolidating the state’s two largest at-risk programs into a new SOQ at-risk program and directing further study of staffing needs for special education.

Over the long-term to be addressed by 2022-24 biennium, JLARC’s report called for developing and adopting new ratios on staffing based on actual numbers and not estimates, updating outdated salary assumptions and adopting economies of scale adjustments to assist small school divisions.

The report projects that near-term recommendation costs would cost nearly $1 billion, while those over the long-term could add up to more than $2.5 billion.

A slide from the JLARC presentation on its study sums up the overall report’s findings.

“SOQ formula does not accurately reflect prevailing practice because it has sometimes been subject to changes that reflect budget decisions,” the presentation on the study stated.

JLARC recommends amending state code to consider the amounts calculated by the SOQ formula, but not be obligated to fund the amounts calculated by the formula.

It also founds that the complex formula used for K-12 staffing is “unusual and creates a variety of issues for policymakers and school divisions.”

To address these concerns, JLARC recommended partially replacing the SOQ formula by using student-based calculations for special education and English learner funding or fully replacing the entire staffing-based SOQ formula with a new student-based formula.

“The SOQ formula underestimates staffing needs in each of Virginia’s school divisions,” the JLARC report found. “Between FY19 and FY21, every school division in the state employed more staff than the SOQ formula calculated they needed. In FY21, the SOQ formula calculations ranged from as low as 43% of the number of staff actually employed in one division to 99% of the number of staff actually employed in another.”

Local administrators told JLARC it “would be a catastrophe” if they funded education based on SOQ.

“In interviews, many school division administrators characterized the state’s staffing standards as unrealistic, often citing the difference between SOQ staffing calculations and the number of staff they actually needed to employ,” the report stated.