INFORMATIONAL

TO:

Division Superintendents

FROM:

Jo Lynne DeMary

Superintendent of Public Instruction

SUBJECT:

Amendments to the 2002-2004 Biennial Budget as Proposed by Governor Warner

Governor Warner’s proposed amendments to the 2002-2004 budget (Chapter 899) were presented on Friday, December 20, 2002, before a joint session of the Senate Finance, the House Appropriations, and the House Finance committees. This budget will be considered by the 2003 Session of the General Assembly, which is scheduled to convene on January 8, 2003. The recommendations made by the Governor include technical revisions to the Standards of Quality, incentive, and categorical accounts in Direct Aid to Public Education. Governor Warner’s budget also consolidates and redirects funds from three existing programs into a single program called Student Achievement Grants.

Actions taken in Governor Warner’s amended budget include:

· Adjustments for enrollment changes and other technical updates.

· Distribution of additional Lottery revenues.

· Creation of a Student Achievement Grants program to support the expansion of programs that are known to assist with closing the achievement gap and improving the academic success of students. This program, to begin in fiscal year 2004, is funded by transferring existing funds from the Dropout Prevention, the School Health Incentive, and the Technology Resource Assistants programs. School divisions have the option of continuing to participate in these three programs if a request for a waiver is submitted to the Superintendent of Public Instruction. Attachment A further explains this program and the conditions that must be met as well as the information that must be included in the waiver request.

· Elimination of the interest rate subsidy program in fiscal year 2004.

· Increased use of Literary Funds in lieu of general funds to support VRS retirement and social security payments in both fiscal year 2003 and fiscal year 2004.

The Governor’s recommended technical adjustments include changes to the Standards of Quality (SOQ), incentive, and categorical programs. Attachment A to this memorandum provides a summary of the funding changes proposed by the Governor. Attachment B to this memorandum shows the estimated entitlements for the SOQ, incentive, and categorical accounts for fiscal year 2003 (which began on July 1, 2002, and ends June 30, 2003) and for fiscal year 2004 (which begins July 1, 2003, and ends June 30, 2004) based on the Governor’s amendments to the 2002-2004 budget. These entitlements are based on the Department of Education’s latest projections of March 31 average daily membership (ADM). The entitlements shown in Attachment B do not include the direct grants (Group IV accounts) authorized by the General Assembly that are unique to certain school divisions.

Several of the categorical account entitlements shown in Attachment B (Group III accounts) are funded on a reimbursement basis and represent the department’s latest projected entitlements; however, final payments on these accounts in fiscal years 2003 and 2004 will be based on actual reimbursements.

In addition to the entitlement information contained in Attachment B, a downloadable Excel file has been created to assist school divisions in calculating projected state entitlements and local matches in fiscal years 2003 and 2004 for the SOQ, incentive-based, and categorical programs. This file gives divisions the opportunity to test the effect on state funding and local match requirements using the department’s projected ADM or a local projection of ADM. Attachment C to this memorandum provides detailed instructions for accessing the Excel file from the Department of Education Web site. The Excel file may be downloaded from the following address:

http://www.pen.k12.va.us/VDOE/Finance/Budget/calctools/

Although we have confidence in the accuracy of our ADM projections on a statewide basis, experience has shown that the accuracy of our projections for individual localities may vary. When localities believe that they have more accurate projections of their March 31 ADM, they are encouraged to substitute their estimates for those provided in this memorandum when using the Excel calculation file. Also, please note that changing the ADM in this file only changes the estimated funding for accounts that are funded on the basis of ADM. The estimated funding for all other accounts remains the same. (Attachment B contains projected entitlement information for each school division in PDF format. This attachment shows projected entitlements based on the department’s ADM and cannot be modified.)

Attachment D contains a copy of the amended Direct Aid to Public Education language included in the Governor’s introduced budget on December 20, 2002. All changes proposed by the Governor are shown in either underlined text or text with a strike-through notation (indicating deleted language). This attachment provides explanatory information for many of the Direct Aid accounts, including the proposed Student Achievement Grants program.

It is important to remember that the information provided in Attachment B and in the Excel calculation template relates to the Governor’s amendments to the 2002-2004 budget as introduced. The House of Delegates and the Senate will have the opportunity to amend the Governor’s budget proposals during the 2003 General Assembly session. The General Assembly will adopt a final amended 2002-2004 biennial budget before the end of the session, which is scheduled for February 22, 2003; therefore, the entitlements contained in Attachment B and in the Excel calculation template are projections only and are subject to change throughout the session. The department will provide additional information during the General Assembly session as changes to Direct Aid entitlements occur. After the conclusion of the session, projected entitlements based on final General Assembly actions will be sent to you by another Superintendent’s memorandum.

Questions regarding the amended 2002-2004 budget and projected Direct Aid entitlements for fiscal years 2003 and 2004 may be directed to Dan Timberlake, assistant superintendent for finance, or budget office staff at (804) 225-2025.

JLD/mv

Attachments

http://www.pen.k12.va.us/VDOE/suptsmemos/2002/inf171a.pdf

http://www.pen.k12.va.us/VDOE/suptsmemos/2002/inf171b.pdf

http://www.pen.k12.va.us/VDOE/suptsmemos/2002/inf171c.pdf

http://www.pen.k12.va.us/VDOE/suptsmemos/2002/inf171d.pdf