Supplemental Information to Informational Superintendent’s Memorandum Number 49 Regarding Changes to the Introduced Fiscal Year 2006 and the 2006-2008 Biennial Budgets Proposed by the House of Delegates and by the Senate

COMMONWEALTH OF VIRGINIA

DEPARTMENT OF EDUCATION

P.O. BOX 2120

RICHMOND, VIRGINIA 23218-2120

SUPTS. MEMO NO. 50

March 1, 2006

INFORMATIONAL

TO:

Division Superintendents

FROM:

Patricia I. Wright

Acting Superintendent of Public Instruction

SUBJECT:

Supplemental Information to Informational Superintendent’s Memorandum Number 49 Regarding Changes to the Introduced Fiscal Year 2006 and the 2006-2008 Biennial Budgets Proposed by the House of Delegates and by the Senate

The Department of Education posted Informational Superintendent’s Memorandum Number 49 on February 28, 2006, which provided a summary of amendments to the fiscal year 2006 introduced budget (HB/SB 29) and a summary of amendments to the introduced 2006-2008 biennial budget (HB/SB 30) that have been separately adopted by the Senate and by the House of Delegates. Subsequent to posting Informational Superintendent’s Memorandum Number 49, the Department of Education was made aware of an additional amendment to the 2006-2008 introduced budget proposed by the House that reduces the group life employer contribution rate funded in the Governor’s introduced budget and reduces the retiree health care credit employer rate proposed by the House as communicated in Informational Superintendent’s Memorandum Number 49.

The reductions to the group life employer contribution rate and the retiree health care credit rate proposed by the House in this amendment were not included in the “Report of the House Appropriation Subcommittee on Elementary and Secondary Education” or in the budget amendments to the Direct Aid to Public Education budget approved by the House. This proposed amendment is contained in the Central Appropriations section of the state budget, which is managed by the Department of Planning and Budget.

In this additional amendment, the House proposes reducing the group life employer contribution rate proposed in the Governor’s introduced budget from 0.49 percent to 0.45 percent of salary and reducing the retiree health care credit rate by 0.07 percent of salary. These proposed rate changes reduce total state funding by approximately $2.0 million in fiscal year 2007 and $2.2 million in fiscal year 2008.

As stated in Attachment B to Informational Superintendent’s Memorandum Number 49, the budget proposed by the House of Delegates included an additional $7.8 million in fiscal year 2007 and $8.0 million in fiscal year 2008 in the Direct Aid to Public Education budget to increase the retiree health care credit rate by 0.30 percent to support an increase in the monthly retiree health care credit from $2.50 per year of creditable service to $4.00 per year of creditable service. When combined, this amendment and the new amendment described above, increase the retiree health care credit rate on a net basis from 0.56 percent in the Governor’s introduced budget to 0.79 percent in fiscal years 2007 and 2008 (i.e., 0.56 percent [introduced budget] + 0.30 percent [original House amendment] – 0.07 percent [new amendment] = 0.79 percent [final employer share]).

A revised downloadable Excel file containing the Direct Aid entitlements proposed by the House of Delegates, including the lower group life rate (employer share at 0.45 percent) and the lower retiree health care credit contribution rate (employer share at 0.79 percent), has been created to assist school divisions in calculating projected state entitlements and required local matches for fiscal years 2007 and 2008. This calculation tool reflects all of the House’s actions affecting fringe benefit rates and should be used in lieu of the calculation tool originally provided as part of Informational Superintendent’s Memorandum Number 49. The Excel file may be downloaded from the following Web address:

http://www.doe.virginia.gov/VDOE/Finance/Budget/calctools.html

Questions regarding the Senate’s and House of Delegate’s proposed amendments to the fiscal year 2006 budget and the 2006-2008 biennial budget and revised estimates of Direct Aid entitlements for fiscal years 2006, 2007, and 2008 may be directed to Dan Timberlake, assistant superintendent for finance, or budget office staff at (804) 225-2025.

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