DEPARTMENT OF EDUCATION
P.O.
SUPTS. MEMO NO. 009
October 6, 2006
REGULATORY
|
TO: |
Division
Superintendents |
|
FROM: |
Billy
K. Cannaday, Jr. Superintendent
of Public Instruction |
|
SUBJECT: |
2006 General Assembly, Special Session I, Adopted
Amendments to Chapter 3 (2006-08 Appropriation Act) Contained in the Enrolled
Version of HB 5032 |
Section 22.1-93, Code
of Virginia, requires the Department of Education to provide “...estimates
to be used for budgetary purposes relative to the Basic School Aid Formula...”
following the conclusion of the General Assembly session based upon the budget
actions taken by the General Assembly with respect to public education.
The revenue estimates provided in this memorandum
represent the state funding that is projected to be distributed to school
divisions in fiscal years 2007 and 2008 based on House Bill (HB) 5032 as
enrolled, which was adopted by the House and by the Senate on September 28,
2006. HB 5032 amends the existing
2006-2008 budget (Chapter
3) to correct the sales tax estimates for fiscal year 2007 and fiscal year 2008,
and provides funding for a hold harmless sales tax payment to divisions in
fiscal year 2007 only. HB 5032 does not
provide for a hold harmless sales tax payment to divisions in fiscal year 2008. Fiscal year 2007 began on July 1, 2006, and
ends on June 30, 2007. Fiscal year 2008
begins on July 1, 2007, and ends on June 30, 2008.
The corrected sales tax estimates in HB
5032 are $129.9 million less in fiscal year 2007 and $143.9 million less in
fiscal year 2008 than the sales tax estimates contained in the Chapter 3
budget. Due to the reduction in the
sales tax estimates in HB 5032, the state share of Basic Aid, Enrollment Loss,
and Supplemental Basic Aid increases in both years. In addition, $56.7 million is provided in fiscal
year 2007 only for the hold harmless sales tax payment to divisions in order to
maintain the same level of projected state funding in fiscal year 2007 as
provided by the Chapter 3 budget. These
hold harmless payments will be made on a quarterly basis upon enactment of HB
5032. Otherwise, the funding actions
contained in the Chapter 3 budget previously communicated in Regulatory
Superintendent’s Memorandum Number 3 dated July 7, 2006, are maintained.
HB 5032 contains several important language
provisions. For the purpose of
calculating required local effort in fiscal year 2007, HB 5032 contains
language authorizing the hold harmless sales tax payment to be counted as a
credit toward the local share of costs of the Standards of Quality (SOQ) in fiscal
year 2007. Further, additional state payments in fiscal year 2007 from
Enrollment Loss and Supplemental Basic Aid resulting from the corrected sales
tax estimate may also be counted as a credit toward the local share of costs of
the SOQ in fiscal year 2007. This
provision only applies to fiscal year 2007; calculation of required local
effort in fiscal year 2008 will employ the normal calculations without any
credit provided toward the local share of SOQ costs. Please see Regulatory
Superintendent’s Memorandum Number 8 dated October 6, 2006, which contains the
budgeted required local effort and match data collection for fiscal year 2007
based on HB 5032.
Upon enactment, HB 5032
authorizes the department to make the hold harmless sales tax payments to
school divisions in fiscal year 2007 on a quarterly basis. The General Assembly stated its intent in HB
5032 to reduce the hold harmless sales tax payments based on any subsequent
increases in the sales tax estimates appropriated by the General Assembly or in
the event actual sales tax collections exceed the estimated sales tax. To account for this potential reduction to
the hold harmless sales tax payments, HB 5032 authorizes the department to make
adjustments to the quarterly hold harmless sales tax payments to prevent the
overpayment of this account pending any subsequent increases to the sales tax
estimate approved by the General Assembly or in the event actual sales tax
collections exceed the estimated sales tax.
Any reduction to the hold harmless sales tax payments in fiscal year
2007 due to a subsequent increase in the sales tax estimate approved by the
General Assembly or due to actual sales tax collections exceeding the estimated
sales tax will be communicated to school divisions in a separate
superintendent's memorandum.
HB
5032 has been sent to Governor Kaine for action and will not be enacted into
law until he signs it. The Governor has several
options that include signing HB 5032 with no changes, returning the bill to the
General Assembly with vetoes, returning the bill to the General Assembly with
amendments, or returning the bill to the General Assembly with some combination
of vetoes and amendments. You will be notified in a separate
communication regarding the final action taken by the Governor on HB 5032.
Please
note that HB 5032 and the entitlements for each school division contained in
Attachment B to this memorandum are based on the department’s latest
projections of March 31 average daily membership (ADM) for those accounts that
use ADM to determine the amount of funding.
The attachments to this memorandum include:
Several of the
incentive and categorical account entitlements shown in Attachment B (Group III
and IV accounts) are funded on a reimbursement basis and represent the
department’s latest projections of those reimbursements; however, final payments on
these accounts in fiscal years 2007 and 2008 will be based on actual qualifying
expenses submitted to the department for reimbursement.
Because Attachment B shows projected
entitlements for each school division (based on the department’s projected
March 31 ADM only) in .pdf format, the entitlements cannot be changed to test
the impact of different ADM assumptions.
If you wish to see the effects of a different ADM on funding for your
school division in those accounts where funding is based on ADM, please use the
Excel calculation file described in the next paragraph.
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 required local
matches for fiscal years 2007 and 2008 for most Direct Aid programs based
on HB 5032. This Excel file gives divisions the
opportunity to change ADM to test the effect on projected state funding and
projected local match requirements using the department’s projected ADM or a
local projection of ADM. (Attachment B
contains projected entitlement information for each school division in .pdf
format based on the department’s projected ADM only and cannot be
modified.) 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 divisions may
vary. When divisions 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 to project state funding and required local
matches.
Changing the projected March 31 ADM in this file
only changes the estimated funding for accounts that are funded on the basis of
ADM, excluding the school construction grants program payments that are funded
based on ADM from the prior year. The
estimated funding for all other accounts is unaffected by changing ADM in this
file and, therefore, remains the same.
The fiscal year 2007 entitlements will not be finalized until they are
recomputed using actual March 31, 2007, ADM and other final program
participation information.
Actual fiscal year 2008 entitlements will not be
finalized until after a similar process is followed next year. The payment of semi-monthly SOQ account
entitlements and other accounts paid on the basis of ADM will begin using DOE’s
projections of division March 31 ADM.
These payments may be adjusted at mid-year based on the department’s
revised ADM forecast made each fall. All
ADM-based payments will be made in this manner pending the recalculation of
final entitlements based on actual March 31 ADM at the end of each fiscal year.
Attachment A 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 Web address:
http://www.doe.virginia.gov/VDOE/Finance/Budget/calctools.html
Questions regarding the adopted amendments to
Chapter 3 as contained in the enrolled version of HB 5032, and the projections
of Direct Aid entitlements for fiscal years 2007 and 2008 may be directed to
budget office staff at (804) 225-2025.
BKCJr/kcd
Attachments
http://www.doe.virginia.gov/VDOE/suptsmemos/2006/reg009a.pdf
http://www.doe.virginia.gov/VDOE/suptsmemos/2006/reg009b.pdf
C: local
governing bodies