INFORMATIONAL

On Sunday, February 18, 1996 the Senate Finance and House
  Appropriations Committees received reports from the various
  subcommittees regarding changes to the 1996-98 budget as
  proposed by Governor Allen (reference Informational Supts.
  Memo. No. 171, dated December 18, 1995).  These changes have
  been reported to each Chamber and are subject to approval by
  February 22, 1996.
  
  It is important to remember that the budget as proposed by
  the Governor included more than $635 million over the
  biennium in support of public education.  This included
  sufficient funding to 1) cover the state share of the
  Standards of Quality, 2) provide for a teacher salary
  increase in the second year, 3) fund all
  statutory/categorical programs according to current policy,
  and 4) fund the majority of the policy initiatives proposed
  by the Board of Education.
  
  At Attachment A are comments regarding changes made by both
  the House Appropriations and Senate Finance Committees. 
  Attachment B provides additional information on changes made
  by the Senate Finance Committee and Attachment C provides
  additional information on changes made by the House
  Appropriations Committee.  Attachment D provides a printout
  which reflects for each locality those major SOQ and related
  accounts for which no differences exist between the House
  and the Senate.  Attachment E reflects those accounts where
  differences exist which must be reconciled.
  
  A Conference Committee will be convened to propose final
  recommendations to each Chamber.  It is expected that these
  proposals will not be finalized until the week of March 4,
  for final action by each Chamber before adjournment on March
  9, 1996.
  
  If you have any questions, or need additional information,
  please contact Mrs. Kathryn S. Kitchen, Division Chief,
  Finance at (804) 225-2025 or Mrs. June F. Eanes, Director of
  the Budget at (804) 225-2060.
  
  WCB,Jr./kk
  Attachments
                                                     Attachment A
                                                 Page 1
  
     AMENDMENTS APPROVED BY BOTH THE HOUSE APPROPRIATIONS
                AND SENATE FINANCE COMMITTEES
                                 
  
  1. SOQ CHANGES
  
     A.   The estimate of the one-cent state sales and use
          tax has been decreased in 1996-97 by $400,000,
          with no change in 1997-98.  Based upon this
          change, Basic Aid has increased by $226,192.
  
     B.   The inflation factors used in the SOQ methodology
          have been updated to reflect the fourth quarter of
          1995 rather than the second quarter of 1995 which
          was included in the Governor's Budget as
          introduced.  This results in lower Basic Aid per
          pupil amounts and decreases the state's share of
          Basic Aid and related accounts by $9,400,191 in
          1996-97 and $9,571,453 in 1997-98.
  
     C.   The cost of competing adjustment for the divisions
          in Planning District 8 has been revised.  The
          adjustment has been changed from the 9.32%
          included in the Governor's Budget to 9.83%.  This
          increases the state's share of the Standards of
          Quality accounts for those divisions by $1,213,415
          in 1996-97 and $1,277,613 in 1997-98.
  
  
  2. SOQ RELATED ACCOUNTS
  
     A.   An additional $8,006,343 in 1996-97 and $8,105,442
          in 1997-98 has been included for the K-3 class
          size reduction initiative.  Criteria for
          eligibility have been amended as follows:
  
          Qualifying School %                               Individual
          Eligible for Free Lunch     K-3 School Ratio      Class Size
  
          20% but less than 50%          20 to 1                  25
          50% but less than 70%          18 to 1                  22
          70% or more                    15 to 1                  20
  
          Language has also been included to allow divisions
          to participate at a higher ratio, with a
          commensurate reduction in state and required local
          funds if local conditions do not allow
          participation at the eligible rate.  This would
          allow a school which qualifies for 15 to 1 to
          participate at the 18 to 1 ratio at local option.    
  
     B.   $15 million proposed by the Governor in 1997-98,
          which represented a return of lottery proceeds to
          localities, has been eliminated.
  
                                                 Attachment A
                                                 Page 2
  
     C.   In addition to the funding included in the
          Governor's Budget in support of technology, both
          Committees have proposed an additional $45.5
          million in 1997-98, for grants of $25,000 per
          school,  to be used to continue progress in
          implementing the Board of Education's Six-Year
          Technology Plan.  Similar to the 1995-96 program
          and that proposed by the Governor for 1996-97,
          funding will be provided through the Virginia
          Public School Authority.  Funding, to be available
          in the spring of 1998, can be used to retrofit and
          upgrade existing school buildings, purchase
          network-ready multimedia microcomputers for
          classrooms, and network-ready microcomputers for
          student use.  Funds may also be used to provide
          other educational technologies as set forth in the
          local school division's approved technology plan.
  
          In both the first year program proposed by the
          Governor and this second year program, localities
          will be required to provide a match for these
          funds equal to twenty percent of the grant amount. 
          At least twenty-five percent of the local match
          must be used for teacher training in the use of
          the technology.
  
          Language has been included to identify the schools
          that will be eligible to receive these funds. 
          Funding available in the spring of 1997 will be
          for those schools that reported membership as of
          September 30, 1996 and will include regional
          Governor's Schools, regional Vocational Centers,
          and regional Special Education programs.  Funding
          in the spring of 1998 will be for those schools
          that reported membership as of September 30, 1997,
          and will also include the above mentioned regional
          programs.
  
     D.   Funding has been included in 1996-97 to provide
          planning grants for two new Governor's Schools --
          $75,000 for a regional "virtual" academic school
          in Southwest Virginia and $200,000 for a regional
          academic school in Northeastern Virginia.
  
     E.   Funding has been included to support the Southside
          Virginia Regional Technology Consortium to expand
          the research and development phase of a technology
          linkage between fourteen public school divisions
          (Senate version - $135,000 in 1996-97 only; House
          version - $135,000 each year).
  
     F.   Language has been included to require the
          Superintendent of Public Instruction and the State
          Treasurer to study the feasibility of establishing
          an Elementary and Secondary Education Equipment
          Trust Fund with purposes similar to the Higher
          Education Equipment Trust Fund.  In addition, the
          study should include the feasibility of providing
          for on-going state support for equipment through
          the Standards of Quality funding formula. 
          Recommendations must be made to the Co-Chairmen of
          the Senate Finance Committee and Chairman of the
          House Appropriations Committees no later than
          November 1, 1996.
  
                                                 Attachment A
                                                 Page 3
  
  
  
     G.   Language has been included to ensure contracts
          between telephone companies and state government
          shall be deemed to include communications lines
          into public schools which are used for educational
          technology.  The rate structure shall be
          negotiated by the Superintendent of Public
          Instruction and the Director of the Council of
          Information Management.  Further, they are
          authorized to encourage the development of "by-pass"
          infrastructure in localities where
          competitive prices or prices consistent with the
          best rates obtained in other parts of the state
          have not been achieved.
  
     H.   Language has been included which states the intent
          of the General Assembly that state funding for
          instructional personnel in 1997-98 recognize local
          salary decisions implemented in 1996-97.  To that
          end, the Department will use actual 1994-95
          salaries to recompute prevailing salary amounts,
          with increases reported by local school divisions
          for 1995-96 and 1996-97, to be used in computing
          the state and local shares of the Standards of
          Quality for 1997-98.  This language would require
          additional funding to be added during the 1997
          session for distribution in 1997-98.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                                     Attachment B
                                                 Page 1
  
  OTHER AMENDMENTS APPROVED BY THE SENATE FINANCE COMMITTEE
                                
  
  A. Due to the large number of school divisions that
     experienced an increase in the composite index of local
     ability-to-pay for 1996-98, a transition payme