COMMONWEALTH OF VIRGINIA
DEPARTMENT OF EDUCATION
P. O. BOX 2120
RICHMOND, VIRGINIA 23218-2120
SUPTS. MEMO. NO. 1
March 12, 1996

REGULATORY

TO: Division Superintendents
FROM: William C. Bosher, Jr.
Superintendent of Public Instruction
SUBJECT: Aid to Localities Appropriations, 1996-98 Biennium

 
  As required by Section 22.1-93 of the Code of Virginia, we are
  hereby submitting "estimates to be used for budgetary purposes
  relative to the Basic School Aid Formula" for school years
  1996-97 and 1997-98.  Aid to locality estimates are based on
  the 1996-98 budget adopted on March 11, 1996 by the General
  Assembly, which is subject to final approval by the Governor.
  
  As I have mentioned to you in earlier memoranda and
  conversations, 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 cover the state share of the SOQ,
  provide for a teacher salary increase in the second year, fund
  all statutory/categorical programs according to current
  policy, and fund the majority of the policy initiatives
  proposed by the Board of Education.  In his report to the
  House Appropriations Committee, Delegate Councill, Chairman of
  the Subcommittee on Elementary and Secondary Education
  remarked, "The Subcommittee . . . was in the enviable position
  of starting with a public education budget which included the
  lion's share of the total proposed new spending in 1996-98." 
  In a like manner, Senator Walker, Chairman of the Subcommittee
  on Education and Co-Chairman of the Senate Finance Committee
  in his report stated, "we are all aware that the Public
  Education budget came over to us with, in the neighborhood of,
  $600 million in new funding for the biennium.  That is
  certainly a comfortable neighborhood from which to start a
  journey."
  
  Given that level of substantial funding, the General Assembly
  was able to focus on expansion and continuation of successful
  programs which were implemented as part of previous
  educational opportunities initiatives.  These programs include
  reduced K-3 class sizes, educational technology, maintenance
  supplement payments, and truancy/safe schools. 
  
  
    In order to more fully describe these initiatives, as well as
  the many other changes adopted by the legislature, attached to
  this memorandum are the following:
  
     A.   Information regarding selected aid to locality
          accounts which were affected by final actions of
          the General Assembly (Attachment A).
  
     B.   Language excerpts from the 1996-98 Appropriations
          Act which (1) allows telephone companies to offer
          different rate schedules for telephone lines used
          in public schools for technology purposes, and
          provides for the negotiation of rates by the
          Superintendent of Public Instruction and the
          Director of the Council of Information Management;
          (2) authorizes the Superintendent of Public
          Instruction and the State Treasurer to study the
          feasibility of establishing an Elementary and
          Secondary Education Equipment Trust Fund; (3)
          relates to state participation in federal programs;
          (4)  establishes the new assessment program
          relating to the Standards of Learning; and (5) 
          implements the Educational Technology Grant program
          in 1996-98 (Attachment B).
  
     C.   An individualized printout which projects payments
          to each locality from state funds (Attachment C).
  
     D.   An individualized sheet which reflects those
          schools in each locality that are eligible for
          participation in the reduced K-3 class size
          initiative (Attachment D).
  
     E.   A printout which reflects those schools that are
          eligible for participation in the Truancy/Safe
          Schools initiative (Attachment E). 
  
  The dollar estimates provided on the attachments, where
  applicable, are based on the Department of Education's
  projection of March 31 average daily membership (ADM) for each
  locality.  While we have confidence in our projection of total
  ADM for the State, experience has shown that the projections
  for individual localities are subject to change.  When
  localities believe that they have more accurate projections of
  their March 31 ADM (adjusted or unadjusted), they are
  encouraged to substitute their estimates for those provided in
  this document.
  
  The following general remarks concerning these projections
  also should be noted:
  
     1)   In addition to ADM estimates, these projections are
          based on current estimates of program participation
          rates, fiscal year sales tax, and other input
          variables to the respective formulae.  These
          projections are thus subject to adjustment as these
          variables change.
  
     2)   These estimates include only State funds (General
          Fund, Literary Fund contributions to Teacher
          Retirement and Social Security, and Driver
          Education contribution to Basic Aid).  Federal
          funds have been excluded from the LEA by LEA
          analyses, as data are not available to develop such
          estimates at this time.
  
     3)   The estimates provided for the Vocational Education
          categorical accounts include each locality's share
          of any allocations for a regional vocational
          technical center.  Each locality's share has been
          determined based upon the percentages of
          participation provided to the Department.
  
  Again, please recognize that these projections are estimates. 
  There is no guarantee that the allocations will be received
  exactly as projected.  Questions may be directed to Mrs.
  Kathryn S. Kitchen, Division Chief of Finance at (804) 225-2025
  or to Mrs. June F. Eanes, Budget Director at (804) 225-2060.
  
  WCB,Jr./kk
  Attachments
  
  cc:     Chairperson of Governing Body or Mayor

          AUTHORITY:  Section 22.1-93, Code of Virginia and the
          1996-98 Appropriations Act, as approved by the
          General Assembly on March 11, 1996.


                                               Attachment A
                                                     Page 1
  
  
  
   Information Regarding Selected Aid to Locality Accounts
  
  
  SOQ ACCOUNTS
  
  A. Basic Aid and other SOQ per pupil amounts (with the
     exception of Maintenance Supplement addressed below) are
     based upon fourth quarter inflation factors and the
     revised cost of competing adjustment for the divisions in
     Planning District 8 as adopted by the House and Senate on
     February 22, 1996.  These per pupil amounts are reflected
     on Attachment C to this memorandum.
  
  B. Fringe benefit rates have not been changed from the
     Governor's Budget as introduced.  For 1996-97 the rates
     are (1) 6.41% for the employer share of teacher
     retirement (divisions electing to pay the employee share
     should add 5% to this rate), (2) 7.65% for social
     security, and (3) a premium holiday for group life
     insurance (no contributions will be required during the
     1996-97 fiscal year).  For 1997-98 the rates are (1)
     7.29% for the employer share of teacher retirement, (2)
     7.65% for social security, and (3) .07% for the employer
     share of group life insurance.  Non-professional
     retirement rates are provided separately to each locality
     by the Virginia Retirement System.
  
  C. Funding included in the Governor's Budget for a 3%
     teacher salary increase effective 12/1/97 has been
     eliminated.  The budget as adopted by the General
     Assembly includes funding for a 1.75% increase effective
     1/1/97 and an additional 2.00% increase effective 1/1/98. 
     This funding is reflected on Attachment C under "Salary
     Supplement."    In order to be eligible to receive these
     funds, localities must certify that equivalent increases
     in teacher salaries have been granted in the fiscal year.
       
  
  D. An additional $390,259 in 1996-97 and $379,464 in 1997-98
     was included for  Enrollment Loss in each year to
     recognize a percentage of the enrollment decline as
     follows:
  
                  Composite Index               Percentage
  
                   .0000 - .1999                   85%
                   .2000 - .3499                   70%
                   .3500 - .4999                   45%
                   .5000 or more                   30%
  
  
  E. Funding is included to provide for the state share of
     $11.50 per pupil in 1996-97 and $10 per pupil in 1997-98
     for the Maintenance Supplement Account.
  
  F. Funding is included to provide for a "no loss" provision
     for localities.  This funding will ensure that no
     locality receives less "state allocations" in 1996-97
     than it received in 1995-96.  For purposes of this
     payment "state allocations" shall include payments from
     Basic Aid, Salary Supplement, Textbooks, Vocational
     Education SOQ, Special Education SOQ, Gifted, Remedial,
     Remedial Summer School, Public School Employee Benefits
     (Retirement, Social Security, Group Life Insurance,
     Harper Account), Sales Tax, Enrollment Loss, At-Risk,
     Maintenance Supplement, Primary Class Size, Educational
     Technology, and English as a Second Language.
                                                 Attachment A
                                                       Page 2
                                                             
  
  G. A "Composite Index Transition Payment" has been
     established in 1996-97 to provide a "one-time buffer
     payment" to school divisions experiencing a negative
     state funding impact due to the recalculation of the
     components of the composite index of local ability-to-pay
     for the 1996-98 biennium.  The additional payment shall
     be made to local school divisions requesting such payment
     in an amount equal to ten percent of the difference
     between the funding the division would have received in
     the Governor's Budget as introduced in state allocations
     in the first year under their 1996-98 composite index and
     the amount they would have received in the Governor's
     Budget as introduced in the first year using the 1994-96
     composite index.  For purposes of this payment "state
     allocations" shall include payments from Basic Aid,
     Salary Supplement, Textbooks, Vocational Education SOQ,
     Special Education SOQ, Gifted, Remedial, Remedial Summer
     School, Public School Employee Benefits (Retirement,
     Social Security, Group Life Insurance, Harper Account),
     Sales Tax, Enrollment Loss, At-Risk, Maintenance
     Supplement, Primary Class Size, Educational Technology,
     and English as a Second Language.
  
  
  SOQ RELATED ACCOUNTS
  
  A. As described in Supts. Memo. No. 38 (Informational),
     dated February 19, 1996, the final budget includes
     additional funds for the K-3 class size reduction
     initiative.  Criteria for eligibility have been expanded
     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 is 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. The $15 million proposed by the Governor in 1997-98,
     which represented a return of lottery proceeds to
     localities, has been eliminated.
  
  C. As described in Supts. Memo. No. 38, additional funding
     has been included in the 1996-98 budget in support of
     educational technology.  Full language is provided in
     Attachment B to this memorandum.  While maintaining the
     $55 million proposed by the Governor in 1996-97 and the
     $20 million in 1997-98, an additional $46.2 million has
     been included in 1997-98 to be used to continue progress
     in this area.  Funding will be provided in both years
     through the Virginia Public School Authority.  In 1996-97,
     divisions will be eligible to receive a grant of
     $53,000 per division plus $26,300 for each school
     reporting membership as of September 30, 1996 (including
     regional Governor's Schools, division and regional
     Vocational Centers, and regional Special Education
     programs).  Funding will be available in the spring of
     1997.  In 1997-98, divisions will be eligible to receive
     a grant of $25,000 for each school reporting membership
     as of September 30, 1997 (including regional Governor's
     Schools, division and regional Vocational centers, and
     regional Special Education programs).
  
     In both years, localities will be required to provide a
     match for these funds equal to twenty percent of the
     grant amount, with at least twenty-five percent of the
     local match being used for teacher training.


                                                  Attachment A
                                                        Page 3
                                                             
  
  
  D. An additional $2,077,023 each year has been provided for
     an incentive payment to eligible school divisions for
     reducing truancy and supporting safe schools in
     elementary and middle schools.  School divisions eligible
     for funding are those with schools in the lowest 13.4%
     for elementary and middle school attendance.  Funds will
     be distributed according to the following formula:
  
     Number of Schools Participating         Amount

     One School                              $20,000
     Two to three schools                     35,000
     Four to five schools                     50,000
     Six or more schools                      17,500 per school
  
     Localities will be required to provide a match for these
     funds based on the composite index and will be required
     to submit truancy intervention plans which outline
     implementation and evaluation of these programs.
  
  
  OTHER ACCOUNTS
  
  A. An additional $1,555,707 has been included in 1996-97 to
     fund the state share of $1,500 per school to be used for
     teacher training and curriculum development associated
     with the implementation of the Standards of Learning.
  
  B. Funding in support of a new assessment program related to
     the Standards of Learning was revised.  Sufficient
     funding has been provided to develop and administer new
     tests against the SOLs at not more than four grades levels.
     Funding included in the Governor's Budget in support
     of the Literacy Passport Test was not changed.  A copy of the
     language amendment relating to the assessment program is
     provided at Attachment B.
  
  C. Funding proposed in the Governor's Budget of $600,000
     each year to provide liability insurance for all teachers
     has been removed.
  
  D. Funding in the amount of $225,000 in 1997-98 in support
     of a pilot Specialized Treatment and Rehabilitation
     program to develop alternative approaches for dealing
     with juvenile offenders has been removed.
  
  E. $45,713 has been included in each year to fund the state
     share of an AVID program in Fairfax County.
  
  F. Funding for Project Discovery has been increased by
     $60,000 each year to serve an additional 150 students,
     with 75 to be in the Arlington program and 50 to be in
     the Richmond program.
  
  G. Additional funding of $97,024 each year has been included
     to provide for the local share of summer residential
     Governor's Schools and Foreign Language Academies, based
     upon the composite index of the participating division or
     50% whichever is less.  Further, language has been
     included to prohibit the local school division from
     charging students to attend the program.  Additional
     funding in 1996-97 is included to provide planning grants
     for academic Governor's Schools as follows: $200,000 for
     a Northeastern program, $50,000 for an Essex program, and
     $75,000 for a regional "virtual" program in Southwest
     Virginia.
  
                                                  Attachment A
                                                        Page 4
                                                             
  H. Funding of $135,000 each year has been provided to
     support the Southside Virginia Regional Technology
     Consortium for expanding  the research and development
     phase of a technology linkage among fourteen public
     school divisions.
  
  I. An additional $75,000 has been included each year in
     support of a School to Work Transition Grants Program. 
     Grants will be awarded on a competitive basis for model
     programs supporting the transition from school to the
     workplace and may be used for those programs already
     authorized by Section 22.1-209.01 of the Code of
     Virginia.
  
  J. An additional $100,000 each year has been included to
     match the Virginia Literacy Foundation grants to
     volunteer literacy groups that provide services for
     adults with 0-4th grade reading levels.  An additional
     $200,000 in 1996-97 is provided for grants under the
     VIP/VIEW program.
  
  K. An additional $75,000 in each year has been included for
     incentive grants for Virginia teachers seeking
     certification from the National Board for Professional
     Teaching Standards.
  
  L. An additional $300,000 each year has been included to
     reinstate the Teacher Scholarship Loan Program.
  
  M. An additional $5,000 in 1996-97 and $10,000 in 1997-98
     has been included to support a student exchange program
     among Virginia's school divisions.
  
  N. An additional $25,000 in 1996-97 has been included for
     regional parental/community involvement summits.  The
     summits shall be led by the Virginia Congress of Parents
     and Teachers with the cooperation of other statewide
     organizations.
  
  O. An additional $20,000 each year has been included for An
     Achievable Dream, Inc., to operate an extended school-day
     and summer educational enhancement program in Newport
     News.
  
  P. An additional $150,000 in each year has been included for
     a Mentor Teacher Program.  Interested localities will be
     required to apply for funding and provide a 50% local
     match.
  
  Q. An additional $200,000 in 1996-97 has been included to
     support the Virginia Commission on the Future of Public
     Education.
  
  R. The Literary Fund transfer to Teacher Retirement was
     increased in 1996-97 from $34,989,382 to $41,091,382 (an
     increase of $6,102,000) due to upward revisions in the
     projected revenues to the Literary Fund from the passage
     of HB 548.  Sufficient funds are projected to remain in
     the Literary Fund to provide for a $10 million Literary
     Fund/VPSA subsidy program in the fall of 1997 and 1998,
     as well as provide for approximately $50 million in
     direct loans each year.  This should allow approximately
     $80 million of projects to be funded in each year of the
     biennium and maintain the First Priority Waiting List at
     approximately 12 months.
  
  S. An amendment to the language governing programs for the
     At-Risk Four-Year-Old program to provide a waiver to the
     requirement that the funding not be used to supplant
     federal funding.  Under current Congressional discussions
     about funding for the Improving America's Schools Act,
     there is potential for localities to lose funding for
     Title I.  Any such reduction could affect programs for
     at-risk four-year-old children which are currently funded
     from Title I.  This language amendment would allow a
     locality to use state and local funds from the At-Risk
     Four-Year-Old program to continue to provide services to
     a number of students equivalent to the percentage
     reduction in Title I funds.  Affected localities must
     seek the allowed waiver in writing from the
     Superintendent of Public Instruction.


                                                  Attachment B
                                                        Page 1
                                                             
                    LANGUAGE AMENDMENTS
                               
                                
  1. TELEPHONE LINES
  
     "e.1) For the purposes of Section 56-232, Code of
     Virginia,  Contracts of Telephone Companies with State
     Government' and for the purposes of Section 56-234,
      Contracts for Service Rendered by a Telephone Company
     for the State Government' shall be deemed to include
     communications lines into public schools which are used
     for educational technology.  The rate structure for such
     lines shall be negotiated by the Superintendent of Public
     Instruction and the Director of the Council of
     Information Management.  Further, the Superintendent and
     Director are authorized to encourage the development of
     "by-pass" infrastructure in localities where it fails to
     obtain competitive prices or prices consistent with the
     best rates obtained in other parts of the state.
     2) The State Corporation Commission, in its consideration
     of the discount for services provided to elementary
     schools, secondary schools, and libraries and the
     universal service funding mechanisms as provided under
     Section 254 of the Telecommunications Act of 1996, is
     hereby encouraged to make the discounts for intrastate
     services provided to elementary schools, secondary
     schools, and libraries for educational purposes as large
     as is prudently possible and to fund such discounts
     through the universal fund as provided in Section 254. 
     The Commission shall proceed as expeditiously as possible
     in implementing these discounts and the funding mechanism
     for intrastate services, consistent with the rules of the
     Federal Communications Commission aimed at the
     preservation and advancement of universal service."
  
  2. ELEMENTARY AND SECONDARY EDUCATION EQUIPMENT TRUST FUND
  
     "The Superintendent of Public Instruction and the State
     Treasurer shall study the feasibility of establishing an
     Elementary and Secondary Education Equipment Trust Fund
     with purposes similar to the Higher Education Equipment
     Trust Fund, and make recommendations to the Chairmen of
     the Senate Finance and House Appropriations Committees no
     later than November 1, 1996.  The recommendations shall
     include, but not be limited to, the following: strategies
     for provision of a continuing and stable funding level
     for the purchase and purchase and/or replacement of
     educational technology equipment and infrastructure in
     Virginia's public schools, including the feasibility and
     cost of direct appropriations for replacement costs
     through the Standards of Quality funding formula;
     potential sources of security for a financing program;
     the appropriate structure for administration of a
     program; appropriate levels of funding anticipated
     through the year 2000; the impact of a financing program
     on the Commonwealth's debt capacity and strategies for
     minimizing such an impact; and the potential state and
     local costs of such a program."
  
  3. STATE PARTICIPATION IN FEDERAL PROGRAMS
  
     "Upon the passage by eighty-five or more local school
     boards of resolutions requesting such, the Superintendent
     of Public Instruction shall, on behalf of local school
     divisions, apply by June 30, 1996 for federal funds as
     specified by the local resolution which are, or may
     become, available pursuant to federal legislation to
     support local school division efforts in the areas of
     teacher training, curriculum development and the purchase
     of instructional materials related to implementing the
     Standards of Learning.  No funds received under this
     provision shall be retained by the state Department of
     Education but all such funds shall be distributed to
     requesting local school divisions pursuant to the
     requirements of the federal program.  For  purposes of
     this item, the Superintendent of Public Instruction is
     hereby designated as the "State Educational Agency" under
     the provisions of any such federal legislation and any
     successor act or amendment thereto.  The provisions of
     this paragraph shall be effective upon passage of this
     act."
  
 
                                             Attachment B
                                                   Page 2
  
     
  
  4. NEW ASSESSMENT PROGRAM FOR THE STANDARDS OF LEARNING
  
     "Out of the amounts for State Education Services,
     $6,003,000 the first year and $6,003,000 the second year
     from the general fund are provided for the development
     and administration of new assessment materials and tests
     related to the Standards of Learning.  Data generated
     from these new assessment materials or tests during 1996-97
     shall be used only to determine the validity and
     reliability of the assessment materials and tests.  The
     data generated from these new assessment materials or
     tests shall not be used to impose any school division,
     school, teacher or student level consequences.  Nothing
     in the Virginia Freedom of Information Act or any other
     provision of state law shall afford public access to the
     data generated during 1996-97 from these new assessment
     materials or tests.  Release of data from "norm-referenced"
     tests or the Literacy Passport tests
     administered during the same period shall not be affected
     by this provision."
  
  5. EDUCATIONAL TECHNOLOGY PROGRAM
     
     "c.1) The Board of Education shall provide the sum of
     $12,676,000 in the second year from the Literary Fund to
     provide first-year debt service payments for an education
     technology grant program to be conducted through the
     Virginia Public School Authority, in an amount estimated
     at $55 million, for the purpose of providing technology
     improvements to school infrastructure, networking, and
     for purchasing technology equipment.
  
     2) Grant funds are based on an average grant of $26,300
     per school and an additional $53,000 for each school
     division.  For purposes of this grant program, eligible
     schools shall include those reporting membership as of
     September 30, 1996, as well as division and regional
     vocational centers, regional special education centers,
     and regular school year regional Governor's Schools.
  
     3) For purposes of this grant program, the funds may be
     used to provide for the retrofitting and upgrade of
     existing school buildings, to provide network-ready
     multimedia microcomputers for classrooms, and to provide
     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.
  
     4) Localities are 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 shall be
     used for teacher training in the use of technology.  The
     Superintendent of Public Instruction is authorized to
     reduce the required local match for school divisions with
     a composite index of local ability-to-pay below .2000.
  
     5) In developing the proposed 1998-2000 and 2000-2002
     biennial budgets for public education, the Board of
     Education shall include a recommendation to the Governor
     to appropriate Literary Fund revenues sufficient to make
     the debt service payments for this program in fiscal
     years 1999, 2000, 2001, and 2002.
  
     d.  The Director of the Department of Planning and Budget
     is authorized to increase appropriations from the
     Literary Fund in the second year in an amount equal to
     the revenues received from deposits of unclaimed property
     remitted by TRIGON as a result of the supplemental co-payment
     refund program.  These revenues shall be distributed by the
     Board of Education to local school divisions for the purchase
     of graphing calculators and scientific probe and sensing device
     kits.  To the extent that these objectives have been met, any
     additional revenues from these deposits may be distributed for the
     purchase of other educational technologies.
  
                                                   Attachment B
                                                         Page 3
  
  
     
     e.1) An educational technology grant program shall be
     conducted through the Virginia Public School Authority,
     through the issuance of equipment notes in an amount
     estimated at $46.2 million in the Spring of 1