REGULATORY

  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 February 22, 1997
  by the General Assembly, which is subject to final approval
  by the Governor.

  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
     (Attachment B).

  C. An individualized printout projecting payments to each
     locality from state funds (Attachment C).

  D. An individualized sheet listing the schools eligible
     for participation in the reduced K-3 class size
     initiative (Attachment D).

  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
  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
     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.

  4. The estimates provided for Technology include Regional
     Vocational Technical Centers, Vocational Centers within
     the school division, Regional Special Education
     Programs and Academic Year Governor's Schools.  These
     are included with the school division's estimates who
     is serving as the fiscal agent.

  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.
  June F. Eanes, Acting Assistant Superintendent for Finance,
  at (804) 225-2060 or Mr. Kent Dickey, Data Base Analyst, at
  (804) 225-2806.

  RTL:je

  Attachments: A hard copy of this memo and its attachments
               will be sent to the superintendent's office

  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 February 22, 1997.



                                                 Attachment A

   Information Regarding Selected Aid to Locality Accounts

  SOQ ACCOUNTS

  A. Sales Tax estimates have been revised for the 1996-97
     and 1997-98 years to $597,800,000 and $627,693,000
     respectively.  These revisions reflect an increase in
     Basic Aid.

  B. Funding was included in the Governor's budget for a 2%
     teacher salary increase effective 1/1/98 for the 1997-98 year. 
     The budget as adopted by the General Assembly
     includes funding for an increase of  4% effective
     1/1/98.   Language has been included to allow  school
     divisions that begin paying the employee's share of
     contributions to the Virginia Retirement System in
     1997-98, as a new benefit that has not been available
     to teachers in prior years, may qualify for the salary
     supplement funds.  In order to be eligible to receive
     these funds, localities must certify that equivalent
     increases in teacher salaries have been granted, or the
     school division began paying for the employee's share
     of contributions to the Retirement System in the fiscal
     year.

  C. Funding is included to provide for the state share of
     $15 per pupil in 1997-98 for the Maintenance
     Supplement.

  D. In 1996-97, $2.1 million is included to provide a one-time payment
     to school divisions receiving less state
     funding in the first year as a result of a loss in
     school age population between the years 1992 and 1996. 
     The additional payment shall be made to local school
     divisions requesting such payment, for a percentage of
     the difference between the funding the division would
     receive using the 1992 Census in the first year and the
     funding that would be received from these accounts in
     the first year using the 1996 Census.  Such payments
     shall be made as determined below:

     Composite Index                    Percentage
     0.0000 to 0.1999                        85%
     0.2000 to 0.3499                        70%
     0.3500 to 0.4999                        45%
     0.5000 or more                          30%

  E. Funding has been included in 1997-98 to enable
     additional schools to participate in the K-3
     initiative.   Schools having at least 16% of students
     approved eligible for free lunch may participate at a
     20:1 ratio.   Attachment D provides a listing of the
     schools eligible.

  F. Funding is included for 50% of the cost of the fringe
     benefit share of increasing the cost of competing salary adjustment
     in Northern Virginia from 9.83 percent(instructional and 
     non-instructional)to 9.83 percent for instructional positions 
     and 24.61 percent for non-instructional positions in the second year. 
     This adjustment
     is applied to the nine school divisions in Planning District
     8.

  G. The cost of health insurance for funded instructional
     positions in 1997-98 has been lowered from $2,286 to
     $2,280 due to lower than expected inflation.  This is
     reflected in the Basic Aid per pupil amounts for many
     divisions.

  OTHER ACCOUNTS

  A. Funding has been included in 1997-98 for the following
     programs:

     Hampton Roads Public Education Regional Cooperative      $105,000
     Chesapeake Bay Regional Environmental Program             100,000
     Southside Regional Technology Consortium
         Allows Danville and Pittsylvania to join               20,000
         Training                                               80,000
     Hampton Public Schools AVID                             
                                                               119,901
     Newport News Excellence in Urban Education AVID        
                                                                45,000

  B. Funding in the amount of $133,000 is included in 1997-98 to provide 
     $1,000 to each local school division that
     certifies to the Superintendent of Public Instruction
     by October 15, 1997, the formation of a Remediation
     Program Standards Committee pursuant to the provisions
     of House Bill 1859.  The Department shall survey local
     school boards for a determination of the specific
     requirements of the local programs of remediation,
     components included in the remediation program, and the
     number of students projected to be in remediation
     programs.  

  C. Funding in the amount of $50,000 for 1997-98 has been
     included for the Commission on the Future of Public
     Education.

  D. Appropriation authority has been included for the
     state's participation in Goals 2000 and the Technology
     Literacy Challenge Fund.  

  E. Funding has been included to fully fund in 1996-97 and
     1997-98 the state's share of operational Governor's
     School programs.  Funding has been included in 1997-98
     for the following Governor's School Programs:

     Southwest Governor's School                       $ 50,000
     Appomattox Governor's School of Technical 
        And Creative Arts                                50,000
     Essex area Governor's School (planning grant)       50,000
     A. Linwood Holton Governor's Schools (Funds
        to be used for curriculum design and student
        recruitment)                                    200,000
     The Commonwealth Governor's School                 705,000

     Language has been included that no funding shall be
     provided for planning or implementation of new
     Governor's Schools after the 1996-98 biennium.

  F. The $600,000 included in the Governor's budget for
     teacher liability insurance has been removed.

  G. Funding ($50,800) and one position has been included in
     the Department's budget for a full-time school health
     specialist.

                                             Attachment B
                      Language Excerpts

  A. Medically Fragile Students

     "1) The Department of Education, in cooperation with
       the Departments of Health and Medical Assistance
       Services, shall develop a monitoring system to identify
       those medically fragile students with one or more
       conditions requiring continuous, on-going specialized
       health care procedures living in a licensed nursing
       home or long-stay acute hospital whose parent or legal
       guardian is a resident of Virginia and for whom
       Virginia has an educational responsibility.  The
       Department of Education shall, as part of this system,
       designate the office within the Department of Education
       which shall be responsible for tracking these data."  

  B. Models/Forecasting Student Enrollment

     "The Superintendent of Public Instruction shall examine
      various models for predicting local school enrollments. 
      If the examination results in a model that is reliable
      and valid for predicting such enrollments, the
      resulting model will be disseminated to local school
      divisions for planning purposes."

  C. Report on Expulsion and Suspension Rates

     "The Superintendent of Public Instruction shall provide
      a report on expulsion and suspension rates by local
      school divisions in relation to disparity indicators."  

  D. Use of School Facilities for Welfare Reform

     "The Superintendent of Public Instruction, in
      cooperation with the Commissioner of Social Services
      shall encourage local departments of social services
      and local school divisions to work together to explore
      the feasibility of cooperative arrangements for the use
      of school resources especially computer labs, for the
      purpose of training Temporary Assistance to Needy
      Families recipients for the workforce."

  E. Use of Statewide Contracts for Technology

     "The Department of Education, in cooperation with the
      Department of General Services, shall study the
      feasibility of providing statewide contracts for local
      school divisions to use for the purchase of technology
      equipment."

  F. Assistance with Student Conduct

     "The Superintendent of Public Instruction shall prepare
      a report on programs and activities dealing with the
      management of student conduct which are available to
      local school divisions.  The information shall be
      provided to local superintendents and local school
      board chairmen by the start of the 1997-98 school
      year."



  G. Early Reading Intervention

     "An additional incentive payment of $6,227,060 the
      second year from the general fund shall be disbursed by
      the Department of Education to local school divisions
      for the purposes of providing early intervention
      services to primary grade students who demonstrate
      deficiencies based on their individual performance on
      the first-grade diagnostic tests which have been
      approved by the Department of Education.  The
      Department of Education shall review the tests of any
      local school board which requests authority to use a
      test other than the state-provided test to ensure that
      such local test uses criteria for the early diagnosis
      of reading deficiencies which are similar to those
      criteria used in the state-provided test."

     "Such intervention programs, at the discretion of the
      local school division, may include, but not be limited
      to the use of: special reading teachers; trained aides;
      volunteer tutors under the supervision of a certified
      teacher; computer-based reading tutorial programs;
      aides to instruct in-class groups while the teacher
      provides direct instruction to the students who need
      extra assistance; or extended instructional time in the
      school day or year for these students."


  H. SOL Teaching Materials

     "Local school divisions will have the flexibility to
      use funding for instructional materials and for any use
      that aids them in implementing the new Standards of
      Learning."

  I. Nonpublic school Students

     "Students who are either (i) enrolled in a nonpublic
      school or (ii) receiving home instruction pursuant to
      22.1-254.1