COMMONWEALTH OF VIRGINIA
DEPARTMENT OF EDUCATION
P. O. BOX 2120
RICHMOND, VIRGINIA 23218-2120
SUPTS. MEMO. NO. 33
February 10, 1999

INFORMATIONAL

TO: Division Superintendents
FROM: Paul D. Stapleton
Superintendent of Public Instruction
SUBJECT: Changes to the 1998-2000 Budget by the Senate Finance and House Appropriations Committees
On Sunday, February 7, 1999, the Senate Finance and House 
Appropriations Committees received reports for the 
various subcommittees regarding changes to the 1998-2000 
biennial budget as proposed by Governor Gilmore 
(reference Informational Superintendents Memorandum No. 
192, dated December 22, 1998). 

For the purposes of this memo, fiscal year 1999 means the 
current year that began July 1, 1998, and ends June 30, 
1999.  Fiscal year 2000 means the year that begins on 
July 1, 1999, and ends on June 30, 2000.

The budget proposed by Governor Gilmore is the base 
against which the General Assembly changes are made.  
This budget included:  1) an additional $123 million in 
fiscal year 1999 and $122 million in fiscal year 2000 
resulting from the dedication of 100 percent of the 
annual lottery revenues to the Basic Aid funding formula;  
2) funding to establish five additional Best Practice 
Centers for a total of eight;  3) restoration of the 
Early Reading Intervention program in fiscal year 2000 to 
permit all school divisions to participate in this 
program; and 4) an additional $8 million in fiscal year 
2000 to hire 400 new teachers.  Governor Gilmore's 
recommendations and proposed budget were adopted unless 
otherwise noted in the attachments.

Attachments are enclosed to provide additional 
information on changes proposed by both the House 
Appropriations and Senate Finance Committees.  Please 
note that these attachments only include the Standards of 
Quality and Incentive-Based accounts.  Categorical 
accounts will be included on the Regulatory Memorandum 
that will be sent to you after the adjournment of the 
General Assembly session.  These attachments include:



Attachment A    Comparison of changes proposed by the 
                Senate Finance and House 
                Appropriations Committees

Attachment B    Locality specific printout for 
                changes proposed by the Senate 
                Finance Committee

Attachment C    Locality specific printout for 
                changes proposed by the House 
                Appropriations Committee


The recommendations proposed by each chamber are not 
final.  A Conference Committee will be convened to 
discuss the differences between the recommendations of 
the House and the Senate reports and to propose final 
recommendations for consideration by each Chamber.  These 
recommendations will not be presented to each Chamber for 
final action until the end of February.  Final action by 
each Chamber will occur just prior to adjournment on 
February 27, 1999.  After final actions have been taken, 
we will provide you with additional information.

If you have any questions, or need additional 
information, please contact Daniel S. Timberlake, 
Assistant Superintendent for Finance, June F. Eanes, 
Budget Director, or Kent Dickey, Assistant Budget 
Director, at (804) 225-2025.

PDS:dst

Attachments:  A hard copy of this memo and its attach-
              ment will be sent to the superintendent's
              office.



Changes Proposed by the Senate Finance and
House Appropriations Committees


Revised Sales Tax Estimate

Senate - Sales tax estimates are revised upward by $4.5 
million in fiscal year 1999 and $500,000 in fiscal year 
2000.  The revised estimate for fiscal year 1999 is $668.4 
million and the revised estimate for fiscal year 2000 is 
$700.9 million.  

House - The sales tax estimate for fiscal year 1999 is the 
same as that proposed by the Senate (an increase of $4.5 
million for a total of $668.4 million).  The revised 
estimate for fiscal year 2000 is $698,423,000, a reduction 
of $1,977,000.

Note:  The individualized sheets for your school division, 
included with this memo, reflect these changes along with 
the corresponding offset changes to Basic Aid and 
Enrollment Loss.


Inflation Adjustment

Senate - Reduces funds by $11.8 million in fiscal year 1999 
and $12.0 million in fiscal year 2000 to adjust for actual 
inflation as of the fourth quarter of 1998.

House - Reduces funds by $2.8 million in fiscal year 1999 
and $12.0 million in fiscal year 2000 to adjust for actual 
inflation as of the fourth quarter of 1998.  This action is 
similar to the Senate's action except that in fiscal year 
1999, the House only adjusts inflation for the last three 
months of the year.

NOTE:  These inflation adjustments mean that each school 
division's basic aid per pupil amounts will be decreased in 
both years of the biennium.  Likewise, any other account 
that uses basic aid to determine its funding will be 
reduced including: salary supplements, at-risk payments, 
enrollment loss, and textbooks (the House version does not 
reduce the textbook per pupil amount in fiscal year 1999).


Eliminate "Harper" Payments

Senate - No action.

House - Reduces funding by $13.8 million in fiscal year 
2000 due to the elimination of the Harper Settlement 
payments in fiscal year 2000.  Language has been included 
directing the Virginia Retirement System to reduce the 
rates charged to local school divisions in fiscal year 2000 
to reflect this change.


Teacher Salary Increase

Senate - Provides an additional $19.4 million to increase 
teacher salaries from 2.25% to 4.00% effective January 1, 
2000.

House - Provides an additional $52.2 million to increase 
teacher salaries from 2.25% effective January 1, 2000, to 
6.00% effective December 1, 1999.


Distribution of Lottery Funds

Senate - Distributes the lottery funds based on the state 
share of $198.80 per pupil in fiscal year 1999 and $195.00 
per pupil in fiscal year 2000.  An additional $14.9 million 
in fiscal year 1999 and $14.8 million in fiscal year 2000 
is included to provide a hold harmless provision for school 
divisions that would have received more funds under the 
distributions proposed by Governor Gilmore in the 
introduced budget.  School divisions must match these funds 
based on their composite index.  These funds may be used 
for any school purpose.  Companion legislation (SB 1225) 
provides that division superintendents must certify the 
public education purpose for which these funds will be 
used.

House - Removes the lottery funds as proposed by Governor 
Gilmore in the introduced budget from both years of the 
biennium ($245.8 million).  These funds are combined with 
the School Construction Grant funds in fiscal year 2000 
($55.0 million) to create a capital improvements program 
totaling $300.8 million in fiscal year 2000.  Every school 
division would receive the same funding as they would have 
received from these distributions in the introduced budget 
proposed by Governor Gilmore.  An additional $125,164 is 
included to provide a hold harmless for any school division 
that would receive more funds from a distribution based on 
the state share of $300 per pupil.  Companion legislation 
(HB 2513) for this proposal stipulates that local 
governments must maintain their spending for school 
operating programs in order to receive these funds.  NOTE:  
HB 2513 originally dedicated approximately $9.4 million of 
lottery revenue to capital projects in higher education.  
This provision was amended on the House floor on February 
9, 1999.  This portion of lottery revenue was dedicated 
back to public education.  The individual sheets reflect 
the amounts school divisions will receive based on the 
original proposal of $300.8 million for public education.  
The remaining $9.4 million has not yet been distributed.  
These funds will be distributed by subsequent House action 
that is likely to occur on February 11, 1999.


School Construction

Senate - Adds language expanding the use of school 
construction funds for infrastructure improvements to 
include but not be limited to, building and site utilities, 
school access roadways, and drainage systems.

House - Removes the construction funds currently 
appropriated in fiscal year 2000 ($55.0 million) for the 
School Construction Grants program and combines them with 
the lottery funds contained in Governor Gilmore's 
introduced budget ($245.8 million) to create a capital 
improvements program totaling $300.8 million in fiscal year 
2000.  Language is added requiring local governing bodies 
to carryover any unspent school construction funds at the 
close of fiscal year 1999 to fiscal year 2000 to be used 
for the same purpose.  NOTE:  HB 2513 originally dedicated 
approximately $9.4 million of lottery revenue to capital 
projects in higher education.  This provision was amended 
on the House floor on February 9, 1999.  This portion of 
lottery revenue was dedicated back to public education.  
The individual sheets reflect the amounts school divisions 
will receive based on the original proposal of $300.8 
million for public education.  The remaining $9.4 million 
has not yet been distributed.  These funds will be 
distributed by subsequent House action that is likely to 
occur on February 11, 1999.


Standards of Learning Test Scoring

Senate - Provides $1.5 million in fiscal year 1999 and $1.8 
million in fiscal year 2000 to reduce the amount of time 
required by the testing vendor to score the tests.  The 
time for scoring will be reduced from 21 work days to 14 
calendar days.  This action will permit testing to be moved 
closer to the end of the course thereby providing more 
instructional time.

House - Same as Senate.


Administrative and Student Information Management Software

Senate - Provides language authorizing the issuance of 
Virginia Public School Authority bonds for the purpose of 
replacing outdated systems such as the "Columbia" system.  
These bond proceeds will be available only to school 
divisions who are eligible because their current systems 
are not sufficient to meet the data requirements of the 
Standards of Accreditation.

House - Same as Senate.


New SOL Remediation Teachers

Senate - Eliminates funds.

House - Distributes the $8 million proposed by Governor 
Gilmore in fiscal year 2000 for 400 new teachers based on 
the 400 elementary schools (one teacher per school) with 
the lowest composite pass rates on the Standards of 
Learning tests.  The House maintains the Governor's 
methodology of providing a flat grant of $20,000 for each 
teacher.


GED Programs

Senate - Provides an additional $2.4 million in fiscal year 
2000 to expand general education development (GED) 
preparatory programs and testing.  Language has been 
included stating that GED students shall be counted in 
Average Daily Membership (ADM).  Two positions are added to 
the Department of Education to support the expanded 
program.

House - Provides an additional $1.3 million in fiscal year 
2000 to expand general education development (GED) 
preparatory programs and testing.  This provision includes 
language that states GED students may be counted in Average 
Daily Membership (ADM).  The House amendment estimates that 
the inclusion of these students will increase statewide ADM 
by 492 students in fiscal year 2000.  NOTE: This estimated 
impact accounts for the difference in ADM projections 
contained in the House and Senate versions of your 
individual sheets.  One position is added to the Department 
of Education to support the expanded program.


Governor's School Programs

Senate - Provides an additional $54,233 in fiscal year 1999 
and $160,150 in fiscal year 2000 to fund enrollment at the 
Commonwealth Governor's school.  An additional $266,947 is 
provided in fiscal year 2000 for the increased cost of the 
summer programs.

House - Provides an additional $54,233 in fiscal year 1999 
and $160,150 in fiscal year 2000 to fund enrollment at the 
Commonwealth Governor's school.  An additional $200,000 is 
provided in fiscal year 2000 for the purchase of technology 
equipment at the Appomattox Governor's school.  An 
dditional $50,000 is provided in fiscal year 2000 to study 
the feasibility of establishing a Governor's School program 
on student leadership.


Other Budget Actions

Senate - Provides additional funding in fiscal year 2000 
(unless otherwise noted) for: Advancement Via Individual 
Determination - Petersburg ($75,000), Advancement Via 
Individual Determination - Staunton ($29,193), Project 
ECOLE ($50,000), VGAP - Fredericksburg ($95,000), New 
Century Consortium ($75,000), Southwest Virginia Public 
Education Consortium William King Outreach ($10,000 in 
fiscal year 1999 and $115,000 in fiscal year 2000), 
Lightspan Program in Alleghany Highlands ($25,000), and 
Jobs for Virginia Graduates ($350,000).

House - Provides additional funding for: Achievable Dream - 
Newport News ($200,000), Achievable Dream - Hampton 
($30,000), Alternative School Grants ($100,000), 
Advancement Via Individual Determination - Virginia Beach 
($100,000), English as a Second Language Teachers 
($190,000), National Certification Bonus for Teachers 
($140,000), and Mentor Teacher Program ($600,000).


Early Intervention Reading Program

Senate - Language is added to require that school divisions 
must agree to assess students at the end of the school year 
after they have received intervention services as a 
condition for receiving state funds.

House - Same as Senate.


Standards of Learning (SOL) Remediation Program

Senate - No action

House - Adds language requiring local governing bodies to 
carryover any unspent SOL Remediation funds at the close of 
fiscal year 1999 to fiscal year 2000 to be used for the 
same purpose.  Language also is added to permit these funds 
to be used for students who may require remediation to 
perform adequately on the Standards of Learning tests.


School Health Incentive Fund

Senate - No action

House - Adds language to restrict the use of these 
incentive funds to nursing services only.


Cost of Competing Adjustments

Senate - No action

House - Adds language directing the Joint Legislative Audit 
and Review Commission to study the need for including the 
school divisions of Clarke, Fauquier, Frederick, Stafford, 
and Winchester in the cost of competing methodology used 
for Planning District Eight.  The findings are to be 
reported to the 2000 Session of the General Assembly.