INFORMATIONAL

 On Sunday, February 20, 2000, the Senate Finance and House Appropriations Committees
adopted changes to the 2000-2002 biennial budget as proposed by Governor Gilmore 
(reference Informational Superintendent's Memorandum No. 226, dated December 21, 
1999).  These changes were later adopted by the full membership of the House of 
Delegates and the Senate.  The changes affect fiscal years 2001 and 2002.  Fiscal 
year 2001 begins on July 1, 2000, and ends on June 30, 2001.  Fiscal year 2002 begins
on July 1, 2001, and ends on June 30, 2002.

The budget proposed by Governor Gilmore is the base against which the 
Assembly made changes.  In his introduced budget, the Governor proposed over $540 
million to fully fund the Standards of Quality (SOQ), which included updates to 
projected average daily membership (ADM), sales tax estimates, the school-age census 
count, and composite index calculations.  The Governor also proposed additional 
funding for remediation and intervention programs including an expansion of the early
reading intervention program to serve students in kindergarten through grade 3 and a 
new mathematics remediation program to serve students in grades 7 and 8.  

To further support the Standards of Accreditation (SOA) and Standards of Learning 
(SOL), a $101.3 million web-based computerized system was proposed for high schools 
to enhance their instructional, remedial, and testing capabilities.  In addition, 
funding was proposed to develop and field test new SOL test questions, to provide 
electronic copies of SOL tests to school divisions, and to provide item analysis of 
SOL test results.  The budget also included funding to start a pilot Supts. Memo No.
31 alternative teacher licensure program that would allow school divisions to hire 
professionals with experience in careers outside education as classroom teachers 
and to provide these individuals with mentor teachers.  

The attachments enclosed provide additional information on the changes adopted by 
the House of Delegates and the Senate.  Unless noted in the attached sheets, the 
Governor's proposals were adopted. Please note that these attachments include only 
the Standards of Quality and Incentive-Based accounts.  Final information concerning 
all accounts, including the Categorical accounts, will be provided in a Regulatory 
Superintendent's Memorandum that will be sent to you after the General Assembly 
adjourns.  The attachments for this memo include:

Attachment A	Description of changes proposed by the Senate and the House of 
                Delegates to HB/SB 29 and to HB/SB 30

Attachment B	Locality specific printout showing the funding proposed by the 
                Senate

Attachment C	Locality specific printout showing the funding proposed by the House
                of Delegates

Please note that the recommendations proposed by each chamber are not final.  A 
Conference Committee will make final recommendations after differences between the 
House and Senate proposals have been resolved.  The Conference Committee's 
recommendations will be presented to each chamber in early March and final action 
by each chamber will occur prior to adjournment on March 11, 2000.  After final 
actions have been taken, the Department will provide you with additional information
concerning the budget.  

If you have any questions, or need additional information, please contact 
Daniel S. Timberlake, assistant superintendent for finance, or budget office staff 
at (804) 225-2025.


JLD:kmr
Attachments

 Changes to HB/SB 29 Proposed by the Senate and the House of Delegates


Annual School Report (ASR) Requirements

Senate - No action taken

House - Language requires the Department to collect data on educational technology 
expenditures, including hardware, software, and required infrastructure 
modifications, as part of the ASR beginning with the 1999-2000 school year.


Carryover Provisions

Senate - Language allows divisions to carry forward into fiscal year 2001 any 
unspent fiscal year 2000 balances left from Lottery profits and school construction 
grants.

House - Language allows divisions to carry forward into fiscal year 2001 any 
unspent fiscal year 2000 balances left in the Standards of Learning Remediation and 
Teacher Training for the Standards of Learning programs, and also from the 
nonrecurring portion of the Lottery revenues.  Language requires that unspent 
lottery revenues be paid into an escrow account.



Changes to HB/SB 30 Proposed by the Senate and the House of Delegates


Math Intervention Program 

Senate - No action taken

House - Renames the Math Intervention Program as "Standards of Learning Algebra 
Readiness".  The House amends the program language to allow divisions to use program 
funding ($9.1 million in fiscal year 2002) to provide math intervention services to 
any student who is at-risk of failing the Algebra I end-of-course test based on their
performance on diagnostic tests.



Technology Initiative

Senate - Eliminates the Governor's proposal to use $10.3 million from the general 
fund and $84.7 million from the Literary Fund to pay for a web-based computerized 
program for high schools.  The Senate proposes instead to issue equipment notes 
through the Virginia Public School Authority (VPSA) for an education technology 
grant program estimated at $54.3 million each year.  The annual debt service would 
be paid from the Literary Fund.  Under this proposal, each school receives $26,000 
and each division receives $50,000.  

The intent of this program is to establish a computer-based instructional and 
testing system for the Standards of Learning and to connect schools, Best Practice 
Centers and the Department of Education.  Funding for this program is targeted to 
reach three specific goals in every high school.  These goals are: 1) one computer 
for every five students, 2) Internet-ready local area network capability in every 
school, and 3) Network Virginia or web-equivalent access to the Internet.  After 
divisions have reached these goals at the high school level, they are authorized to 
use any remaining funds to similarly equip middle schools and elementary schools.  

School divisions are required to provide a 20 percent match for the funds; however, 
if a locality's composite index is less than 0.2000, the Superintendent of Public 
Instruction may lower the match requirement.  Divisions must use at least 25 percent
of the local match to train teachers in the use of technology. 

In order to participate in this program, divisions must complete an "Intent to 
Participate" statement by August 1, 2000, and a "Plan for the Use of the Funds" by 
November 1, 2000.  The Department of Education and the Department of Technology 
Planning must develop the format for these documents and provide them to school 
divisions by July 1, 2000.

House - Same as Senate.  The House also provides nearly $3 million in fiscal year 
2002 from the general fund to cover costs that cannot be supported through the 
proceeds of the equipment notes, such as test licensure costs and T1 lines.  
Divisions are required to provide a match for this additional funding based on the 
composite index.



Technology Resource Assistants

Senate - No action taken

House - Provides nearly $7 million in fiscal year 2002 for the state's share of 
funding a technology resource assistant in each high school, regional vocational 
education center, regional special education center, and academic year regional 
Governor's school.  The General Assembly intends for these assistants to provide 
on-site support for the SOL technology initiative.  Divisions are required to 
provide a match for these funds based on the composite index.  


Student Management Information Systems

Senate - Provides $2.3 million in fiscal year 2001 to assist divisions with on-going
maintenance and upgrade costs associated with the administrative and student 
management information systems.  School divisions that purchased new systems under 
the program sponsored by the state during the 1998-2000 biennium are eligible to 
receive this additional funding.  Divisions must certify that the upgrades and 
maintenance will be completed using the funds provided and must also provide 
matching funds based on the composite index.

House - No action taken


Lottery Profits

Senate - No action taken

House - Requires that divisions use no more that 50 percent of their portion of 
lottery profits for recurring costs and no less than 50 percent for nonrecurring 
costs defined as: "school construction, additions, infrastructure, site acquisition,
renovations, technology, and other expenditures related to modernizing classroom 
equipment, and debt service payments on school projects completed during the past 
10 years".  The Governor's introduced budget eliminated this requirement from 
appropriation act language, which permitted the lottery revenue to be used for any 
public school purpose.  



Teacher Salaries

Senate - Includes budget language encouraging divisions to provide a 2.4 percent 
increase in fiscal year 2001.  Language states that sufficient funds are available 
for the increase as a result of fully funding the state's share of the Standards of 
Quality and also from local savings realized by reducing the employer's share of 
Virginia Retirement System (VRS) payments.  

House - Provides $89 million over the biennium for a 2.4 percent increase effective 
December 1, 2000. Divisions will have the option to participate in this program.  
However, if divisions choose to participate, they must certify that appropriate 
increases have been granted by March 1, 2001 and must provide a local match based 
on the composite index.  


Study to Review Funding for the Standards of Quality (SOQ)

Senate - No action taken

House - Language requires the Joint Legislative Audit and Review Commission (JLARC) 
to compare the SOQ funding methodology with prevailing school practices.  As part 
of this study, JLARC is required to: review local school division practices that 
are not funded in the SOQ, including technology programs; identify enhancements to 
the SOQ funding methodology and prevailing cost calculations; compare the extent to 
which a division's practices exceed the SOQ with that division's ability-to-pay; and 
determine the extent to which state distributions for education funding are based on
local ability-to-pay.  An interim report of findings is due to the 2001 session of 
the General Assembly and the final report is due to the 2002 session of the General 
Assembly.


Remedial Block Grant Funding

Senate - Includes language that authorizes divisions to use state funds received for
SOQ remediation, SOL remediation, and remedial summer school programs as a block 
grant for remedial purposes without restrictions or reporting requirements.  

House - Similar to the Senate except that divisions are not exempted from reporting 
data needed to determine funding for the programs.


Teacher Incentive Programs

Senate - Provides an additional $150,000 in each fiscal year for additional teaching 
scholarship loans.

House - Provides an additional $449,000 in fiscal year 2001 and $444,000 in fiscal 
year 2002 for additional teaching scholarship loans.  Provides $122,500 in fiscal 
year 2001 and $392,500 in fiscal year 2002 to continue the bonus program for teachers
who are certified by the National Board for Professional Teaching Standards.  This 
amendment provides bonuses of $5,000 in the first year and $2,500 in the second year 
for 42 additional teachers who have earned certification.  The amendment also 
provides funding for approximately 75 teachers who are expected to earn certification
during fiscal year 2002.  The House also provides an additional $750,000 in each 
fiscal year to increase funding for Clinical Faculty and Mentor Teacher Programs.


Speech Language Pathologist Case Loads

Senate - No action taken

House - Provides $629,723 to reduce case loads from 70 to 68 in fiscal year 2001, 
and $1.4 million to reduce case loads from 70 to 66 in fiscal year 2002.


Sales Tax Estimates

Senate - No action taken

House - Reduces the estimated portion of sales tax that is dedicated to public 
education by $125,794 in fiscal year 2001 and by $142,421 in fiscal year 2002 
pursuant to proposed House Bills 1094 and 106.  Funding for basic aid is increased 
by $71,006 in fiscal year 2001 and by $79,702 in fiscal year 2002 as a result of 
this change.



Virginia Retirement System (VRS) Retirement

Senate - Reduces funding by $28.8 million in fiscal year 2001 and $31 million in 
fiscal year 2002 as a result of lowering the VRS employer rate for school employees.
The Senate's plan reduces the VRS rate for instructional employees from 9.61 percent
to 7.92 percent of salary each year and the VRS rate for non-instructional support 
employees from 6.14 percent to 5.65 percent of salary in fiscal year 2001 and from 
6.16 percent to 5.66 percent of salary in fiscal year 2002.  

House - Reduces funding by $28 million in fiscal year 2001 and $30.1 million in 
fiscal year 2002 as a result of lowering the VRS rate for instructional employees 
from 9.61 percent to 7.92 percent of salary each year.  The House did not recommend 
an adjustment for non-instructional support employees.

Note: The Virginia Retirement System (VRS) has advised us that the VRS Board must 
approve these reduced rates.  As a result, school divisions should consider 
developing their budgets on: 1) paying the rates included in the Governor's 
introduced budget, which have been approved by the VRS Board; and, 2) anticipating 
revenue from the state based on the General Assembly's action, which reduces the 
rates and subsequently reduces state payments. 


Inflation Adjustment

Senate - Reduces funding by $1.3 million each fiscal year by updating the utilities 
inflation factor based on third quarter 1999 inflation data.

House - Same as Senate 


Northern Virginia Cost of Competing 

Senate - Provides $2.3 million in fiscal year 2001 to increase the cost of competing 
differential for non-instructional support personnel from 20.92 percent to 24.61 
percent.  This adjustment affects the nine school divisions in Planning District 
Eight.

House - No action taken


Composite Index Transition Payments

Senate - Provides an additional $5.9 million in fiscal year 2001 for payments 
ranging from 25 percent to 75 percent of funds lost due to the recalculation of the 
2000-2002 composite index of ability-to-pay. The basic aid, textbooks, SOQ vocational
education, SOQ special education, SOQ gifted, SOQ remedial education, fringe benefits,
enrollment loss, at-risk, maintenance supplement, and sales tax accounts are used to
calculate this transition payment.

House - No action taken


SOL Materials

Senate - No action taken

House - Reduces funding for SOL materials from the state's share of $20 per pupil 
to the state's share of $10 per pupil, which reduces total funding by $6.3 million 
each fiscal year.  The House adds language that allows divisions to use funding for 
textbooks to purchase SOL materials.


School Health Incentive Payments

Senate - No action taken

House - Proposes an additional $725,986 in fiscal year 2001 and $724,531 in fiscal 
year 2002 to increase the number of nurse hours provided for each eligible student 
from .523 to .75.


Governor's Schools

Senate - Increases the maximum number of Governor's School students that may be 
supported with state funding from 800 to 900 per school.  As a result of this action,
the Senate provides an additional $89,235 in fiscal year 2001 and $89,354 in fiscal 
year 2002 for the Thomas Jefferson High School for Science and Technology in Fairfax.
  

In addition, the Senate proposes funding for the operating costs of the new Jackson 
River Governor's School ($64,350 over the biennium) and for the new Blue Ridge 
Virtual Governor's School ($313,529 over the biennium). The Senate also provides 
$50,000 as a planning grant for a Governor's school that will serve Henry, 
Martinsville, Patrick, Danville, and Pittsylvania school divisions. 

House - Removes the budget language that capped enrollments at all Governor's 
Schools.  As a result of this action, the House increases funding at the Thomas 
Jefferson High School for Science and Technology in Fairfax by $759,506 in each 
fiscal year, which will fund all of the school's 1,650 students.  

Like the Senate, the House proposes funding for the operating costs of the new 
Jackson River Governor's School ($64,350 over the biennium) and for the new Blue 
Ridge Virtual Governor's School ($313,529 over the biennium).  A $50,000 planning 
grant is provided for a Governor's school that will serve Henry, Martinsville, 
Patrick, Danville, and Pittsylvania school divisions. 

In addition, the House provides $238,000 over the biennium to restore slots in 
summer residential programs to summer 1999 capacity and $50,000 to plan a new 
academic year Governor's School in the Shenandoah Valley.  Finally, the House moves 
first-year funding for the new summer residential Governor's School for Agriculture 
into the second year.  This action increases funding for this school to $150,000 in 
fiscal year 2002.


Alternative Education 

Senate - No action taken

House - Provides an additional $933,913 in fiscal year 2001 and $933,860 in fiscal 
year 2002 to increase the number of students served by alternative education centers 
by 20 percent.  An additional $77,640 in fiscal year 2001 and $77,650 in fiscal year 
2002 is included for a new regional center to serve students in Bedford County and 
Roanoke County.  The House also provides $500,000 each fiscal year to establish 
separate alternative education programs to serve elementary students.  Proposals 
will be requested from divisions that are interested in hosting an elementary 
program. Divisions selected to provide these programs must provide a match for 
state funding based on the composite index. 


Detention Homes 

Senate - No action taken

House - Provides an additional $350,000 each year to fund a pupil to teacher ratio 
of 12 to 1 in detention homes as proposed by House Bill 53.  This bill recognizes 
both bed capacity and average daily attendance in determining the number of teachers 
required in a facility.   


Vocational Education Equipment

Senate - Provides an additional $300,000 each year for the purchase of secondary 
vocational-technical equipment.  This funding will be distributed on the basis of 
enrollment in vocational-technical courses.

House - Provides an additional $2.5 million in fiscal year 2001 for the purchase of 
secondary vocational-technical equipment. The distribution of funding is based on an 
allocation of $2,000 for each division in fiscal year 2001 and $1,000 for each 
division in fiscal year 2002; the balance of funding will be distributed on the 
basis of enrollment in vocational-technical courses. Divisions must use these funds 
to supplement, not to supplant, any local funds currently provided for secondary 
vocational-technical equipment.


New Pilot Programs

Senate - Provides the Department with $360,000 in fiscal year 2001 for on-line 
instruction, remediation, and testing pilots related to the Standards of Learning.

House - Also provides the Department with $360,000 in fiscal year 2001 for on-line 
instruction, remediation, and testing pilots related to the Standards of Learning.  
The House also provides an additional $800,000 in fiscal year 2001 to fund pilot 
programs for year-round schools.  This funding represents the state's share of $11 
per pupil day for intersession days provided to students in schools at high risk of 
academic failure.  Divisions must certify that their school calendars provide 
instructional days beyond the required 180 days.  Divisions must match these funds 
based on the composite index.  

The House also provides $50,000 in fiscal year 2001 for two gifted education pilot 
programs.  


School Construction

Senate - Includes language that allows divisions to carry forward unspent balances 
from the school construction grant fund from fiscal year 2001 to fiscal year 2002.  
Language expands the list of permitted uses to include payments into escrow accounts 
pursuant to Chapter 391, 1999 Acts of Assembly.  Additional language encourages 
divisions to use value engineering in construction projects that are funded through 
school construction grants.

House - Same as Senate.  The House also changes the name of the program from 
"General Education Needs" to the "School Construction Grants Program" and further 
expands the language to allow divisions to use funding from this program for school 
safety equipment or school safety renovations.


Other Budget Actions 

Senate - Provides additional funding for AVID programs as follows (amounts shown are
biennial totals): $52,123 for a new center in Culpeper; $31,625 to expand the 
program in Staunton; and $50,000 to expand the program in Petersburg.  In addition, 
the Senate provides $250,000 in fiscal year 2001 to expand the Van Gogh Outreach 
Program in Southwest Virginia,  $112,500 in each fiscal year for the Western 
Virginia Public Education Consortium (previously named the New Century Public 
Education Consortium), and $250,000 in each fiscal year to expand the Jobs for 
Virginia Graduates program.

House - Provides additional funding of $55,000 in each fiscal year for a staff 
position for the Northern Neck-Middle Peninsula Public Education Consortium and 
$55,000 in each fiscal year for operating costs at the Western Virginia Public 
Education Consortium.


Program Reductions

Senate - Eliminates $15,000 in each fiscal year for the Lightspan Program and 
$100,000 in each fiscal year for the Chesapeake Bay Regional Environmental Program 
originally provided as one-time funding.

House - Also eliminates $15,000 in each fiscal year for the Lightspan Program and 
$100,000 in each fiscal year for the Chesapeake Bay Regional Environmental Program 
originally provided as one-time funding.

In addition, the House eliminates one-time funding of $75,000 in each fiscal year 
for the New Century Public Education Consortium and reduces funding for the Hampton 
Roads Public Education Regional Cooperative by $50,000 in each fiscal year.


Annual School Report (ASR) Requirements

Senate - Language requires the Department to collect data on educational technology 
expenditures, including hardware, software, and required infrastructure 
modifications, as part of the ASR beginning with the 1999-2000 school year.

House - Same as Senate