INFORMATIONAL

TO:

Division Superintendents

FROM:

Jo Lynne DeMary

Superintendent of Public Instruction

SUBJECT:

2002-2004 Biennial Budget as Introduced

by Governor Gilmore

Governor Gilmore presented his 2002-2004 biennial budget on Wednesday, December 19, 2001, before a joint session of the Senate Finance, the House Appropriations, and the House Finance committees. This budget will be considered by the 2002 Session of the General Assembly, which is scheduled to convene on January 9, 2002. The Governors recommendations for the 2002-2004 Direct Aid to Public Education budget include technical updates to the Standards of Quality (SOQ), incentive-based, and categorical accounts, funding for initiatives, and various savings actions. Attachment A to this memorandum provides detailed descriptions of the funding proposed by the Governor for the 2002-2004 Direct Aid budget.

Major proposals in the introduced 2002-2004 budget include:

Update costs of the SOQ, incentive-based, and categorical accounts;

Continue funding for the direct grants to school divisions;

Change the employer contribution rates for Virginia Retirement System (VRS) retirement and group life benefits;

Fund the Retiree Health Care Credit through the SOQ funding formula;

Provide a 2 percent salary increase for SOQ instructional and support positions effective December 1, 2002;

Continue the SOL Web-based Technology Initiative funded through Virginia Public School Authority (VPSA) proceeds;

Reduce SOL instructional materials funding from $10 to $5 per pupil in both years of the biennium;

Apply a participation savings to At-risk Four-year-old funding in fiscal year 2003;

Remove funding for the Lottery Hold Harmless and School Construction Grants in both years of the biennium;

Continue the interest rate subsidy program to support school construction in both years of the biennium;

Use Literary Funds in lieu of general funds to support VRS retirement and social security payments in both years of the biennium;

Provide additional funding to continue the departments current testing programs and SOL testing initiatives.

Attachment B to this memorandum lists the estimated school division entitlements for fiscal years 2003 and 2004 for the SOQ, incentive-based, and categorical accounts based on the Governors introduced 2002-2004 budget. These entitlements are based on the Department of Educations latest projections of March 31 average daily membership (ADM). The entitlements shown in Attachment B do not include the direct grants (Group IV accounts) authorized by the General Assembly that are unique to certain school divisions.

Several of the categorical account entitlements shown in Attachment B (Group III accounts) are funded on a reimbursement basis and represent the departments latest projected entitlements; however, final payments on these accounts in fiscal years 2003 and 2004 will be based on actual reimbursements. Please note three account name changes appear on the entitlement sheets in Attachment B: Spec. Ed. Hospitals now reads Spec. Ed. State Op. Programs, GED Funding now reads ISAEP Funding, and School Food now reads School Nutrition.

In addition to the entitlement information contained in Attachment B, a downloadable Excel file was created to assist school divisions in calculating projected fiscal years 2003 and 2004 state entitlements and local matches for SOQ, incentive-based, and categorical Direct Aid programs. This file gives divisions the opportunity to change ADM to test the effect on state funding and projected local matches using the departments projected ADM or a local projection of ADM. Attachment C to this memorandum provides detailed instructions for accessing the Excel file from the Department of Education website. The Excel file may be downloaded from the following address:

http://www.pen.k12.va.us/VDOE/Finance/Budget/calctools/

Although we have confidence in the accuracy of our ADM projections on a statewide basis, experience has shown that the accuracy of our projections for individual localities may vary. When localities believe that they have more accurate projections of their March 31 ADM, they are encouraged to substitute their estimates for those provided in this memorandum when using the Excel calculation file. Also, please note that changing the ADM in this file only changes the estimated funding for accounts that are funded on the basis of ADM. All other accounts remain the same.

It is important to remember that the information provided in Attachment B and in the Excel calculation template relates to the Governors 2002-2004 budget as introduced. The House of Delegates and the Senate will have the opportunity to amend the Governors budget proposals during the 2002 General Assembly session. The General Assembly will adopt a final 2002-2004 biennial budget before the end of the session, which is scheduled for March 9, 2002; therefore, the entitlements contained in Attachment B and in the Excel calculation template are projections only and are subject to change throughout the session. The department will provide additional information during the General Assembly session as changes to Direct Aid entitlements occur.

Questions regarding the introduced 2002-2004 budget and projected fiscal years 2003 and 2004 Direct Aid entitlements may be directed to Dan Timberlake, assistant superintendent for finance, or budget office staff at (804) 225-2025.

JLD/kd

Attachments

/administrators/superintendents_memos/2001/inf187a.pdf

/administrators/superintendents_memos/2001/inf187b.pdf

/administrators/superintendents_memos/2001/inf187c.pdf

/administrators/superintendents_memos/2001/inf187d.pdf

/administrators/superintendents_memos/2001/inf187e.pdf