COMMONWEALTH OF VIRGINIA

DEPARTMENT OF EDUCATION

P.O. BOX 2120

RICHMOND, VIRGINIA 23218-2120

SUPTS. MEMO NO. 30

June 6, 2003

ADMINISTRATIVE

TO:

Division Superintendents

 

FROM:

Jo Lynne DeMary

Superintendent of Public Instruction

 

SUBJECT:

State Entitlements for Fiscal Year 2003 Based on Actual March 31, 2003, Average Daily Membership (ADM) and Adjustments to the Fiscal Year 2003 Basic Aid Entitlement

 

Administrative Superintendents Memorandum Number 13, dated March 14, 2003, required school divisions to report average daily membership (ADM) as of March 31, 2003. The data reported by divisions were used to recalculate all ADM-based entitlements for fiscal year 2003. Actual ADM was less than the projected ADM on which the state budget was based. Consequently, school divisions will receive their full ADM entitlement payments with no changes other than the routine adjustments that are made to Basic Aid each year as described in this memorandum.

 

The information in this memorandum contains the final state funding due to school divisions in fiscal year 2003 for ADM-based accounts. In addition, final entitlements for other Direct Aid accounts that are not calculated based on ADM are shown. Entitlements for some accounts that require school divisions to submit reimbursements have not been finalized for the year and the entitlements shown are estimates only.

 

An Excel file is provided to calculate state entitlements, required local effort for the Standards of Quality (SOQ) accounts, and required local matches for incentive-based accounts calculated on March 31, 2003, ADM. The accounts affected by final March 31, 2003, ADM appear on the Excel file in bold italics and are shown as the full entitlement. The Excel file can be accessed from the departments website at:

 

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

Attachment A to this memorandum provides detailed instructions for accessing the Excel entitlement file. Attachment B to this memorandum shows the final FY 2003 and projected FY 2004 entitlements for each school division for the Standards of Quality (SOQ), incentive, and categorical accounts based on March 31, 2003, ADM. Please note that, unlike previous Excel calculation files provided by the department, this file does not offer an option to change ADM for fiscal year 2003 since ADM is now final.

Please note the following when reviewing the data contained in the Excel file:

 

1. Basic Aid: The fiscal year 2003 state payment for Basic Aid contained in the Excel calculation file sheet labeled State and Local Funds Worksheet does not reflect any required adjustments such as overpayments or payments made on behalf of school divisions to the schools for the deaf and the blind, mental health/mental retardation facilities, or summer Governors School programs. The adjustments made to fiscal year 2003 Basic Aid entitlements are described below and listed in the sheet labeled Adjustments to FY03 Basic Aid. The final amount to be paid to school divisions in fiscal year 2003 for Basic Aid is contained in this sheet.

 

2. Sales Tax: The sales tax estimates contained in the Excel calculation file represent the amounts used to compute the Basic Aid entitlement for fiscal year 2003. As required by law, these estimates are based on those contained in the final appropriation act for fiscal year 2003 (Chapter 1042, 2003 Acts of Assembly). It appears that actual fiscal year 2003 sales tax revenues may be less than the estimate contained in Chapter 1042. However, as required by Chapter 1042, in the event that the actual revenues from the state sales and use tax returned (on the basis of the latest triennial count of school age population) for sales in the fiscal year in which the school year begins are different from the number estimated as the basis for this appropriation, the estimated revenues shall not be adjusted. Final information on actual sales tax receipts on a cash and accrual bases will be sent to school divisions in July as part of the fiscal year 2003 Annual School Report information.

 

A corrected 2002 Triennial Census count, which involved a reduction in the count for the affected division, was recently submitted. This correction affects the distribution of estimated sales tax used in the Basic Aid formula for fiscal years 2003 and 2004 for all school divisions. The sales tax estimates for fiscal years 2003 and 2004 contained in the Excel calculation file reflect this census correction. The effect of the correction distributes additional estimated sales tax funding to all other school divisions for fiscal years 2003 and 2004. The division submitting the correction experiences a reduction in sales tax revenues.

 

For payment of actual fiscal year 2003 sales tax revenues, the corrected census count has been provided to the Virginia Department of Accounts. The Department of Accounts will adjust the actual distribution of sales tax revenue for the corrected census count on the June 16, 2003, sales tax payment. The adjustment on the June 16th payment will correct for payments made during January through May that were based on the 2002 Triennial Census data prior to the correction.

 

3. Fringe Benefits: The fringe benefit amounts contained in the Excel calculation file are the actual amounts you will receive for fiscal year 2003 on a cash basis. Fringe benefit amounts expressed on an accrual basis will be sent to school divisions in July as part of the fiscal year 2003 Annual School Report information.

 

4. Incentive and Categorical Accounts: Group II incentive accounts represent the full entitlement for actual participation in fiscal year 2003. For certain Group III categorical accounts, the entitlements do not reflect final participation or reimbursement levels for the year and are shown as estimated entitlements.

 

5. VPSA Technology: VPSA Technology (i.e., SOL Web-based Technology Initiative) entitlements reflect the total entitlement that is allocated to the school division for the note issue offered in the designated year. They do not reflect actual reimbursement payments requested and paid to the school division. Please be aware that entitlements for regional programs are included in school division fiscal agent totals; however, actual reimbursements for the Spring 2003 issue will be made directly to regional programs from State Non-Arbitrage Program (SNAP) accounts set-up separately for regional programs.

 

Adjustments to the Fiscal Year 2003 Basic Aid Entitlement for Certain School Divisions

 

As in past years, the departments normal practice for making certain types of adjustments to school division payments is to first adjust Basic Aid since it is the largest account. The appropriation act directs that adjustments for students in mental health or mental retardation facilities be made against a school divisions Basic Aid payment. Consequently, various adjustments will be made to the fiscal year 2003 state Basic Aid entitlements for certain school divisions beginning with the June 16, 2003, electronic funds transfer (EFT). Where applicable, these adjustments will reduce the fiscal year 2003 Basic Aid entitlement paid to school divisions. As noted above, the estimated adjustments to Basic Aid (as of the June 16, 2003 EFT) are shown in the sheet labeled Adjustments to FY03 Basic Aid. The Basic Aid adjustments for fiscal year 2003 shown in the Excel file are as follows:

 

  1. Overpayment of Instructional VRS and Instructional Social Security An adjustment for overpayments of instructional VRS and Social Security entitlements may be made if actual ADM is lower than the projected ADM on which payments were based during the year.

 

  1. Overpayment of School Health Incentive Program An adjustment for overpayments of School Health Incentive program entitlements may be made if actual ADM is lower than the projected ADM on which payments were based during the year.

 

  1. Driver Education Funds Portion of Basic Aid As required by the appropriation act in Item 147 C.2.e.1) of Chapter 1042, 2003 Acts of Assembly, this adjustment reduces Basic Aid entitlements for school divisions that are not eligible to receive Driver Education funds in fiscal year 2003.

 

  1. Local Tuition for Summer Residential Governors Schools Lists the local share of tuition for Summer Residential Governors Schools paid by the department on behalf of school divisions and is owed to the department in fiscal year 2003. This deduction reduces the Basic Aid entitlement paid to affected divisions.

 

  1. Local Tuition for Foreign Language Academies Lists the local share of tuition for Foreign Language Academies paid by the department on behalf of school divisions and is owed to the department in fiscal year 2003. This deduction reduces the Basic Aid entitlement paid to affected divisions.

 

  1. Mental Health Local Share of Cost This adjustment is for the school divisions share of the cost of educating children in state mental health hospitals. The data used to calculate this adjustment are based on the 2001-2002 school year. This adjustment to the division Basic Aid entitlement is in accordance with Item 147.C.2.d.1) and 2) of Chapter 1042, 2003 Acts of Assembly.

 

  1. Mental Retardation Local Share of Cost This adjustment is for the school divisions share of the cost of educating children in state mental retardation facilities. The data used to calculate this adjustment are based on the 2001-2002 school year. This adjustment to the division Basic Aid entitlement is in accordance with Item 147.C.2.d.1) and 2) of Chapter 1042, 2003 Acts of Assembly.

 

  1. Local Tuition for Schools for the Deaf and the Blind This adjustment is for the local tuition payment for students enrolled at the Virginia Schools for the Deaf and the Blind (VSDB). If you have students from your school division enrolled at VSDB and MD-Hampton or VSDB-Staunton during fiscal year 2003, Virginia Board of Education regulation 8VAC20-80-130.H. requires the Department of Education to adjust your state Basic Aid payment to capture the local share of the cost of educating these students. These funds are then transferred to the two schools to offset the cost of educating those students. This adjustment is based on the December 1, 2002, enrollment for each school.

 

In addition to the Basic Aid adjustments listed above, some school divisions required adjustments to Enrollment Loss and Lottery. Adjustments were made to Enrollment Loss and Lottery because the required adjustments for these divisions were greater than the remaining balance to be paid in Basic Aid. These adjustments are shown in column O of the Basic Aid adjustments file.

 

In order to maintain proper accounting for adjustments made to Basic Aid entitlements for payments made on behalf of school divisions (adjustments 4 through 8 above), it is necessary for each school division to report the gross receipt of Basic Aid funds under revenue source code 240202 (Basic School Aid) on the 2002-2003 Annual School Report. To balance this gross Basic Aid revenue on the 2002-2003 Annual School Report, school divisions with adjustments to Basic Aid for Summer Residential Governors Schools, Foreign Language Academies, Mental Health/Mental Retardation facilities, or Schools for the Deaf and the Blind should report these adjustment amounts as expenditures in the Instruction Function (61000) and Object Code 3000 (Purchased Services), using the appropriate program(s).

 

For those divisions where Basic Aid was adjusted for overpayments in items 1 and 2 above, the amount of the overpayment must be deducted from your unadjusted or full Basic Aid entitlement. Report this reduced Basic Aid entitlement in revenue source code 240202 on your 2002-2003 Annual School Report. A deduction to Basic Aid for non-eligibility of Driver Education funds (item 3 above) should be treated in the same manner.

 

Special Reminder on Carry-Over Provision Language in Chapter 1042, 2003 Acts of Assembly (Fiscal Year 2003 to Fiscal Year 2004)

 

As communicated in Informational Superintendent's Memorandum No. 80, dated May 2, 2003, Chapter 1042 permits unexpended state funds as of June 30, 2003, to be carried forward by school divisions to fiscal year 2004 for the following Direct Aid accounts only:

 

1.     SOL Remediation (revenue source code 240274)

2.     SOL Algebra Readiness (revenue source code 240405)

3.     School Construction Grants Program (revenue source code 240306)

4.     Lottery (revenue source code 240233)

5.     Additional Lottery (revenue source code 240237)

 

To carry forward fiscal year 2003 state funds to fiscal year 2004 for the five accounts listed above, the school division must have actually received the state funds. State funds received by school divisions in fiscal year 2003 for the School Construction Grants Program and Lottery may also be paid into escrow accounts pursuant to Sections 22.1-175.5 and 22.1-100.1, Code of Virginia, respectively, and carried forward indefinitely.

 

Except for the five accounts listed above, all other state Direct Aid funds received by school divisions in fiscal year 2003 should be expended by June 30, 2003; otherwise, any unexpended fiscal year 2003 state funds are subject to the reversion requirement of Section 22.1-100, Code of Virginia.

 

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

JLD/bkl

 

Attachments

 

/administrators/superintendents_memos/2003/adm030a.pdf

/administrators/superintendents_memos/2003/adm030b.pdf