P.O. BOX 2120



December 5, 2003



Division Superintendents



Jo Lynne DeMary

Superintendent of Public Instruction



Composite Index of Local Ability-to-Pay for the 2004-2006 Biennium


This memorandum and the attachments contain information regarding the Composite Index of Local Ability-to-Pay for the 2004-2006 biennium, which will begin July 1, 2004. The 2004-2006 composite index was calculated using 2001 base-year data provided by the Department of Taxation for adjusted gross income, taxable retail sales, and true value of real property. The estimates of local population for 2001 are provided by the Weldon Cooper Center for Public Service at the University of Virginia, and the March 31, 2002, average daily membership is taken from the data reported by school divisions to the Department of Education.


The Department of Education will use this composite index in calculating the state share of applicable school division entitlements for the Governors introduced budget for the 2004-2006 biennium. Information regarding these entitlements will be made available to you in late December following the release of the Governors 2004-2006 introduced budget.


Attachment A to this memorandum includes the composite index calculated using the total Adjusted Gross Income (AGI) for each locality. Attachment B shows an alternative composite index for those localities in which three percent or more of their total AGI is derived from individuals who are not residents of Virginia. The alternative index in Attachment B excludes non-resident AGI data from the composite index calculation. As provided in the appropriation act, school divisions whose total Virginia AGI consists of at least three percent or more from nonresident income may elect to exclude such nonresident income from the computation of the composite index.


Each school division that elects this option must have certified its intention to do so to the Department of Education on or before January 1, 2004. Attachment C contains the certification form that is to be completed and returned to the Department of Education in order to elect the nonresident AGI exclusion option. Only those school divisions listed in Attachment B that meet the three percent or greater nonresident AGI requirement are eligible to submit Attachment C to the department.


Downloadable Excel and PDF files containing the 2004-2006 composite index for each school division are available on the Department of Education website at:


In addition, at the website referenced above, an Excel file will be made available that will allow you to view the detailed calculation of your 2004-2006 composite index. The file will display all of the data elements used and the steps involved in the calculation of your 2004-2006 index. In addition, this file will provide comparisons between the per pupil and per capita components of your index relative to statewide averages. It is anticipated that this file will be available after December 12, 2003.


If you have questions or need additional information concerning this data, please contact the budget office at (804) 225-2025 or by e-mail (e-mail addresses available at