COMMONWEALTH OF VIRGINIA
DEPARTMENT OF EDUCATION
P.O. BOX 2120
RICHMOND, VIRGINIA 23218-2120
SUPTS. MEMO NO. 118
May 31, 2006
Patricia I. Wright
Acting Superintendent of Public Instruction
State Entitlements for Fiscal Year 2006 Based on Actual March 31, 2006, Average Daily Membership (ADM) and Adjustments to the Fiscal Year 2006 Basic Aid Entitlement
Administrative Superintendents Memorandum Number 006, dated February 17, 2006, required school divisions to report average daily membership (ADM) as of March 31, 2006. The data reported by divisions were used to recalculate all ADM-based entitlements for fiscal year 2006. On a statewide basis, actual ADM was less than the projected ADM on which the state budget was based as adopted by the General Assembly in HB 5012, which has been sent to the Governor for action. Pending final action by the Governor on the fiscal year 2006 budget contained in HB 5012, the department projects that school divisions will receive their full ADM entitlement payments for fiscal year 2006 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 2006 for ADM-based accounts. Also, where available, final entitlements are shown for other Direct Aid accounts that are not calculated based on ADM. 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. In addition, the changes to the fiscal year 2006 budget (contained in HB 5012) adopted by the 2006 General Assembly also are included in the attachments to this memorandum and the Excel calculation file. Please note that HB 5012 now goes to the Governor for final action. The Governor may propose amendments or vetoes to the budget, or he may sign it without proposing any changes. The budget is not final until signed into law by the Governor.
Information on the amendments to the fiscal year 2006 budget adopted by the 2006 General Assembly is provided in Regulatory Superintendents Memorandum No. 002. These adopted changes affect fiscal year 2006 only.
The Excel calculation file shows state entitlements, required local effort for the Standards of Quality (SOQ) accounts, and required local matches for incentive-based accounts calculated based on actual March 31, 2006, ADM. The accounts affected by actual March 31, 2006, ADM appear in the Excel file in bold italics and are shown as the full entitlement with no adjustments. The calculation template can be downloaded from the Department of Education website at:
Attachment A to this memorandum provides detailed instructions for accessing the Excel entitlement file.
Attachment B to this memorandum shows the final fiscal year 2006 entitlements for each school division for the Standards of Quality (SOQ), incentive, and categorical accounts that are based on actual March 31, 2006, ADM. Please note that, unlike previous Excel calculation files for fiscal year 2006 provided by the department, this file does not offer an option to change ADM for fiscal year 2006 since ADM is now final.
Attachment C to this memorandum shows the final, routine adjustments to fiscal year 2006 Basic Aid, which are explained in further detail below.
Please note the following when reviewing the data contained in the Excel file:
1. Basic Aid: The fiscal year 2006 state payment for Basic Aid contained in the Excel calculation file sheet labeled State and Local Funds Worksheet does not reflect any required adjustments for circumstances 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 2006 Basic Aid entitlements are described below and are listed in the sheet labeled Adjustments to FY06 Basic Aid. The final amount to be paid to school divisions in fiscal year 2006 for Basic Aid is contained in this sheet.
2. Sales Tax: The sales tax estimates contained in the Excel calculation file represent the Department of Taxations official forecast of sales tax included in the appropriation act. Pursuant to the appropriation act, these amounts must be used to compute the Basic Aid entitlement for fiscal year 2006. For purposes of calculating final entitlements, these estimates are based on those contained in the 2006 General Assembly-adopted fiscal year 2006 budget, HB 5012. As required by HB 5012:
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.
Please be aware, however, that payments to school divisions are based on actual revenues collected as the state sales and use tax dedicated to public education. These actual payments may differ from the estimates provided in this worksheet. Final information on actual sales tax receipts on a cash and an accrual basis will be posted on the departments Web site in July as part of the fiscal year 2006 Annual School Report information.
3. Fringe Benefits: The fringe benefit amounts contained in the Excel calculation file are the actual amounts you will receive for fiscal year 2006 on a cash basis (both the June 2005 rollover portion paid in early July 2005 and the recurring portion paid semi-monthly from July 16, 2005 through June 30, 2006). Fringe benefit amounts shown on an accrual basis will be posted on the departments website in July as part of the fiscal year 2006 Annual School Report information; however, please note that there no longer is a June fringe benefit payment rolled over to the next fiscal year and paid in July, so the accrued payment for 12 months was received as cash in fiscal year 2006. Because the June 2005 payment was rolled over and paid in July, the actual cash paid in fiscal year 2006 represents 13 months.
4. Incentive and Categorical Accounts: Group II incentive accounts represent the full entitlement for actual participation in fiscal year 2006. 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 2006 issue may be made directly to regional programs from State Non-Arbitrage Program (SNAP) allocations if they are established separately in SNAP for the regional program.
6. Local Lottery Distribution: The distribution of local lottery revenue to school divisions is based on the per pupil amount of $240.92 listed in HB 5012 for fiscal year 2006. The semi-monthly Lottery payments for fiscal year 2006 will be adjusted for actual ADM beginning with the May 31, 2006, electronic funds transfer (EFT).
Adjustments to the Fiscal Year 2006 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 adjust Basic Aid since it is the largest Direct Aid 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 2006 state Basic Aid entitlements for certain school divisions beginning with the May 31, 2006, electronic funds transfer (EFT). Where applicable, these adjustments will reduce the fiscal year 2006 Basic Aid entitlement paid to school divisions. As noted above, the estimated adjustments to Basic Aid (as of the May 31, 2006, EFT) are shown in the sheet labeled Adjustments to FY06 Basic Aid. The Basic Aid adjustments for fiscal year 2006 shown in the Excel file are as follows:
1. Overpayment of At-Risk Program Payments - Adjusts for overpayments of At-Risk entitlements, where applicable.
2. Driver Education Funds Portion of Basic Aid As required by HB 5012, this adjustment reduces the Basic Aid entitlement for school divisions that are not eligible to receive Driver Education funds in fiscal year 2006.
3. 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 that is owed to the department in fiscal year 2006. This deduction reduces the Basic Aid entitlement paid to affected divisions.
4. 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 that is owed to the department in fiscal year 2006. This deduction reduces the Basic Aid entitlement paid to affected divisions.
5. 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 2004-2005 school year. This adjustment to the division Basic Aid entitlement is in accordance with HB 5012.
6. 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 2004-2005 school year. This adjustment to the division Basic Aid entitlement is in accordance with HB 5012.
7. 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 2006, 22.1-348, Code of Virginia, and 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, 2005, enrollment for each school.
In order to maintain proper accounting for adjustments made to Basic Aid entitlements for payments made on behalf of school divisions (adjustments three through seven above), it is necessary for each school division to report the full entitlement or gross revenue of Basic Aid funds under revenue source code 240202 (Basic School Aid) on the 2005-2006 Annual School Report. To balance this gross Basic Aid revenue on the 2005-2006 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 the final Basic Aid payment was adjusted for overpayment in item one, and for non-eligibility for Drivers Education funds in item two above, the amount of the overpayment will be deducted from your unadjusted or full Basic Aid entitlement as shown in the Annual School Report. The reduced Basic Aid entitlement will be shown on the Revenues worksheet in revenue source code 240202 on your Annual School Report. No further reporting action is required, since the adjusted Basic Aid entitlement will show the reduction, but school divisions should make note of this adjustment, and can reference attachment C to this memorandum for further detail on adjustments for overpayment and non-eligibility for Drivers Education funds.
Special Reminder on Carry-Forward Provision Language in HB 5012, (Fiscal Year 2006 to Fiscal Year 2007)
As described in Informational Superintendents Memorandum No. 117, HB 5012 permits unexpended state funds as of June 30, 2006, to be carried forward by school divisions to fiscal year 2007 for the following Direct Aid accounts only:
1. SOL Algebra Readiness (revenue source code 240405)
2. School Construction Grants Program (revenue source code 240306)
3. Lottery (revenue source code 240233)
4. Competitive Leadership Grant (revenue source code 240294)
5. Textbooks (revenue source code 240214)
State funds received by school divisions in fiscal year 2006 for the School Construction Grants Program and Lottery also may 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 2006 should be expended by June 30, 2006; otherwise, any unexpended fiscal year 2006 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.