DEPARTMENT OF EDUCATION
SUPTS. MEMO NO. 262
December 15, 2006
Billy K. Cannaday, Jr.
of Public Instruction
Amendments to the 2006-2008 Biennial Budget as Proposed by Governor Kaine (HB 1650/SB 750)
Governor Kaines proposed amendments to the current 2006-2008 biennial budget (i.e., Chapter 3 and Chapter 10, 2006 Acts of Assembly, Special Session I) were presented on Friday, December 15, 2006, before a joint session of the Senate Finance, the House Appropriations, and the House Finance committees. These amendments to the 2006-2008 budget will be considered by the 2007 Session of the General Assembly, which is scheduled to convene on January 10, 2007. The Governors amendments adjust funding for both years of the biennium, fiscal year 2007 (current year) and fiscal year 2008. Fiscal year 2007 began on July 1, 2006, and ends June 30, 2007. Fiscal year 2008 begins July 1, 2007, and ends June 30, 2008. The introduced budget bill containing the Governors amendments is House Bill 1650/Senate Bill 750.
The recommendations made by the Governor regarding the Direct Aid to Public Education budget include technical adjustments to the Standards of Quality (SOQ), incentive, categorical, and school facilities accounts, as well as increased funding for existing programs. The Governors recommendations include funding for the state share of all SOQ programs and the continuation of all existing incentive, categorical, school facilities, and supplemental education programs in Direct Aid. The major actions proposed in Governor Kaines amended 2006-2008 budget include:
Adjustments for enrollment changes, program participation, and other technical updates in fiscal years 2007 and 2008;
Distribution of additional sales tax revenues in fiscal years 2007 and 2008, and an adjustment to the sales tax hold harmless payment in fiscal year 2007;
A revision to the lottery revenue forecast in fiscal years 2007 and 2008;
Updated group life and retiree health care credit benefit rates for fiscal year 2008;
Funding in fiscal year 2008 for pre-kindergarten pilot programs;
A three percent compensation supplement (effective December 1, 2007) in fiscal year 2008 for all instructional and support positions funded in the Standards of Quality;
Transportation services for foster care students in fiscal year 2008;
Addition of sixth-grade students to the Standards of Learning (SOL) Algebra Readiness program funding in fiscal year 2008;
A revision to the Early Reading Intervention program funding formula to fund 100 percent of eligible students in grades one and two in fiscal year 2008;
Fully funding the School Breakfast Program in both years;
Language changes regarding the payment of Governors Schools funds to match current practice.
Attachment A to this memorandum provides summary information on the funding changes proposed by the Governor for fiscal years 2007 and 2008 that affect the Direct Aid to Public Education and the Department of Education Central Office budgets.
Attachment B to this memorandum lists the estimated entitlements for each school division for the SOQ, incentive, categorical, and school facilities accounts for fiscal year 2007 and fiscal year 2008 based on the Governors amendments to the 2006-2008 budget. The estimated entitlements shown in Attachment B are based on the Department of Educations latest projections of March 31 average daily membership (ADM) for fiscal years 2007 and 2008 only and cannot be modified. The entitlements shown in Attachment B do not include the direct grants (Financial Assistance for Supplemental Education service area) authorized by the General Assembly that are unique to certain school divisions. Several of the categorical account entitlements shown in Attachment B (Financial Assistance for Categorical Programs service area) are funded on a reimbursement basis and represent the departments latest projected entitlements; however, final payments on these accounts in fiscal years 2007 and 2008 will be based on actual, eligible reimbursement requests submitted by school divisions.
In addition to the entitlement information contained in Attachment B, a downloadable Excel file has been created to assist school divisions in calculating projected state entitlements and required local matches in fiscal years 2007 and 2008 for most Direct Aid programs. This file gives divisions the opportunity to change ADM to test the effect on projected state funding and local match requirements using the departments projected ADM or a local projection of ADM. 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 divisions may vary. When divisions 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.
Please note that changing the ADM value in the Excel file only changes the estimated funding for accounts that are funded on the basis of ADM; the estimated funding for all other accounts is unaffected by changing ADM in the Excel file and, therefore, remains the same.
Also note that sales tax estimates in the Excel calculation file are revenue projections only. Actual sales tax payments made to school divisions in fiscal years 2007 and 2008 on a semi-monthly basis will be based on actual sales tax receipts. Pursuant to the Appropriation Act, the Basic Aid entitlement calculation is based on the estimated sales tax appropriation only and is not adjusted for actual sales tax revenues received.
Attachment C to this memorandum provides detailed instructions for accessing the Excel calculation file from the Department of Education website. The Excel file may be downloaded from the following Web address:
It is important to remember that the information provided in Attachment B and in the Excel calculation file relates to the Governors proposed amendments to the 2006-2008 budget as introduced. The House of Delegates and the Senate will have the opportunity to amend the Governors budget proposals during the 2007 General Assembly session. The General Assembly will adopt a final amended 2006-2008 biennial budget before the end of the 2007 session, projected to be late February 2007; therefore, the estimated entitlements contained in Attachment B and in the Excel calculation file are projections only and are subject to change as a result of legislative action by the 2007 General Assembly.
The department will provide additional information during the General Assembly session as changes to the estimated Direct Aid entitlements occur. After the conclusion of the session, projected entitlements based on final General Assembly actions will be sent to you in another Superintendents Memorandum. Please note, the actual fiscal year 2007 entitlement payments will not be finalized until they are recomputed using actual March 31, 2007, ADM and other final program participation information. Actual fiscal year 2008 entitlement payments will not be finalized until after a similar process is followed next year.
Questions regarding the Governors proposed amendments to the 2006-2008 budget and the revised estimates of Direct Aid entitlements for fiscal years 2007 and 2008 may be directed to Kent Dickey, budget director, or budget office staff at (804) 225-2025.