COMMONWEALTH OF VIRGINIA

DEPARTMENT OF EDUCATION

P.O. BOX 2120

RICHMOND, VIRGINIA 23218-2120

SUPTS. MEMO NO. 012

October 27, 2006

REGULATORY

TO:

Division Superintendents

 

FROM:

Billy K. Cannaday, Jr.

Superintendent of Public Instruction

 

SUBJECT:

Final Enacted 2006-2008 Biennial Budget Signed by Governor Kaine (Chapter 10, 2006 Acts of Assembly, Special Session I)

 

On October 25, 2006, Governor Kaine signed House Bill (HB) 5032 into law as the final enacted 2006-2008 biennial budget (Chapter 10, 2006 Acts of Assembly, Special Session I). HB 5032 amended the previous 2006-2008 budget (Chapter 3) to correct the sales tax estimates for fiscal year 2007 and fiscal year 2008, and provided funding for a hold harmless sales tax payment to divisions in fiscal year 2007 only. HB 5032 did not provide for a hold harmless sales tax payment to divisions in fiscal year 2008. Fiscal year 2007 began on July 1, 2006, and ends on June 30, 2007. Fiscal year 2008 begins on July 1, 2007, and ends on June 30, 2008.

 

Previously, the Department of Education notified you of the changes contained in HB 5032 in Regulatory Superintendents Memorandum No. 009, dated October 6, 2006, and the accompanying Excel calculation template. The information contained in Regulatory Superintendents Memorandum No. 009, as well as the data in the Excel calculation template, reflect the final 2006-2008 appropriation act as approved by the Governor and enacted as Chapter 10. The Governor approved HB 5032 as adopted by the General Assembly with no changes, and so the information in the HB 5032 calculation template can now be considered final.

 

Please continue to reference Regulatory Superintendents Memorandum No. 009 and the Excel calculation template for HB 5032 to calculate projected state funding and required local effort and matches for fiscal years 2007 and 2008. Information referenced in the memorandum and calculation template can now be considered the final, enacted biennial budget for 2006-2008. The Excel file may be downloaded from the following Web address: http://www.doe.virginia.gov/VDOE/Finance/Budget/calctools.html

 

Please note that Chapter 10 contains the corrected sales tax estimates for fiscal years 2007 and 2008. Due to the reduction in the sales tax estimates, the state share of Basic Aid, Enrollment Loss, and Supplemental Basic Aid increases in both years. The semi-monthly payments of the fiscal year 2007 Basic Aid entitlement will be based on the adjusted fiscal year 2007 Basic Aid entitlement amount adopted in Chapter 10 beginning on the November 16, 2006, electronic fund transfer (EFT) to your school division. Adjustments to the Enrollment Loss and Supplemental Basic Aid accounts will be reflected at the time payments for these accounts are made.

 

In addition, Chapter 10 provides $56.7 million in fiscal year 2007 only for the hold harmless sales tax payment to divisions in order to maintain the same level of projected state funding in fiscal year 2007 as provided by the Chapter 3 budget. These hold harmless payments will be made on a quarterly basis, with the first quarter payment projected to be paid to divisions on the November 16, 2006, EFT.

 

Chapter 10 authorizes the department to make the hold harmless sales tax payments to school divisions in fiscal year 2007 on a quarterly basis. The hold harmless sales tax payment is subject to reduction based on any subsequent increases in the sales tax estimates appropriated by the General Assembly or in the event actual sales tax collections exceed the estimated sales tax. To account for this potential reduction to the hold harmless sales tax payments, Chapter 10 authorizes the department to make adjustments to the quarterly hold harmless sales tax payments to prevent the overpayment of this account pending any subsequent increases to the sales tax estimate approved by the General Assembly or in the event actual sales tax collections exceed the estimated sales tax. Any reduction to the hold harmless sales tax payments in fiscal year 2007 due to a subsequent increase in the sales tax estimate approved by the General Assembly or due to actual sales tax collections exceeding the estimated sales tax will be communicated to school divisions in a separate superintendent's memorandum.

 

For all other accounts, the funding actions contained in the Chapter 3 budget previously communicated in Regulatory Superintendents Memorandum Number 3 dated July 7, 2006, are maintained.

 

Questions regarding Chapter 10, and the projections of Direct Aid entitlements for fiscal years 2007 and 2008 as contained in the Excel calculation template may be directed to budget office staff at (804) 225-2025.

 

BKCJr/kcd