Superintendent's Memo #140-09

State seal, Commonwealth of Virginia

COMMONWEALTH of VIRGINIA
Department of Education

May 19, 2009

TO: Division Superintendents

FROM: Patricia I. Wright, Superintendent of Public Instruction

SUBJECT: Fiscal Year 2009 State Payments Based on Actual March 31, 2009, ADM, and Adjustments to the Fiscal Year 2009 Basic Aid Entitlement

Pursuant to Chapter 781, 2009 Acts of Assembly, school divisions were required to report average daily membership (ADM) as of March 31, 2009, to the Department of Education (the Department). The data reported by divisions were used to recalculate all ADM-based state entitlements for fiscal year 2009. On a statewide basis, actual March 31, 2009, ADM was higher than the projected ADM on which the current state budget for fiscal year 2009 (Chapter 781, 2009 Acts of Assembly) is based. Consequently, current appropriations in the Direct Aid to Public Education budget are not sufficient to pay school divisions their full ADM entitlements for fiscal year 2009. As of the date of this memorandum, there is an estimated statewide funding shortfall of $1.6 million, based on available balances already identified in other accounts. In order to address this deficit, the payments for Basic Aid shown in this memorandum are prorated down to 99.95 percent of the full entitlement amount. The Department will continue to monitor program budgets to determine if any additional balances will be available to help reduce the proration. As a result, Basic Aid payments will continue to be adjusted through the end of the year as balances become available so divisions will need to monitor receipts carefully through June 30th.

The information in this memorandum contains the final state funding (as of the date of this memorandum, pending balances becoming available to make additional Basic Aid payments) due to school divisions in fiscal year 2009 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.

The Excel calculation file referenced in this memorandum shows state entitlements, required local effort for the Standards of Quality (SOQ) accounts, and required local matches for school facilities, incentive, and Lottery accounts calculated based on actual March 31, 2009, ADM. The accounts affected by actual March 31, 2009, ADM appear in the Excel file in bold italics and are shown as the estimated cash payment based on actual March 31, 2009, ADM and other adjustments made to date (see sheet titled “Adjustments to FY2009 Basic Aid” in Excel calculation file for details). Please note that, unlike previous Excel calculation files for fiscal year 2009 provided by the Department, this file does not offer an option to change ADM for fiscal year 2009 since ADM is now final. The calculation template can be downloaded from the Department of Education website at:

http://www.doe.virginia.gov/school_finance/budget/calc_tools/index.shtml.

Attachment A to this memorandum provides detailed instructions for accessing the Excel entitlement file.

Attachment B to this memorandum shows the fiscal year 2009 entitlements for each school division for the Standards of Quality (SOQ), school facilities, incentive, and Lottery accounts that are based on actual March 31, 2009, ADM.

Attachment C to this memorandum shows the routine adjustments to the fiscal year 2009 state Basic Aid entitlement amounts, 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 2009 state Basic Aid entitlement amount contained in the “State and Local Funds Worksheet” in the Excel calculation file reflects any required adjustments for circumstances such as overpayments or payments made on behalf of school divisions to the Virginia School for the Deaf and the Blind, mental health/mental retardation facilities, or summer residential Governor’s School programs. The specific adjustments made to fiscal year 2009 Basic Aid entitlements are described below and the details are also available in the sheet labeled “Adjustments to FY2009 Basic Aid.” The Basic Aid entitlement amount also includes the proration outlined above to address the appropriation shortfall. Again, this amount reduces the Basic Aid payment to address the shortfall that resulted from actual March 31, 2009, ADM exceeding the projection on which the Chapter 781 budget is based. As a reminder, the final amount to be paid to school divisions in fiscal year 2009 for Basic Aid based on final adjustments will be communicated in a separate memorandum at a later date once all other account balances have been confirmed and any available funds have been reprogrammed to Basic Aid to reduce the proration.

  2. Sales Tax: The fiscal year 2009 sales tax estimates contained in the Excel calculation file represent the Department of Taxation’s official forecast of sales tax included in the Chapter 781 budget (2009 Acts of Assembly). The sales tax estimates contained in Chapter 781 must be used to compute the Basic Aid entitlement for fiscal year 2009. Chapter 781 specifically states:

    “…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.”

    As of April 2009, actual sales tax receipts for fiscal year 2009 were trailing the estimate in Chapter 781. As a result, the Department is advising all school divisions to monitor their actual sales tax cash receipts very closely through the remainder of the fiscal year.

    Also, please note that the distribution of sales tax proceeds for fiscal year 2010 has been revised based on corrections to the 2008 triennial census count. Two divisions submitted revised census counts that were lower than the original counts. As a result, the projected sales tax distribution for all other divisions has increased in fiscal year 2010 and is reflected in the Excel calculation file.

  3. Incentive, Categorical, School Facilities, and Lottery Accounts: Incentive and School Facilities accounts represent the full entitlements for actual participation in fiscal year 2009. For Categorical accounts, the entitlements do not reflect final participation or reimbursement levels for the year and are shown as estimated entitlements only. For Lottery accounts, all entitlements are final except for the Additional Support for School Construction and Operating Costs account, which is subject to available cash deposited in the Lottery Proceeds Fund prior to June 30, 2009 up to the appropriation limit in Chapter 781, 2009 Acts of Assembly.

  4. 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 2009 issue may be made directly to regional programs in cases where the regional program allocations are established separately in the State Non-Arbitrage Program (SNAP) account.

  5. Additional Support for School Construction and Operating Costs Distribution: The distribution of Lottery revenue to school divisions under the Additional Support for School Construction and Operating Costs account is based on the revised per pupil amount of $198.52 (up from the estimated amount of $197.87 included in Chapter 781), which reflects available balances in other Lottery accounts and actual March 31, 2009, ADM. The semi-monthly Lottery payments for fiscal year 2009 will be adjusted for actual ADM beginning with the June 16, 2009, electronic funds transfer (EFT). Please note that the per pupil amount for the Additional Support for School Construction and Operating Costs account is subject to change based on final balances in other Lottery accounts. Any such balances would be added to the Additional Support for School Construction and Operating Costs account. In addition, if actual Lottery proceeds for fiscal year 2009 do not meet the estimate in Chapter 781, the per pupil amount will be adjusted down to prevent payments from exceeding available appropriation.

Adjustments to the Fiscal Year 2009 Basic Aid Entitlement for Certain School Divisions

As in past years, the Department’s 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 the local share of cost of educating students in mental health or mental retardation facilities be made against a school division’s Basic Aid payment. Consequently, various adjustments will be made to the fiscal year 2009 state Basic Aid entitlements for certain school divisions beginning with the June 16, 2009, EFT. Where applicable, these adjustments will reduce the fiscal year 2009 Basic Aid entitlement paid to school divisions. As noted above, the estimated adjustments to Basic Aid (as of the June 16, 2009, EFT) are shown in the sheet labeled “Adjustments to FY09 Basic Aid.” The Basic Aid adjustments for fiscal year 2009 shown in the Excel file are as follows:

  1. Proration of Basic Aid – Pursuant to Chapter 781, this adjustment reduces the Basic Aid entitlement for school divisions as a result of actual March 31, 2009, ADM exceeding the estimate on which the current appropriation levels are based.

  2. Driver Education Funds Portion of Basic Aid – As required by Chapter 781, this adjustment reduces the Basic Aid entitlement for school divisions that are not eligible to receive Driver Education funds in fiscal year 2009.

  3. Local Tuition for Summer Residential Governor’s Schools – Lists the local share of tuition for Summer Residential Governor’s Schools paid by the Department on behalf of school divisions and that is owed to the Department in fiscal year 2009. 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 2009. This deduction reduces the Basic Aid entitlement paid to affected divisions.

  5. Mental Health Local Share of Cost – This adjustment is for the school division’s share of the cost of educating children in state mental health hospitals. The data used to calculate this adjustment are based on the 2007-2008 school year. This adjustment to the division Basic Aid entitlement is in accordance with Chapter 781, 2009 Acts of Assembly.

  6. Mental Retardation Local Share of Cost – This adjustment is for the school division’s share of the cost of educating children in state mental retardation facilities. The data used to calculate this adjustment are based on the 2007-2008 school year. This adjustment to the division Basic Aid entitlement is in accordance with Chapter 781, 2009 Acts of Assembly.

  7. Local Tuition for Virginia School for the Deaf and the Blind – This adjustment is for the local tuition payment for students enrolled at the Virginia School for the Deaf and the Blind (VSDB). If you have students from your school division enrolled at VSDB in Staunton during fiscal year 2009, §22.1-348, Code of Virginia, and Virginia Board of Education regulation 8VAC20-80-130.H. require 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 school to offset the cost of educating the students. This adjustment is based on the December 1, 2008, enrollment for the school.

Reporting Basic Aid Adjustments on the 2008-2009 Annual School Report

In order to maintain proper accounting for adjustments made to Basic Aid entitlements for payments made on behalf of school divisions (adjustments two through six 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 2008-2009 Annual School Report. To balance this gross Basic Aid revenue on the 2008-2009 Annual School Report, school divisions with adjustments to Basic Aid for Summer Residential Governor’s Schools, Foreign Language Academies, mental health/mental retardation facilities, or the Virginia School 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 non-eligibility for Driver 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 under 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 Driver Education funds.

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

PIW / shd

Attachments

a. Instructions for Accessing the Entitlement Calculation Template (PDF)
b. FY 2009 & FY 2010 Entitlement Sheets - Chapter 781 (PDF)
c. FY 2009 Adjustments to Basic Aid Entitlements (PDF)