Superintendent's Memo #008-11

State seal, Commonwealth of Virginia

COMMONWEALTH of VIRGINIA
Department of Education

January 14, 2011

TO: Division Superintendents

FROM: Patricia I. Wright, Superintendent of Public Instruction

SUBJECT: Revised Fiscal Year 2011 Payments Based on Updated Average Daily Membership Projections, Final Fall Membership, Participation, & Lottery Projections

The Department of Education produced revised projections of average daily membership (ADM) for each school division for fiscal year 2011 in November 2010. These revised projections were used in Governor McDonnell's proposed changes to fiscal year 2011 Direct Aid funding contained in his amended fiscal year 2011 budget that was presented on December 17, 2010, (see Superintendent's Memorandum Number 315-10 ). For fiscal year 2011, the department's revised forecast decreased the statewide estimate of unadjusted ADM by 4,370 students. Consequently, the projections on which the current fiscal year 2011 entitlement payments are based (for those accounts that are paid on the basis of a division's ADM) were updated.

The Lottery forecast for FY 2011 did not change. This projection has remained constant at $435.2 million, as directed in Chapter 874 (2010 Appropriation Act). This projection is used to pay the state share of certain accounts, as directed in Chapter 874.

Fiscal Year 2011 Standards of Quality (SOQ) Payments

Fiscal year 2011 payments for all Standards of Quality (SOQ) accounts that are calculated on the basis of ADM and that are paid on a semi-monthly basis have been recalculated based on the revised projections of ADM contained in the Governor's proposed amendments to fiscal year 2011 funding. For purposes of determining the Basic Aid payments, the sales tax amounts have been updated for the revised sales tax revenue estimate contained in the Governor's proposed fiscal year 2011 amendments. The actual distribution of sales tax is based on actual collections distributed on the basis of school-age population data. If additional adjustments to estimated sales tax are needed as a result of General Assembly action, they will be communicated at a later date.

Beginning with the deposit of state funds on January 14, 2011, semi-monthly payments for all SOQ ADM-based accounts will be based on the recalculated entitlement amounts using the latest revised ADM data and per pupil amounts provided in the Governor's amended fiscal year 2011 budget, as well as the latest fiscal year 2011 estimate of sales tax impacting Basic Aid payments. This change is being made for all school divisions.

On December 17, 2010, the final 33 percent (Phase II) of funding from the State Fiscal Stabilization Fund (SFSF) authorized under the American Recovery and Reinvestment Act of 2009 (ARRA) was loaded into the VDOE Online Management of Education Grant Awards (OMEGA) system. The original amount of Phase II SFSF funds allocated for this purpose by the 2010 General Assembly was $126,372,427. However, based on the state's final Phase II application, incorporating all actions of Chapter 874, 2010 Acts of Assembly, the fiscal year 2011 portion allocated to K-12 education has been reduced by $3,431,113 to $122,941,314. Governor McDonnell's proposed amendments to the current 2010-2012 biennial budget (i.e., Chapter 874, 2010 Acts of Assembly) released on December 17, 2010, include an amendment to increase the state's general fund support for Basic Aid by the same $3,431,113 to fund the portion of Basic Aid no longer supported from Phase II SFSF funding. However, the additional state general fund support for Basic Aid will not be included in recurring payments until the action has been approved by the 2011 General Assembly. As a result, the fiscal year 2011 semi-monthly Basic Aid payments have been reduced by the original $126.4 million based on each division's pro rata share of Phase II SFSF funding. Please see Superintendent's Memorandum No. 314-10 for further details.

Fiscal Year 2011 Lottery Service Area Payments

Fiscal year 2011 payments for certain Lottery service area accounts (At-Risk, Early Intervention Reading Initiative, K-3 Primary Class Size Reduction, SOL Algebra Readiness, Virginia Preschool Initiative, Supplemental Basic Aid, English as a Second Language, Remedial Summer School, Textbooks (Lottery Portion), and Alternative Education) will begin on January 14, 2011, for those school divisions that have submitted a completed Excel file and signed certifications from the fiscal year 2011 Budgeted Required Local Effort and Required Local Match data collection, and have been approved to begin receiving these payments. All payments will be paid on a semi-monthly recurring basis beginning January 14, 2011, through June 30, 2011, except for the six localities in the Virginia Preschool Initiative program that will receive one lump sum payment.

Similar to the fiscal year 2011 entitlements for accounts calculated on the basis of ADM, At-Risk, Supplemental Basic Aid and Textbooks payments will be based on the recalculated entitlement amounts using the latest revised ADM projections. This change is made for all school divisions. Early Intervention Reading Initiative, K-3 Primary Class Size Reduction, SOL Algebra Readiness, Virginia Preschool Initiative, English as a Second Language, Remedial Summer School, School Breakfast, and Alternative Education payments will be based on the recalculated entitlement amounts contained in the Governor's Amended 2010-2011 Budget (HB 1500/SB 800), to reflect actual fiscal year 2011 program participation and certified fiscal year 2011 student counts. Lottery accounts that are funded by grant awards or a reimbursement basis will also be paid on a semi-monthly recurring basis, based on the number of payment dates remaining through June 30, with the semi-monthly payments beginning once all certified data are received and approved.

In the Governor's amended budget, the Composite Index Hold Harmless account was split funded between general fund (Incentive service area) and Lottery funds. Payments will continue to be paid out of the general fund until the 2011 General Assembly's actions have been approved, and then payments will be paid out of both the general fund and Lottery Proceeds Fund.

Calculation of the final fiscal year 2011 entitlement amounts for each division will be made based on final actions of the 2011 General Assembly and final March 31, 2011, ADM for each school division. Final fiscal year 2011 entitlement amounts will be communicated to school divisions in a subsequent superintendent's memorandum in May or June 2011.

Questions regarding the revised fiscal year 2011 entitlement amounts may be directed to budget office staff at (804) 225-2025.

PIW/st