May 5, 2017

TO:  Division Superintendents

FROM:  Steven R. Staples, Superintendent of Public Instruction

SUBJECT: State Direct Aid to Public Education Funds Permitted to be Carried Forward from Fiscal Year 2017 to Fiscal Year 2018

Section 22.1-100, Code of Virginia, requires school divisions to return unexpended state funds to the Commonwealth at the close of each fiscal year.  Chapter 836, 2017 Acts of Assembly (i.e., 2017 Appropriation Act) overrides this Code section and permits school divisions that have met required local effort and required local match for fiscal year 2017 to carry forward to fiscal year 2018 any remaining state Direct Aid fund balances that are unexpended as of June 30, 2017.  Specifically, the appropriation act language (Item 139 B.24.a.) for fiscal year 2017 reads as follows:

This language permits school divisions to use carry forward funds to address any revenue shortfall related adjustments in state funding to the locality, regardless of the original purpose of such funds.  The adopted language requires the state carry forward funds to be reappropriated by the local governing body to the school division’s budget for fiscal year 2018. 

This provision does not alter the existing requirement that school divisions must spend the fiscal year 2017 required local effort and required local match amounts before the end of fiscal year 2017, which ends on June 30, 2017.        

Chapter 836 also encourages certain local funds to be carried over into fiscal year 2018 pursuant to the following language (Item 139 B.25.):

To be eligible to carry forward any local fund balances from fiscal year 2017 to fiscal year 2018, school divisions must meet their required local effort and required local match expenditure obligations in fiscal year 2017.

Chapter 836 provides separate carry forward authority (Item 139 C.5.f.4) for the Textbooks account, which reads as follows: 

A school division must first meet all required local effort and required local match obligations in the current fiscal year prior to carrying forward any portion of its state or local funds for Textbooks to the next fiscal year.  If a division meets these requirements without spending all or a portion of its local matching funds for Textbooks (i.e., they meet their required local effort and required local match for all other required accounts), then the division is permitted to carry forward both the state and local shares of Textbooks funding.

Chapter 836 contains the same language for the same carry forward of funds from fiscal year 2018 to fiscal year 2019.

If you have any questions regarding this information, please contact Kent Dickey, Deputy Superintendent for Finance and Operations, or budget office staff at (804) 225-2025 or by email at DOEBUDGETOFFICE@doe.virginia.gov.

SRS/eml