P.O. BOX 2120



May 3, 2002



Division Superintendents



Jo Lynne DeMary

Superintendent of Public Instruction



Summary of Changes to the Fiscal Year 2002 Budget and the 2002-2004 Biennial Budget at the 2002 Reconvened (Veto) Session


On April 17, 2002, the 2002 Session of the General Assembly reconvened to consider changes proposed by Governor Warner to the 2002-2004 biennial budget as adopted by the General Assembly (reference Regulatory Superintendents Memorandum No. 1., dated March 15, 2002). The Governor did not propose any amendments or vetoes to the budget adopted by the General Assembly for the current year, fiscal year 2002. He has signed this bill and it was enacted as Chapter 814, effective April 8, 2002.


Attachment A to this memorandum provides a summary of actions taken by the General Assembly in response to Governor Warner's proposed amendments to the 2002-2004 biennial budget. These actions are noted in Attachment A as either "General Assembly Action - Adopted" or "General Assembly Action - Rejected."


As indicated in Attachment A, no changes were adopted by the General Assembly at the April 17 Session that affected state payments to school divisions for fiscal years 2003 and 2004. As a result, the state revenue projections and the Excel calculation tool provided as part of Regulatory Superintendent's Memorandum No. 1 remain the latest information on projected state payments for 2002-2004.


Although no amendments were proposed for the budget passed by the General Assembly for the current year, administrative action has been taken to further reduce the required contributions paid to the Virginia Retirement System (VRS) for group life in fiscal year 2002. This action further reduces group life payments for fiscal year 2002 by $559,928 statewide for a premium holiday in April 2002. The budget adopted by the 2002 General Assembly already included a two-month premium holiday for May and June (see Attachment A to Regulatory Superintendents Memorandum No. 1 for more information).


In addition, group life costs for support positions paid through Basic Aid and for instructional positions paid through Remedial EducationSOQ will be based on an annualized rate of 0.24 percent to account for the three-month premium holiday (i.e., nine-twelfths of 0.32 percent). For most divisions, this will result in a small reduction in your Basic Aid and Remedial EducationSOQ per pupil amounts for the current year as well as reducing your per pupil amount for group life.


To recognize these reductions in the current fiscal year, the department began adjusting group life payments for the April through June premium holiday beginning with the second recurring payment in April. Group life payments for the second payment in April and the payments in May will be calculated using an annualized rate of 0.32 percent, but the fiscal year 2002 entitlement on which the remaining recurring payments are based will be adjusted to capture savings related to the first nine months of the fiscal year. Any group life overpayments for fiscal year 2002 resulting from the three-month group life premium holiday will be corrected by making adjustments to the final Basic Aid entitlement for fiscal year 2002.


It is anticipated that final entitlements for fiscal year 2002 based on actual March 31, 2002, Average Daily Membership (ADM) will be communicated to school divisions by May 17, 2002. The information in this forthcoming memorandum will represent the final state funding due to school divisions in fiscal year 2002 for ADM-based accounts.


Special Reminder on the One-Time Carry-Over Provision Language (Fiscal Year 2002 to Fiscal Year 2003)


As communicated in Regulatory Superintendent's Memorandum No. 1, budget language was added to specify that any unexpended balances of state funds on June 30, 2002, that are not required to be spent for the state share of Standards of Quality (SOQ) programs may be carried forward to be appropriated to school divisions in fiscal year 2003 for any school purpose and that these funds will continue to be counted as state funds. Please note that this provision remains in the final fiscal year 2002 budget adopted by the General Assembly and signed by the Governor.


This language has the effect of allowing school divisions to carry-over, for appropriation in fiscal year 2003, state fund balances for any Direct Aid to Public Education account with the exception of the SOL Algebra Readiness program and those required to meet the Standards of Quality (i.e., Basic Aid, Textbooks, Vocational EducationSOQ, Gifted Education, Special EducationSOQ, Remedial EducationSOQ, VRS Retirement, Social Security, and VRS Group Life). Please note that the SOL Algebra Readiness program has a separate carry-over provision that requires carried-over funds to be appropriated to the school division in fiscal year 2003 for use in the SOL Algebra Readiness program only.


If you have any questions, or need additional information, please contact Daniel S. Timberlake, assistant superintendent for finance, or budget office staff at (804) 225-2025.