P.O. BOX 2120



December 9, 2005



Division Superintendents



Jo Lynne DeMary

Superintendent of Public Instruction



Composite Index of Local Ability-to-Pay for the 2006-2008 Biennium


This memorandum and the attachments contain information regarding the Composite Index of Local Ability-to-Pay for the 2006-2008 biennium, which will begin July 1, 2006. The 2006-2008 composite index was calculated using 2003 base-year data provided by the Department of Taxation for adjusted gross income, taxable retail sales, and true value of real property. The estimates of local population for 2003 are provided by the Weldon Cooper Center for Public Service at the University of Virginia, and the March 31, 2004, average daily membership is based on data reported by school divisions to the Department of Education.


The Department of Education will use this composite index in calculating the state share of applicable school division entitlements for the Governors introduced budget for the 2006-2008 biennium. Information regarding these entitlements will be made available to you in late December following the release of the Governors 2006-2008 introduced budget.


Attachment A to this memorandum includes the composite index calculated using the total Adjusted Gross Income (AGI) for each locality. Attachment B shows an alternative composite index for those localities in which three percent or more of their total AGI is derived from individuals who are not residents of Virginia. The alternative index in Attachment B excludes non-resident AGI data from the composite index calculation. As provided in the appropriation act, school divisions whose total Virginia AGI consists of at least three percent or more from nonresident income may elect to exclude such nonresident income from the computation of the composite index.


Pursuant to the appropriation act, each school division that elects this option must have certified its intention to do so to the Department of Education on or before January 1, 2006. The certification form that is to be completed and returned to the Department of Education in order to elect the nonresident AGI exclusion option is an Excel file located at:


Only those school divisions listed in Attachment B that meet the three percent or greater nonresident AGI requirement are eligible to submit the certification form to the department.


Downloadable Excel and PDF files containing the 2006-2008 composite index for each school division are available on the Department of Education website at:


In addition, at the website referenced above, an Excel file is available that will allow you to view the detailed calculation of your 2006-2008 composite index. The file displays all of the data elements used and the steps involved in the calculation of your 2006-2008 index. In addition, this file provides comparisons between the per pupil and per capita components of your index relative to statewide averages.


If you have questions or need additional information concerning this data, please contact the budget office at (804) 225-2025 or by e-mail (e-mail addresses available at