Superintendent's Memo #122-10

State seal, Commonwealth of Virginia

Department of Education

May 21, 2010

TO: Division Superintendents

FROM: Patricia I. Wright, Superintendent of Public Instruction

SUBJECT: State Direct Aid to Public Education Funds Permitted to be Carried Forward from Fiscal Year 2010 to Fiscal Year 2011

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; however, Chapter 872, 2010 Acts of Assembly (appropriation act), permits school divisions that have met required local effort and required local match for fiscal year 2010 to carry forward to fiscal year 2011 any remaining state fund balances that are unexpended as of June 30, 2010. This provision is considered to be a one-time carry forward option; any decision regarding continuation in future years will be made by the General Assembly. Specifically, the appropriation act language reads as follows:

“Any locality that has met its required local effort for the Standards of Quality accounts for fiscal year 2010 or that has met its required local match for incentive or Lottery-funded programs in which the locality elected to participate in fiscal year 2010 may carry over into fiscal year 2011 any remaining state fund balances available to help minimize any fiscal year 2011 revenue adjustments that may occur in state funding to that locality.”

Please note that this language also permits a school division to use such carry forward funds to address any revenue shortfall related adjustments in state funding to the locality, regardless of the original purpose of such funds. Furthermore, the state carry forward funds shall be reappropriated by the local governing body to the school board’s budget for fiscal year 2011.

This provision does not alter the existing requirement that school divisions must spend the fiscal year 2010 required local effort and required local match amounts before the end of fiscal year 2010, which ends on June 30, 2010.

State funds received by school divisions in fiscal year 2010 for the Support for School Construction, Operating Costs, and Textbooks account funded by Lottery proceeds may also be paid into escrow accounts pursuant to Section 22.1-100.1, Code of Virginia, and carried forward indefinitely. However, the use of such funds would then be limited to the purposes as defined in section 22.1-100.1, Code of Virginia.

State funds deposited to escrow from the Support for School Construction, Operating Costs, and Textbooks account may be counted towards a division’s overall local effort requirement if the deposit is made on or before June 30, 2010. Such deposits would be added to a division’s total qualifying expenditures for required local effort and required local match pursuant to Chapter 872, 2010 Acts of Assembly.

The School Construction Grants account was not funded in fiscal year 2010; therefore, school divisions cannot make deposits to escrow accounts that were previously permitted for such grants pursuant to Section 22.1-175.5, Code of Virginia, unless the School Construction Grant funds have been carried forward from prior fiscal years. No other sources of state funds may be deposited to such an escrow account pursuant to Section 22.1-175.5.

School divisions that received a Leadership Development Grant in fiscal year 2008 (the last year the grants were awarded) were allowed to retain any unspent balances and were permitted to spend any remaining balances for the intended purposes during the ensuing two fiscal years (during fiscal years 2009 and 2010). Therefore, school divisions that received such awards in fiscal year 2008 will not be permitted to carry forward any remaining balance of these funds from fiscal year 2010 to fiscal year 2011.

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