DATE: June 22, 2018
TO: Division Superintendents
FROM: James F. Lane, Superintendent of Public Instruction

State Direct Aid to Public Education Funds Permitted to be Carried Forward from Fiscal Year 2018 to Fiscal Year 2019

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 1, 2018 Special Session I Acts of Assembly (i.e., 2018 Amendments to the 2017 Appropriation Act) overrides this Code section and permits school divisions that have met required local effort and required local match for fiscal year 2018 to carry forward to fiscal year 2019 any remaining state Direct Aid fund balances that are unexpended as of June 30, 2018.  Specifically, the appropriation act language (Item 139 B.24.b.) for fiscal year 2018 reads as follows:

“Any locality that has met its required local effort for the Standards of Quality accounts for FY 2018 and that has met its required local match for incentive or Lottery-funded programs in which the locality elected to participate in FY 2018 may carry over into FY 2019 any remaining state Direct Aid to Public Education fund balances available to help minimize any FY 2019 revenue adjustments that may occur in state funding to that locality. Localities electing to carry forward such unspent state funds must appropriate the funds to the school division for expenditure in FY 2019.”

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 2019. 

This provision does not alter the existing requirement that school divisions must spend the fiscal year 2018 required local effort and required local match amounts before the end of fiscal year 2018, which ends on June 30, 2018.        

Chapter 1 also encourages certain local funds to be carried over into fiscal year 2019 pursuant to the following language (Item 139 B.25.):

“Localities are encouraged to allow school boards to carry over any unspent local allocations into the next fiscal year.”

To be eligible to carry forward any local fund balances from fiscal year 2018 to fiscal year 2019, school divisions must meet their required local effort and required local match expenditure obligations in fiscal year 2018.

Chapter 1 provides separate carry forward authority (Item 139 C.5.f.4) for the Textbooks account, which reads as follows: 

“Any funds provided to school divisions for textbook costs that are unexpended as of June 30, 2017, or June 30, 2018, shall be carried on the books of the locality to be appropriated to the school division the following year to be used for same purpose. School divisions are permitted to carry forward any remaining balance of textbook funds until the funds are expensed for a qualifying purpose.”

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 2, 2018 Special Session I Acts of Assembly, contains the same language for the same carry forward of funds from fiscal year 2019 to fiscal year 2020.

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 Email link. .