And This is How They Will Spend the Money
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31 responses to “And This is How They Will Spend the Money”
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Very good summary! THANK YOU!
Any idea why the fuel tax revenues came in so much higher than predicted?
any idea why the reinsurance idea was kicked?
finally, on the SOQs and raises for teachers.
ONLY SOQ teachers get that raise. Any other non-SOQ teachers and staff will not get it unless the local jurisdiction ups it’s contributions.
Our local BOS refers to this as an “unfunded mandate”! Although, they have no problem increasing raises for county personnel …called “competitive pressures”.
these blog posts, I’m quite sure take a lot of time and effort and just wanted to say that the time and effort is much appreciated even if some of the comments are perhaps not as much time and effort!
thanks!
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No, I have not looked at the fuel tax revenue projections. As for the reinsurance program, I think I remember reading a news report quoting Luke Torian, the chairman of the House Appropriations Committee, saying they thought the establishment of the state exchange would accomplish bringing stability to the insurance market.
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As for the salary increases for non-SOQ teachers, the same situation exists for constitutional officers, particularly sheriffs. The state will provide funding for salary increases for the number of deputies approved by the Compensation Board. If the Board of Supervisors has authorized the sheriff to hire deputies above that number, the board is on the hook for salary increases for those deputies.
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Great budget summary, Dick. Best I’ve seen anywhere.
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re: ” Furthermore, the budget bill itself has some safeguards built in. For example, the employee salary actions are contingent on the projected revenue.”
is that typical, normal for other spending ? I like it!
also.. thanks for the objective summary sans the “gawd, they’re taxing us to death” … narratives !!!
😉
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Only the salary increases are contingent on the revenue coming in as projected. There is a standard provision that, in the event that revenues fall below a certain level, the Governor can take action to reduce appropriations.
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Right, Larry, the money just falls from the sky. You got the tax increase list the other day, but most of those are indeed not the traditional “general fund.” However their growth tells me that the distinction between general and non-general fund is meaningless now, and to continue it only hides the growth and economic impact of government. It very much was a tax and spend session.
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From a budgeting perspective and for the agencies, there is a fundamental difference between general and non-general fund appropriations. If an agency has a general fund appropriation, it can spend that amount. If it has a non-general fund appropriation, it can only spend that amount if it has the non-general fund cash on hand. If the cash is not there, the agency cannot spend its appropriation. Similarly, if it has non-general fund cash, but no appropriation or an appropriation that is less than the cash, it cannot spend the cash. It can spend only to the extent that it has cash to support the appropriation. However, it can request DPB to administratively increase its non-general fund appropriation to match its cash on hand.
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re: ” If it has a non-general fund appropriation, it can only spend that amount if it has the non-general fund cash on hand. If the cash is not there, the agency cannot spend its appropriation.
That DOES sound fundamentally different.
If State revenues fall short – doesn’t this work a little like a
safety valve?What major categories are non-general?
probably not Medicaid or transportation… or state police or other state agencies ?
car taxes? teacher raises?
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Transportation is all NGF. Some other agencies that are all or mostly NGF: ABC, Game and Inland Fisheries, Military Affairs. All federal money is NGF. Higher ed tuition and fees are NGF. Most agencies have some NGF; some are more dependent on it than others.
One factor that is probably not widely known: the funding for state employee salary increases is all GF. Agencies with NGF-supported employees must fund those salary increases out of their NGF revenue; they can get the additional appropriation if they need it, but their NGF revenues don’t necessarily increase enough to completely cover the salary increase costs.NGF cannot really serve as a safety valve in most cases because most NGF revenue is restricted to specified uses, e.g. federal Medicaid match, transportation, federal grants.
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For the hard core wonks, here are the money committee staff Powerpoint slide presentations given to legislators yesterday. Lots of deep detail….Since I don’t have any basketball to watch, may actually read them closely….
As you review them, try to note the new programs which will grow in future years. Providing dental care to adults on Medicaid, for example, clearly provides a health benefit, but once fully established the annual cost will be greater than this initial budget suggests. The next “base budget” will start with a larger amount for that, and several other items on the lists. If you see something in the “second year” only, you can at least double it to estimate the base for Northam’s next and final budget.
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Great post! Seems definitely a tax and spend session as Steve noted. As Virginia climbs from being a mid tier taxation state to becoming a high tier taxation state we’ll see what happens.
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Good summary … BUT my question remains …
What the devil is the state doing directing local educational sending? It is one thing to equalize the ability of districts to draw funding from their communities and certainly the state certainly should establish and enforce standards but ….
it’s not like the legislators have time on their hands to dictate the specifics of local school spending.-
The state constitution requires the state to establish minimum Standards of Quality that all school divisions must meet. The state provides funding for its share of the cost of these minimum standards. As for the 2 percent teachr raises, localities are not bound by that. Local school can choose to provide no raises; in such a case, they would not get the state money. They can choose to provide higher raises, but they would only get enough state money to support two percent. They can hire more teachers than the SOQ calls for (and many do), but they would receive state funding based on the minimum standards.
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I understand that the state does set standards. I guess I didn’t realize that some of those specifics can be treated as ‘recommended’ only. However, I am talking about the fact that funding from the state is doled out according to standards and other requirements, not just on the local tax base’s ability to fund their schools at a reasonable level.
And maybe I am questioning the definition of ‘standards’. Meeting educational standards is one thing. Defining educational structure requirements within the school is another.
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The major vehicle for allocating state funding for SOQ is the basic aid formula. That formula uses a “local composite index” that tailors the distribution to a large degree on a locality’s wealth. (This is the LCI that TooManyTaxes on this blog complains about.) Sometime soon, I may take a whack at trying to outline the basic aid formula on this blog.
I understand your point about standards. The state has chosen the easy way by defining Standards of Quality in terms of inputs (so many teachers per 1,000 students, etc.) rather than in terms of outputs. Of course, the Standards of Learning and the much-maligned SOL tests try to do that and there is a link between the SOL and funding.
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Would love to see your whack at that crazy formula …
AND … when I looked at the budget, as someone unfamiliar with the process in VA, I saw a whole pile a things that were linked to how the money was spent specifically. The specifics on teachers, their salaries and their numbers, is one example. -
I think no matter how the LCI is calculated, the essential design of it is to equitably fund education for K-12 across the state by allocating SOQ funds according to the relative wealth of a given county relative to other counties.
THe full time of LCI is COMPOSITE INDEX OF LOCAL ABILITY TO PAY.
We’re NOT taking money away from counties – we’re allocating collected taxes back to the counties such that the less wealthy counties get MORE in SOQ funding than the richer ones.
The argument about “fairness’ has been going on for a long time and it’s not just about SOQ, it’s also about transportation money. For instance, the rural counties say it’s wrong for them to help pay for METRO in NoVa and places like Hampton are convinced that NoVa receives more transportation money than they do. When VDOT decided to build HOT lanes in NoVa, they had to also toll roads/tunnels in Hampton or face cries of regional discrimination!
So the basic argument is probably not going to change no matter how the LCI is tweaked. It’s not the algorithm, it’s the basic idea that the rich counties help fund the poor ones, never mind, it’s about education for youngsters. No algorithm will be accepted as “fair”.
DJ makes a similar argument about roads. He’s convinced that VDOT spends more money on rural roads that they actually receive in transportation taxes from those counties and that the additional money comes out of revenues generated in NoVa.
The big difference is that there is no such “LCI”-type transparency for transportation money. We know what projects are built where and for how much, but we do not know how much transportation money is generated on a county or jurisdictional basis and we do not know how much of it is kept by VDOT for administration and their responsibilities to maintain Federal and State-designated roads.
There is a guy who posts here on occasion called “Bosun” who seems to be knowledgeable but beyond his name we do not know his background. I suspect he has views on the road funding aspect.
by determining the local ability to pay by looking at things like gross income and value of property.
The actual full name is:
COMPOSITE INDEX OF LOCAL ABILITY TO PAY
The Composite Index determines a school division’s ability to pay education costs fundamental to the commonwealth’s Standards of Quality (SOQ). The Composite Index is calculated using three indicators of a locality’s ability-to-pay:
True value of real property (weighted 50 percent)
Adjusted gross income (weighted 40 percent)
Taxable retail sales (weighted 10 percent)it’s pretty much mandated by the Virginia Constitution and affirmed by the courts.
If we can better calibrate the LCI, to assure that no one is paying more than they should, I’m all for it but my suspects are that, that won’t fix the underlying issue.
Fairfax, by the way, is not at the top of the scale – they’re below about 12 other counties.
And seems like I heard that Metro got a bunch of money from the GA…
I have no idea of how much money NoVa “loses” because of the LCI
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What if the state treasury coffers do not fill up as anticipated? How large is the rainy day fund? Would the state be willing to run a deficit?
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The state constitution requires the Governor to execute a balanced budget (that is generally considered to be over the biennium). There are provisions in the budget bill for dealing with a shortfall in revenues. If the shortfall in GF revenues in a fiscal year is one percent or more below the amount projected, the Governor is required to conduct a formal re-estimate of the anticipated revenues in the upcoming year. The Governor is then required to develop and execute a plan for reducing appropriations. This plan must be submitted to the General Assembly for review, but the GA approval is not required. The budget provisions go on to set out certain limitations on any plan withholding appropriations; for example all debt service must be paid. This process would take place in August, after the books on the prior fiscal year had closed. I have had to go through this while I was in DPB and it is not fun.
By the way, the balance in the rainy day fund is about $2 billion. However, the state cannot pull it all out at one time. There are constitutional limits on how much can be withdrawn. A couple of years ago, the legislature set up another reserve fund in addition to the constitutionally-required Rainy Day fund. The balance in that is several hundred million and there are no limits on withdrawals.
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Great job, Dick.
Once again, a General Assembly sees provides ample evidence as to just how stupid residents of Fairfax County are. The “Cost of competing, $19.6 million–The basic aid formula has a component that provides additional funding for localities in Northern Virginia and adjacent localities in recognition of the higher costs in those areas. The legislature increased the weighting factors.” This is like putting a band aid on a beheading.
Oh just vote for Democrats and we’ll fix the LCI. This doesn’t fix the LCI. It still ignores differences in cost of operations and living, as well as the huge number of low-income students in Fairfax County schools.
This proves that having advanced degrees does not make one smarter than the high school graduates in RoVA who eat our lunch paid for by Fairfax County legislators and Fairfax County taxpayers.
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Another big problem with the LCI is the use of “ability to pay” versus a requirement to pay that amount in local taxes. Unlike in some other states, there is no requirement for a local school division and its taxing authority to impose local taxes at the ability to pay. Poorer areas should receive more aid form the state. But they should also be required to make a minimum tax effort.
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@tmt – have you actually read the reports and law:
” Pursuant to the requirements of Section 22.1-97, Code a/Virginia, the Virginia Department of Education collected data from school divisions on the actual local funding effort in support of the Standards of Quality for fiscal year 2018, through the 2017-2018 Annual School Report Financial Section (ASRFIN). School divisions were also required to certify that local funds were at the required level in support of the Standards of Quality for fiscal year 2019.
This report provides the results of calculations made to ensure that each school division has expended sufficient local funds to support its required local effort. The purpose of required local effort is to ensure that each school division has sufficient local operational expenditures to support its local share of the cost of the Standards of Quality. Fiscal year 2018 calculations are based on actual local operational expenditures. All school divisions met required local effort in fiscal year 2018.”
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@tmt – re: “ability to pay”.
that’s the calculation that they do …. they determine how much a locality should be able to pay and they provide the state part and expect the locality to provide their share.
here’s a fairly in-depth discussion about the LCI and how “ability to pay” is determined.
https://www.wm.edu/as/publicpolicy/documents/prs/options.pdf
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Larry, do you read what I write? Yes, there is a requirement in the LCI to consider a locality’s ability to raise taxes and fund its local schools. No one objects to that. My problem is that the LCI does not require a minimum local tax effort. So what we often see is many districts cutting local tax spending for its schools after the state increases funding. There should be a requirement for every local government to make a minimum local tax effort that funds their schools as a condition of getting state aid.
The increased state aid coming from the GA should be contingent on each school system spending a minimum of local real estate tax dollars. An increase in state aid should not result in lower real estate taxes. It doesn’t in many states but does in Virginia.
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I disagree … The local tax bases are completely different and so the local ability to fund anything is restricted by that tax base. Additional money sent through the school equalized funding formula should be delivered to the school system and the school system should be offering an education that meets standards but you are just adding another complication to the formula.
Maybe the formula should be changed and possibly simplified, not complicated. AND I continue to advocate for the idea that the local school Boards should be making the decisions on educational policy questions as long as they are meeting state educational standards.
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TMT – what you’re saying is totally wrong. Localities ARE required to fund their part of the LCI and if they do not, they can lose the LCI funding.
I’ve provided several references to you that show that localities have to fund their share.
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So if I’m wrong, why has Senator Janet Howell explained many times over the years that when the state increases aid for K-12, a number of localities cut their local tax support for their public schools? The formula shows what it can raise through taxes. It doesn’t require that amount to be raised and spent.
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You’re wrong because of the facts TMT. There is ample data to show that virtually every county in Virginia actually does pay it’s required local share and yes they do – it’s documented exactly what their local share is as well as how much they actually spent – and most all of them spent MORE than required.
Just because someone else, even an elected official made some spurious claim or lie , does not make it the truth and repeating a lie over and over also does not make it the truth.
Some of us seem to have decided that it’s okay to misrepresent facts and that we can just make up what we think is the truth and go on from there.
It’s okay to argue that some aspect of the LCI perhaps needs to be adjusted – perhaps adjusted growth or value of property is not enough or different measures and metrics included.. I don’t know, but I’d certainly be willing to listen to a convincing argument – AND support change if we do see a problem.
But, PLEASE show those specifics… and don’t just keep spreading this non-fact as truth!
Look at the following chart on page 5:
FY 2017 Actual Required Local Effort (RLE) for the Standards of Quality Compared to Actual Local Expenditures for Operations
https://rga.lis.virginia.gov/Published/2018/RD43/PDF
have you never seen this or you have but do not believe it or what?
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Thanks for the info Larry …
And I still say … Virginia is certainly Big Brother, which complicates evaluations, placing a lot of emphasis on monies….“All school divisions reported certified actual local operational expenditures sufficient to meet required local match for the programs in which they elected to participate in fiscal year 2018” such as “Virginia Preschool Initiative; K-3 Primary Class Size Reduction; Compensation Supplement, Math/Reading Instructional Specialist Initiative; and Early Reading Specialist Initiative.”
…. and in 2019 budget must show … “local match for Incentive and Lottery accounts (i.e., At-Risk, Virginia Preschool Initiative, K-3 Primary Class Size Reduction, Math/Reading Instructional Specialist Initiative, and Early Reading Specialists Initiative).”AND I agree that there can be a lot of ‘cost of living’ difference to those school costs in different sections of the state.
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All states have to assure that all kids in their state receive equitable funding of their k-12 education and the states that relied primarily on the local property tax lost multiple court cases in the SCOTUS and that has resulted in various schemes like Virginia’s LCI which basically has the richer counties help fund the poorer counties.
New Jersey was one of those states – see the list below:
https://edeq.stanford.edu/sections/landmark-us-cases-related-equality-opportunity-education
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