A Peek Behind the Veil

by Dick Hall-Sizemore


During my research for the articles on state financial assistance for public education, I ran across a curious provision and, subsequently, tracked the history of that provision. That history provides a small peek at the budget development and legislative processes that illustrate:

  1. Why I find them so fascinating, and
  2. Why many people find them exasperating, if not downright outrageous.

For those readers who did not read the first post on the SOQ financing, and for those who did, but need a reminder, you need to understand the importance of “cost-of-competing” adjustments (CCA). A major component of the costs of implementing the Standards of Quality (SOQ) is the “prevailing” salary for teachers, administrators, and other support activities. The Appropriation Act has long provided that the prevailing salaries are to be increased by “cost-of-competing” adjustments for school divisions in Northern Virginia.

In the introduced budget bill, the language related to the CCA includes Accomack and Northampton counties. These two jurisdictions are not included in that language in the current Appropriation Act. I pointed out this anomaly in my article. One commenter, Don Rippert, picked up on this new provision and raised questions about it, for which I had no answer. (I was not surprised that he was the one to focus on it.) I now have the answer.

The Answer

The first hint to the origin of this preferential treatment for Accomack and Northampton can be found in the budget document prepared by the Department of Planning and Budget (DPB) in the fall of 2020 explaining the Governor’s proposed 2021 amendments to the 2020-2022 Appropriation Act.

Under the Department of Education section, there is this item:

The Department of Education (DOE) did not include this item in its submission of budget amendment items to DPB for the Governor to consider. Therefore, it has to be assumed that the impetus for the item came from the Governor’s Office itself.

That language provides the ostensible justification—to allow the Eastern Shore counties to compete with nearby Maryland schools for teachers. In addition, the language references SB 327 of the 2020 General Assembly Session. It is not unusual for the ensuing budget bill to include funding to implement a policy enacted by the legislature.

However, that language contains another clue. It refers to SB 327 as being “introduced,” not “enacted.” Indeed, SB 327 was never passed. Introduced by state Senator Lynwood Lewis, D-Accomack County, SB 327 was a simple bill. It declared that Accomack and Northampton counties were eligible to receive the cost-of-competing adjustment as part of the basic aid calculations. The bill was probably inspired by a December 2019, letter from the Accomack Board of Supervisors and School Board to the Governor, asking to be included in the CCA provision. The bill was carried over to the 2021 Session in the Senate Finance and Appropriations Committee and that committee took no further action and the bill died quietly.

Because the development of the budget bill was completed before SB 327 died, one could be willing to give the Governor’s Office the benefit of the doubt. Perhaps it assumed that SB 327 would ultimately pass and it felt that the funding should be in place to implement it.

Whatever the circumstances, the funding to include Accomack and Northampton in the list of localities for the CCA, along with the appropriate language amendment, was included in the 2021 introduced budget. What emerged in the final budget after the General Assembly made its changes was different.

The legislature moved the requested funding for Accomack and Northampton from the SOQ section of the Item for State Education Assistance Progams to the Lottery Funded programs section and included this language in the Appropriation Act:

“An additional state payment of $2,000,000 the second year from the Lottery Proceeds Fund shall be disbursed to provide one-time support to Accomack and Northampton school divisions for teacher recruitment and retention efforts, including adjustments to salary scales to minimize misalignment to salary scales of adjacent counties. Disbursement of these funds is contingent on the division providing the required local share of a 5.0 percent compensation supplement included in paragraph C. 44.” [Emphasis added]

For the 2022-2024 budget development, there is no indication that DOE included the Accomack and Northampton CCA in its rebenchmarking exercise, nor did it include that funding in its budget submissions to DPB. Again, it would seem that this decision to include the Accomack and Northampton CCAs in the on-going base calculations of the SOQ costs came from the Governor’s Office.

A Summary Timeline

  1. 1/06/2020—SB 327 introduced. Would make Accomack and Northampton eligible for CCA.
  2. 2/06/2020—SB 327 continued to 2021 in Senate Finance and Appropriations Committee.
  3. 12/04/2020—SB 327 “Left in Finance and Appropriations”, aka, died.
  4. 12/16/2020—Governor Northam introduces budget bill with Accomack and Northampton included in list of localities authorized to receive CCA.
  5. 2/25/2021—GA budget conferees report provides Accomack and Northampton a one-time grant to help in teacher recruitment and retention.
  6. 3/31/2021—Governor submits proposed amendments to passed budget bill; do not include any amendment relating to additional educational funding for Accomack and Northampton.
  7. 4/7/2021—Governor signs budget bill.
  8. 12/16/2021—Governor submits 2022-2024 budget bill including Accomack and Northampton in list eligible for CCA.

The Justification

The reason provided for the CCA for Accomack and Northampton was to enable them to compete with Maryland schools for teachers. The letter to the Governor from the Accomack officials claimed that the wealth of the adjoining Maryland county enabled it to “offer teacher salaries that dwarf those offered by Accomack County.”

Teacher salaries in Worcester County, the largest Maryland county adjacent to Accomack, are certainly higher than those in Accomack. According to Accomack Public Schools, the FY 2022 starting salary for teachers was $43,125. In contrast, the comparable starting teacher salary for Worcester County was $47,725. The disparity grows with tenure. A teacher in his tenth year in Accomack would be making $47,352, while his Worcester counterpart’s salary would be $54,774. In 2020, the average teacher’s salary in Worcester was $52,156; in Accomack, it was $49,036. (The Maryland average is obviously higher, but hardly “dwarfs” the Accomack average.)

Accomack claims it cannot afford to compete with Worcester. In its letter to the Governor, it claimed that Worcester County, which includes Ocean City, is “one of the most affluent counties in the state of Maryland.” Accomack pointed out that Worcester County’s taxable real estate value was almost four times that of Accomack’s and its per-capita personal income was 43% higher.

Worcester County may well have more wealth than Accomack, but there is evidence that Accomack is not doing all that it can. The Virginia Commission on Local Government, a subdivision of the Department of Housing and Community Development, annually issues a report on the fiscal stress of Virginia localities. One component of that report is an analysis of local effort. As defined in the Commission’s latest local fiscal stress report, local revenue effort is “a ratio of actual tax collections by a locality to its computed revenue capacity.” In turn, “revenue capacity” is defined as the “computation of how much revenue a jurisdiction could generate if it taxed its population at statewide average rates.”  Using these definitions, it calculated the statewide average local revenue effort, in FY 2019 (the latest year for which complete data was available), as 1.0067. “In other words, on a statewide basis, Virginia localities are collecting $1.0067 for every $1.00 of revenue capacity.” Using those measures, the revenue effort of Accomack County was 0.7313. Out of 133 jurisdictions, its revenue effort was ranked 86 and was “below average.”

Not only could a case be made that Accomack should ask its residents to pay a little more before asking for more state financial assistance, it is clear that the county is already being treated favorably by the state funding formula. Its average teacher’s salary of $49,036 is considerably less than the “prevailing” salaries of $51,377 (elementary school) and $53,777 (secondary school) used to compute the costs of implementing the SOQ, thereby providing the county a windfall of state funding. Similarly, its composite index for the 2020-2022 biennium is .3374, which ranked 53 out of 135 jurisdictions (going from lowest to highest). The result was that the state covered almost two-thirds of the county’s cost to implement the SOQ.

(I am restricting my comments and analysis to Accomack because that county was the one that submitted the original request to the Governor in 2019 and a DPB fiscal impact statement indicates that Accomack would get approximately 85% of additional funding needed to include Accomack and Northampton in the CCA provision.)

Final Comments

  1. Relatively speaking, there is not a significant amount of money involved. The amount included in the Governor’s 2021 amendment to the 2020-2022 Appropriation Act was $2.7 million, less than 0.04 percent of the total general fund appropriation for state assistance to K-12. As we used to say in DPB, “that amount would be lost in the rounding.”
  2. Hey, what is the use of being Governor if you can’t help out your home area a little bit?