School Finance in Virginia – the Issue of State Contributions

by James C. Sherlock

We have been discussing public school policy often, and it merits the attention.

So to provide background, I prepared a spreadsheet to help us all understand school finance in Virginia. I used the school year 2019-20.

It is both important and interesting and certainly raises questions, primarily about state contributions.

The state computes an index of local ability to pay that is supposed to guide state contributions to each school district, but the 2019 – 20 data complied in the spreadsheet do not seem to support that contention.

I am sure VDOE has an explanation, but it would be worth hearing.


First a few contextual facts.

Mississippi is the poorest state in the union.

Thirty-four of Virginia’s schools districts are operated by jurisdictions whose median household income was below that of Mississippi in 2019.

The State of Mississippi in 2017 – 18 paid its teachers nearly $45,000 per year on average.  Note that in the teacher average pay column of the spreadsheet, 16 Virginia jurisdictions paid their teachers less than that in 2019-20.

But some good news.

Forty of Virginia’s school districts paid teachers more than the local median household income; seventeen of those paid at least 10% more.

The city of Salem paid its teachers 150% of its median household income.

If Loudoun had done what Salem did with teacher pay, the average Loudoun teacher would have made over $210,000 annually.

One. helpful note from VDOE:

“Any division with a calculated composite index that exceeds .8000 is considered as having an index of .8000”.

Translation, even if a jurisdiction has an even greater ability to pay than that, it gets education funding as if it was stuck at .8000.  Cool if you live in Arlington, Falls Church or Surry County.

But I digress.

The Composite Index of Local Ability to Pay and State Contributions to Education

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 is the official guideline for the distribution of state education funds.

One can see the effect on the index of taxable real property.  For example, Surry County, with a median household income of under $58,000 (state average over $76,000) is given the maximum composite index of ability to pay (composite index) because of the taxes paid by the nuclear power plant in that jurisdiction.

But the index itself fails to correlate with the real distribution of state funds in 2018 – 20.  Sort the spreadsheet by column D and you will see what I mean in the state contribution column.

VDOE writes

“Each locality’s index is adjusted to maintain an overall statewide local share of 45 percent and an overall state share of 55 percent.”

Looking at the actual state funds distributed to each locality, I am not sure exactly what that means.

The 2019 – 20 state funds distribution recorded in the spreadsheet from VDOE data do not correlate with the corresponding index values.

Maybe there is something I missed.

The case of state education funding to Sussex County and Tazewell County


Sussex County, with a .3492 ability to pay, received $8,191 per student from the state and provided nearly $8,000 per student locally.

That plus its federal contribution raised Sussex County’s total per pupil financial support to over $17,500 per student, putting it the top ten jurisdictions in the state by that measure, ranking just ahead of Fairfax County.

Of those jurisdictions with it in the top ten in total per-pupil financial support, Sussex County with its .35 index is the only one with an ability to pay index below .65.

From Sussex County’s index value the state apparently did not expect Sussex would or could pay $8,000 per student from its own local tax funds.

Sussex County median household income was $49,487, far below the state average of over $76,000.


Yet Tazewell County, with a composite index of .2575, was provided only $6,572 per student by the state.

The state index, if applied, would have provided Tazewell considerably more state money than Sussex.

Tazewell added almost $2,400 per student in local funds, and with its federal contribution had just over $10,000 per student to fund its schools compared to Sussex’ $17,500.

Tazewell median household income was $42,099.

Maybe someone can explain how the state funding train left the tracks in that comparison, but I cannot.

How accurate are the indices?

The indices are updated every year, yet for some counties the calculations appear to yield strange numbers.  Download the calculator here.

The most prominent examples are Stafford and Prince William.  Stafford was awarded an index of .35 and Prince William a .38, indicating low ability to pay.

Yet those two counties are 5th and 6th in median household income in the entire state now, each around $110,000.

Mecklenburg County, with an ability to pay index of .40, higher than Stafford and Prince William, has a median household income of just over $43,000.

Check out Loudoun.  Ability to pay index of .5466 puts it below Charlottesville with 40% of Loudoun’s median household income and a poverty rate of 24%.

The others

There are more than 130 school districts in Virginia. Each of them is listed.

Remember, this is about the financing of public education, not educational policy or the outcomes of that education. That is a long list of different discussions.

There are six segments to the spreadsheet. All of the data are from 2019-20.

The first two segments are:

  • Census Bureau income and poverty figures by jurisdiction;
  • Virginia composite index of local ability to pay on which state contributions to schools were to be based. I am sure there is some small print, but that is the headline;

The others provide data from VDOE that include

  • School financial support data broken into local, state and federal dollars contributed per student per jurisdiction and then summed to define total per-pupil financial support;
  • Percentage of school division expenditures on instruction;
  • Pupil and teacher data that includes totals and ratios, and average teacher salaries;
  • teacher average salary as a percentage of the median household income in each jurisdiction.

Generally speaking, dark red cells are the worst (high or low) and dark green cells the best (high or low) depending on the subject of each column.

Size is interesting

One exception to that rule is in the Pupils all grades column. I used cell coloring to provide some perspective on the size of the districts.

Each of the school division pupil numbers in yellow in that column reflect that the entire school division in 2019-20 had fewer pupils than did Lake Braddock Secondary School in Fairfax County.

Teachers in the middle class

The other is a column into which I placed a formula that calculated the average teacher’s salary as a percentage of the median household income in that jurisdiction.

Just thought it an interesting figure.

Bottom line

So look at whatever school district that interests you. If there is a lot of green, that is good. A lot of red and yellow, maybe not.

Perhaps the VDOE can explain the anomalies in the distribution of state funds.

They are likely able to do it, but they certainly should.

State contributions represent the Commonwealth’s attempt to implement the “quality education” guaranteed in the Virginia Constitution Article VIII.

They are worth getting right.

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7 responses to “School Finance in Virginia – the Issue of State Contributions”

  1. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    The process used to determine state aid for local schools is too labyrinthine to get into here, but there some general answers that will address the seeming anomalies you have pointed out.

    First, a locality’s composite index may not reflect its median income because local income is only one component of the composite index, and not the major component. The three factors and their weights are:

    True value of real property–50 percent
    Adjusted gross income–40 percent
    Taxable retail sales–10 percent

    Localities that have relatively high real property valuations will end up with a high composite index score. The presence of major Dominion Energy properties within their boundaries thus account for the .80 composite index of Surry, Bath, and Highland counties.

    Second, not all the state aid is distributed using the composite index. The funding streams can be broken down into three main categories:

    1, SOQ funding–distribution based on composite index
    2, Sales tax–distribution of the local share of sales tax collected by state, based on pupil population
    3. Categorical–these are special education activities or areas that are funded by GA outside of SOQ funding. Each has its own distribution formula.

    Total per pupil—$8,191
    Sales tax–$1,293

    Total per pupil–$6,572
    Sales tax–$1,233

    Sussex received $1619 more per pupil than Tazewell did. Obviously, the $1,278 difference in categorical funding accounts for most of that difference. However, Sussex, with a higher composite index, received $281 more per pupil in SOQ funding also. A lot more digging is needed to account for that difference, as well as for the slight difference in sales tax distribution per pupil.

    1. Stephen Haner Avatar
      Stephen Haner

      Fools rush in…..Few things in state government are more complicated or controversial. Dick’s summary fits my understanding. Yet all see this as a huge electrified third rail and avoid the topic. Pull on one thread and the battle will begin.

      1. James C. Sherlock Avatar
        James C. Sherlock

        Maybe it should.

      2. James C. Sherlock Avatar
        James C. Sherlock

        See my response to Dick above.

    2. James C. Sherlock Avatar
      James C. Sherlock

      One of the reasons I wrote this piece is to let members of the GA see the practical results of their laws.

      Not sure they get to see the outcomes presented in this way.

      One of the major anomalies in the Sussex – Tazewell comparison I presented was the $8000 per student that Sussex contributed with local funds. Good for them. But the composite index seems to assess that they could not raise that level of funds.

      I know this is complex, but the real world outcome that Sussex students ($17,500 per pupil) and Tazewell students (a little over $10,000 per student) have public educational support funding at that level of difference is worth at least exposing to public view.

      Money is certainly not everything, as I have shown many times, but it does indicate public investment and should be monitored.

      If the GA and the Governor intended these funding distribution outcomes, then they can say so.

      With this much money in play, they should let us know how they manage it.

      1. Atlas Rand Avatar
        Atlas Rand

        I would caution you James that white kids in Sussex are so few as to not constitute an applicable sample size. Also, the few white kids who do attend Sussex are almost always low income, and unable to attend the local private schools, Tidewater Academy, Southampton Academy, and Isle of Wight Academy. Some also attended St. Joseph’s in Petersburg. Sussex is still very much segregated, with white kids nearly universally still attending the segregation academies, and black kids in public school. I say this as a former Sussex resident and attendee of one of the academies, though during my time Sussex was the worst rated school system in the state.

        1. James C. Sherlock Avatar
          James C. Sherlock

          All of that I am sure is true. Yet by the state standards, that cohort is large enough to report upon. The only reason I reported the results of SOLs was in answer to Dick. I think you are right. I have edited my response.

          If the GA intended the extra funding to go to Sussex to raise the quality of failing schools, then they will look at these funding numbers and be pleased. If that was the reason, I may agree with them when and if they explain themselves.

          But it is public money, and a full airing of how it is distributed and why is warranted.

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