McDonnell Reverses on Local School Funding Formula; Triangle Schools Could Lose $3M

By Amber Lester Tuesday, February 09, 2010

Gov. Bob McDonnell announced Monday he will not support a proposed freeze of the local composite index that determines how much state funding each locality receives. McDonnell’s office released that statement only two weeks after staff members told Capital News Service the governor would support former Gov. Tim Kaine’s proposal to freeze the LCI (read the story here). His decision might cost Historic Triangle schools about $3 million in funding.

The General Assembly will still have to rule in favor or against the proposal to stall the change, but McDonnell ultimately reserves veto power. He cited the freeze’s negative effects for Northern Virginia as part of his reasoning.

“The application of this Index has always been done in an objective manner, using the most recent fiscal data to most fairly apportion state resources,” McDonnell said in a press release. “For many school districts, particularly in Northern Virginia, the biennial update of the Index has meant far less funding from the state than that received by school districts in localities experiencing lesser rates of economic growth.”

If Kaine’s proposal to freeze the LCI were approved, some localities in Northern Virginia would lose $128.3 million in state funding for education.

The LCI is a number assigned to each locality that determines its state funding. Any percentage change in the index can greatly increase or decrease a locality’s funding. The funding formula is calculated using the true value of real property (50 percent), adjusted gross income (40 percent) and taxable retail sales (10 percent) of each locality.

The higher the composite index, the less funding a school district receives and vice versa. If the General Assembly agrees with McDonnell, the LCI will rise for both the Williamsburg-James City County and York County school districts.  If the LCI changes, WJCC could lose $2.3 million in state funding and York County could lose $700,000. WJCC’s current score is .5286; York County’s is .3732.

Williamsburg James City Schools Superintendent Gary Mathews said Tuesday morning that a school board budget retreat planned for Saturday would be canceled so administrators could retool the budget.

“In total, and given further cuts anticipated out of the General Assembly, we’re looking at about $8.6 million in budget cuts per the superintendent’s proposed budget for 2010-11,” Mathews said.  “As echoed by many educators throughout the state, these cuts will change education and school operations for years to come.”

York County Schools Chief Financial Officer Dennis Jarrett said the county will have to examine its budget to find $700,000 worth of cuts, but the effect of the LCI proposal might not be seen in Superintendent Eric Williams’ budget. His budget is set to be released at the end of this week, Jarrett said. “We’ll have to wait to see what the total picture looks like before we make any adjustments,” he said.

In his announcement, McDonnell also named other areas of the state budget that could be trimmed to allow for the additional state spending necessary to change the LCI. The update will cost the state $29 million in FY 2011. He plans to recommend the transfer of $13 million from Literary Fund balances; $8 million through the use of available balances in the Health Insurance Fund to reduce health insurance premiums; and the capture of $5.2 million in Real ID savings and $3 million in Non-General Fund balances.