Williamsburg, JCC Start Joint School Contract Renegotiation

By Desiree Parker Thursday, October 13, 2011

The way public schools are funded in Williamsburg and James City County is getting a closer look in light of current funding challenges. The WJCC Public Schools Contract Committee met Wednesday and agreed to look into a new funding allocation structure between the two governments, which could cost the city more.

In recent years, the poor economy means less state funding for schools and also tighter local budgets. The contract committee discussed increasing school budget projections, local budget concerns and state funding structure as some challenges WJCC will face going forward. Committee member Bruce Goodson, a member of the James City County Board of Supervisors, also suggested the group consider a new funding allocation system that would be based on real estate value instead of the current system, which is based on the number of enrolled students. This would represent a significant change to the contract should the group agree to it.

One challenge the group discussed relates to how the state funds schools. The state uses Standards of Quality (SOQ), or the minimum amount of programming school divisions must provide, to determine the funding required to meet the standards. Once the total SOQ is calculated, the state uses the Local Composite Index (LCI) score to figure how much of the burden can be carried by the locality. The LCI is calculated using three factors: the true value of real property, adjusted gross income, and taxable retail sales. (read a detailed story on how schools are funded here).

Though the state funding formula is complex, McDonald summed it up to the committee simply: “In reality, the state is paying about 25 percent [of the school budget]” based on the SOQ, which means the state is able to cap its cost effectively.

Williamsburg City Manager Jack Tuttle pointed out that this “puts the burden back on us to fund education.”

Aside from state funding concerns, the committee also discussed school budget projections. Through 2016, WJCC projects a roughly four percent increase in its budget each year (without any new buildings planned in that time range), which means local funding will need to increase at a time when local revenue projections aren’t great.

Tuttle said the WJCC projected increase “is outside even our best-case revenue growth scenario” for the city.

County Administrator Robert Middaugh said the county is bracing for a significant drop in real estate assessments – possibly around six percent – as the county starts its reassessment process. “This will be a pretty hard hit to our overall revenues,” he said.

According to the contract, the city pays an allotment of the school system funding based on how many city students are enrolled (the percentage of city students multiplied by 1.14 equals the percentage of the school budget the city pays). This is called the “city premium.”

Goodson said the funding allocations in the contract have always been based on enrollment; he suggested looking at allocations based on ability to pay, namely based on the land values.

This would mean the burden for school funding is more evenly distributed among all taxpayers and would better reflect a locality’s ability to pay, he noted. He also admitted that switching to his suggested system would “be beneficial to the county now, but that will not always be the case.” The benefit to the county would come from the expected new lower property assessments, meaning the county would likely end up paying a lower percentage of school funding.

This would be a significant change to the contract should the group agree to it; most city members didn’t seem keen on the idea when Goodson mentioned it.

City Councilman Doug Pons said he’d prefer not to tamper with the system if it works well. “If it ain’t broke, why try to fix it?” he asked.

City Finance Director Phil Serra argued that the current system is very consistent, with the city and county per-pupil costs very similar and the allocation percentage a known factor. “There could be a big swing with this change,” he said, “and more pressure on the budget.”

Tuttle agreed. “We’re better off if we know what to expect,” he said.

City Mayor Clyde Haulman also felt comfortable because the city and county per-student spending was about the same within the current system, but he suggested that staff research the financial impact of the idea compared to past and present data and report back the findings.

The group also suggested staff look at other possible models and report back, though there are very few joint school systems in the state to look to for comparison, staff noted.

The group will meet again sometime in mid-December, with a rough goal to have an updated contract ready for the council and board to approve in February or March.