UPDATED: Frequently Asked Questions About School Budgets

By Amber Lester Kennedy Wednesday, February 01, 2012

In the weeks since school boards started budget talks, readers have sent us several recurring questions. WY Daily can’t answer all your questions, but we decided to answer some of the most frequently asked.

We plan to update this story as we tackle more questions, which you can leave in the comments or email to amber@wydaily.com. To understand the basics of school funding, read this 2010 article.

Q: What is VRS and how does it affect school budgets?

The Virginia Retirement System provides benefits for state employees, teachers and school administration employees.

Prior to 1983, state employees and teachers contributed 5 percent of their pay toward their retirement funds. That year, the General Assembly voted to freeze state salaries, but justified the action by picking up contributions to VRS. The agreement remains in place today, although Gov. Bob McDonnell pushed in 2011 for the GA to allow localities to require employee contributions, provided salaries were raised 3 percent.

Although the VRS board suggests rates, the General Assembly approves them. During the 1990s, when the stock market was performing better than expected, the GA decided not to fully fund the suggested rates. After the recession hit in 2008, however, it became clear VRS is now underfunded.

 

In 2010, to balance the budget, the GA agreed to suspend payments to VRS for one year, with a plan to repay the suspended payments over a 10-year period. McDonnell wants to aggressively tackle those payments, and has proposed employers make the largest-ever contribution – $2.2 billion – to the VRS in the next year.

In 2011, the Williamsburg-James City County School Board approved the creation of two retirement plans. Employees already enrolled in the VRS prior to July 2010 would be grandfathered under Plan A, but employees hired after that date would join Plan B. Plan B employees contribute 5 percent to their retirement plans. The York County School Division decided not to require any of its employees to contribute, according to Chief Financial Officer Dennis Jarrett.

Although teachers are not state employees, they belong to the VRS teachers’ fund, which is a statewide pool. Locally, school divisions are facing a burden of increased VRS payments in the millions if the GA approves McDonnell’s plan. WJCC’s contribution will increase by $4.3 million for fiscal year 2013; York County’s will rise by $4.5 million.

UPDATED Question: If administrators knew the schools would have to pay more for retirement contributions, why didn’t they set money aside?

In short, school divisions can’t set money aside, even if they wanted.

When the General Assembly decided to defer employer contributions to the Virginia Retirement System for fiscal year 2011, it was clear the deferred contributions would have to be repaid at a higher rate in the next 10 years. Schools knew the costs would be increased after that year was skipped, but they’re powerless to change the situation, said York County Schools Chief Financial Officer Dennis Jarrett.

Because VRS rates are set by the General Assembly, based on input from the VRS board and its actuary, the school divisions have no way of knowing what the rates might be in the future. Gov. Bob McDonnell has proposed the rate be raised from 11.93 percent to 17.77 percent, including a retiree healthcare credit. “We knew it was going to go up, but we had no idea it would go up at the rate that’s been proposed,” Jarrett said.

By Virginia law, school divisions also cannot carry a fund balance at the end of a fiscal year. Any left over money has to revert back to local government. For that reason, every cent must have a designated use; the school divisions do not have accounts comparable to a family’s savings account or rainy-day fund.

School divisions also cannot pay more or less in VRS contributions, so paying a little extra isn’t an option.

 

Q: What is LCI, and why does it matter?

The Local Composite Index is a score used by the state to determine how much a locality can contribute to its public education. The LCI is calculated using three factors: the true value of real property (weighted 50 percent), adjusted gross income (weighted 40 percent) and taxable retail sales (weighted 10 percent).

It is recalculated every two years (a period called the biennium by the state). If a locality’s LCI score rises in the biennium, its school division will see a decrease in state funding. That’s happening this year in York County.

York County’s true value of property was $9.3 billion; the adjusted gross income was $1.7 billion; and the taxable retail sales were $897 million. The March count of school enrollment was 12,533. York County’s new LCI is .4049, compared to .3727 in the last biennium.

For 2012-14, Williamsburg’s true value of property was $1.9 billion; the adjusted gross income (including nonresidents’ adjusted gross incomes) was $313 million; and its taxable retail sales were $321.6 million. Although the city is considered, by its LCI score, to be the most eligible to pay, only 829 of the division’s students came from the city when enrollment was counted in March. Its composite index score of .8000 has not changed in the biennium.

James City County’s true value of property was $11.7 billion; the adjusted gross income was $2 billion; and its taxable retail sales were $787 million. Its portion of the student enrollment was 9,657. Its composite index score is .5628, a decrease from its 2010 composite index of .5668.

Q: How many administrators work in each division? Could they take pay cuts?

Many readers have varying definitions of administrators, which prompted a closer look at this question's original answer. Some might consider any employee in the Central Office an administrator, while others might limit it only to employees in supervisory roles. Some might be referring only to administrators who possess Ph.D.’s in education administration, but others might be including administrators in operations. With such a wide range of definitions, it’s difficult to give a definitive count.

The Virginia Department of Education last collected data on administrative, service and support positions in Fiscal Year 2010 (which goes from July 1, 2009 to June 30, 2010). In that year, WJCC had 230.22 full-time administrative, service and support positions, which would include any positions other than teachers. In that same year, York County had 233.9 administrative, service and support positions.

In the past three budget cycles, WJCC has eliminated 34.5 administrative and support positions. In the current budget, $2.2 million of the $110.6 million operating budget was allocated to administrative costs (a decrease of 2.4 percent from the previous year). That does not include operations, maintenance or technology costs.

In the past three budget cycles, York County has eliminated 30 School Board Office and operations positions through attrition. In its budget, York County allocated $5.8 million for the administration/attendance and health category of its budget, which includes the costs for school board services, executive services, human resources, fiscal services, information services and health services – 5 percent of its $116.8 million budget.

Excluding elementary and secondary principals, WJCC includes 47 positions on its organizational chart. Its chart includes both senior administrators and supervisory positions, along with some support positions, such as an accountant.

York County’s organizational chart included in its current budget includes its 15 senior administrators, excluding principals. It does not detail its supervisory staff. Its online administrative directory lists 43 positions.

Neither school division has proposed pay cuts. When WJCC school board member Heather Cordasco suggested pay cuts might be a better alternative to layoffs, Superintendent Steve Constantino said he would never propose pay cuts because they hadn’t worked in his previous school division in Cobb County, Ga. He said morale plummeted, and the pay cuts were not able to stave off layoffs in following years.

Q: What benefits do School Board members receive?

In fiscal year 2012, York County’s five members each received a $9,000 stipend (the fiscal year ends in June). The chair receives an additional payment of $1,200 and the vice-chair receives an additional $600.

Board members also receive employee benefits. In 2012, York County allocated $4,039 for Federal Insurance Contributions Act (FICA) taxes; $17,188 for health insurance; and $259 for other benefits. The division also set aside $18,000 for travel costs (the members attend statewide and national conferences) and $13,000 in dues and memberships. Money is also set aside for board support services, including auditing, advertising (the board is required to advertise its meetings), office supplies and furniture equipment. The total board services budget was $131,340.

In WJCC, five board members are paid by James City County and two are paid by the city of Williamsburg. In 2012, James City County allocated $30,815 in salary and fringe benefits for its members; Williamsburg allocated $13,025 for its members.

The division also allocates $176 for FICA benefits; $10,680 for purchased services; $6,626 for telecommunications; $5,000 for communications; $14,125 for travel; $5,800 for miscellaneous costs; $14,442 for dues and memberships; $1,700 for supplies and $914 for technology and hardware replacements. The budget for WJCC’s school board services was $243,181 for the current year.

Q: Why aren’t all buses filled to capacity?

“We do our best to transport as many students as we can with as few buses as possible, but getting all our students to school on time requires us to consider the time of day a school begins its classes, the distance traveled, and seating capacity when we plan our routes,” said Earl Tyler, director of transportation for WJCC. “All of these things vary considerably depending on the school being served, how many students live in a certain area, etc.

"Some of our students live a considerable distance from our schools and in some cases, the street network is challenging. And yet, fewer students live in these areas, so buses having to travel routes like this will not have as many students on them.”

Tyler also told the WJCC School Board at its budget retreat that the school system is obligated to give rides to homeless students, who might not be living in the same place they were the day before.

As of Jan. 27, WJCC transported 7,106 students, including K-12, special ed in-district and special ed out-of-district, preschool, magnet programs, shared courses, Governor’s School, vocational school and School of Arts students.

Without including buses used for special ed or special program students (who often require small or specially equipped buses), buses used for high school runs are at 54 percent of capacity; at 70 percent of capacity for middle school runs; and at 59 percent capacity for elementary school runs.

Q: Could the divisions get smaller buses, or more fuel-efficient buses?

WJCC has never researched the price of, or purchased, smaller buses that aren’t specially equipped for special ed or special needs services, Tyler said.

“A smaller bus’s use is limited,” he said. “For example, a field trip for 50 passengers requires one large bus, while it would take at least two smaller buses and drivers for the same trip.”

WJCC has a mixed fleet of buses, including specially equipped buses for special needs and preschool programs. Large buses cost $89,779 each.

Tyler’s department has researched purchasing fuel-efficient buses in the past, and is currently researching propane and natural gas buses. Because the cost of all fuel types fluctuates, it isn’t clear what the cost savings would be, and the availability of federal rebates has also varied from year to year, he says.

If the school divisions wanted to purchase natural gas buses, each bus would cost close to $100,000. An additional $100,000 would have to be invested into adding the infrastructure for a natural gas refueling station, which is more expensive than propane.