Virginia

Background

K–12 public education and higher education have seen dramatic funding declines over the past five years. Virginia is still struggling from the impact of the Great Recession. A June 6, 2013, U.S. Department of Commerce Bureau of Economic Analysis news release reported that U.S. real GDP by state grew 2.5% in 2012 while Virginia’s GDP grew by only 1.1%, ranking the state 40th in the nation and last (12th) in the Southeast region.

As seen in Figure 1, Virginia’s state share of public school per-pupil funding saw a rather large decrease in 2010, down $759 from 2009. In 2011, the state’s share of funding decreased another $104. Since then, the share has been increasing, but it remains $398 lower than funding in 2009.

With many questions about sequestration and Virginia being home to many defense contractors, the economic outlook is unclear.

As a result of underfunding the Virginia Retirement System, school divisions face substantial increases in the rate the employer pays currently and in the coming years; no additional state help is expected. Additionally, the state has provided no increased funding for compensation for several years (until FY 2014, when a 2% compensation supplement was provided) even as retirement and other costs have risen. Shifts in enrollment and changes in the local composite index have also strained local school divisions during the economic decline. The drop in housing values has compounded the issue by reducing the amount of local funding available.

State Issues Affecting P–12 and/or Higher Education Funding

Medicaid and a major overhaul of transportation funding were the two major issues affecting public education and higher education in the FY 2012–2014 session of the Virginia General Assembly. Neither education level received much attention or funding. The transportation funding will affect all education levels: $49 million was diverted from the General Fund to help repair Virginia’s roads. Building needs and enrollment growth in higher education were additional issues. Also, Commonwealth public school enrollments have increased by more than 11,000, while state per-pupil funding has decreased.

Funding Priorities/Trends for Higher Education

This year’s state funding favors higher education budgets at the expense of monies for public education. The past five years have included no raises for higher education faculty. The General Assembly allocated $7.3 million for a 3% faculty salary increase, $3.4 million for enrollment growth, $11,042 million for base operations (ranging from $42,757 at Richard Bland to just under $4.6 million at Old Dominion), $8.6 million for in-state undergraduate financial aid, and $4.9 million for research. Additionally, a $936 million capital outlay package financed by bonds was approved with annual authorizations capped at $250 million. In sum, the general fund for educational and general (E & G) programs will increase by $25.1 million or 3.3% over the previous year’s level.

Figure 1.

Virginia’s State Per-Pupil Funding, 2009–2014

Source: Virginia Education Association, Research Report (Richmond, VA: February 28, 2013). Reprinted by permission of the Virginia Education Association.

Changes to the Funding Formula for P–12 and/or Higher Education

This year (2013), Virginia’s funding formula did not change for public education. In the past two years, two changes had a negative impact on public school funding. First, a federal recapture provision was implemented whereby the state recaptured the federal funding for certain programs, reducing revenue to the localities. Second, in FY 2011, the SOQ funding for support positions was reduced substantially, requiring localities to either fund selected positions or eliminate them. At the higher education level, base funding was adjusted for some colleges and universities to remedy past inadequacies.

The 2012 State Council of Higher Education in Virginia Report on Tuition and Fees indicated the average cost-share relationship between state funding and in-state undergraduate students’ tuition for public colleges and universities. The Commonwealth’s tuition policy goal for 2012–13 was to have in-state undergraduate tuition pay 33% of tuition cost. Figure 2...