Virginia

Background

Virginia has a biennial budget system. On even number years, the General Assembly passes a two-year budget. In odd numbered years, the General Assembly amends the second year's budget based on revenue projections, which have improved in the last few years. In 2015, Virginia's gross domestic product (GDP) growth was 0.0%, ranking 48^th in the nation (ahead of Mississippi and Alaska) and next to last (11^th) in the Southeast region.¹ According to the July 3, 2019, Bureau of Economic Analysis, Virginia's GDP grew by 2.7%²-an improvement over last year's growth of 2.4%³ and the 0.6% growth in 2016⁴-allowing budget increases for education. In this session, PK-12 education increases totaled $292,094,409 and higher education increases totaled $249,382,042 over the fiscal year FY2019 base budget.⁵

Funding priorities for p-12 and higher education

The 2018 National Education Association rankings of public-school teacher salaries put Virginia $9,218 below the national average.⁶ Providing a 5% salary increase for public school teachers was a major priority for the Governor's budget. The caveat: Virginia will only contribute its share of the pay increase, and the localities must pick up their share. The payment split is based on the locality's wealth as determined by the modified foundation formula, called the Standards of Quality (SOQ), resulting in a composite index (CI) in which poorer localities pay less and wealthier ones pay more of the foundation costs. For example, a poor locality may have a CI of 0.3 and a wealthier one may have a CI of 0.7. In the first case, the locality with a 0.3 CI would be responsible for paying 30% of the SOQ costs, and the state would pick up the remaining 70%. In the second case, the locality with a 0.7 CI would be responsible for 70% of the cost with the state paying 30%. At issue is the available funds at the local level to pick up their share of the 5% salary increase which some localities have already said they cannot afford.

In higher education, the funding priority was to provide additional funds to institutions that decide not to increase in-state tuition rates. All public colleges agreed to freeze in-state tuition, and the state paid the $57.5 million tab. A second priority was for Virginia to become "the number one state for education"-the most highly educated state in the U.S. The cost of tuition has become a barrier to reaching that goal. In 2004, Virginia set a goal for state funding to cover 67% of undergraduate, in-state tuition with the institutions covering 33%. In FY2020, the state support level increased to 48%⁷ from 45% in FY2019.⁸

changes to funding formula for P-12 and/or higher education

No substantial changes have been made to either the P-12 or higher education funding formulae.

pressing state issues affecting P-12 and/or higher education funding

Pressing P-12 issues revolve around funding and changing demographics. In spite of financial gains made over the last several years, state support is down 9.1% for the FY2018 compared to FY2008; staffing has declined by 1,242 positions; and enrollment has increased by 53,376 students.⁹ The low level of state funding places the onus to meet student needs on the localities. According to the Virginia funding formula, in total, localities are required to raise $3.6 billion to meet the SOQ. Local spending now stands at $7.6 billion-$4 billion above the state requirement, and poorer localities may not be able to increase their spending.¹⁰ This wealth gap could exacerbate the achievement gap.

Salaries are the largest part of any education system, and P-12 Virginia salaries are another pressing issue with the Virginia average teacher salary $9,218 below the national average.¹¹ With changing the Virginia Retirement System (VRS) from a defined benefit to a hybrid plan (mostly a defined contribution plan with a...