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HomeMy WebLinkAboutIII. B. SCHOOL FUNDING FORMULA UPDATECity/School Revenue Sharing Formula Kevin Chatellier, Director Budget and Management Services June 11, 2024 Agenda •Relationship with City- State Code •Historical Overview •Existing Formula and Allocation •Benchmark Comparison •Direction or Next Steps •Work with Schools staff to revise/update formula •Extend formula as-is another year Relationship with City Virginia State Code: •School Boards can be elected or appointed. Virginia Beach School Board has been elected since 1994. •Taxing authority only provided to governing body. •Minimum Standard of Quality (SOQ) local match requirement and state law requirement to raise revenue to meet this requirement. •Local funding provided may either be provided in lump sum or through nine major classifications/categories. •Governing body (City Council) does not have financial control over the use of those funds. •Schools not to overspend budgeted allocation; malfeasance in office. •Schools are not permitted to retain a fund balance, but instead funds lapse at fiscal year end and revert to the source of funds (Commonwealth or locality). Often referred to as the “reversion process” •City Council does not have the power to dictate policies or priorities regarding the oversight of Schools •Outlines process for School’s to submit budget for consideration and establishes a governing body budget adoption date of May 15th. Historical Overview •1994- School Board members became elected positions •1997-98- City and Schools began the use of a funding formula to allocate resources in the prioritization and planning of operation and capital needs. •2012-13 Revenue Sharing Formula was not utilized to allocate resources. Needs based budget that resulted in Real Estate tax increase of 4¢ for Schools as a result of reduced State revenue. •2013-14 Revenue Sharing Formula revised with components to remain more relevant: •Review by or extend date •SOQ State Funding •2019-20 Revenue Sharing Formula revised •Removed SOQ Funding as part of calculation •2023-24 Revenue Sharing Formula extended one year Current Revenue Sharing Formula •Local funding allocation through the formula are for VBCPS to manage their operations and prioritize funding needs which includes paying for Debt Service and programming Pay-as-you-go to the CIP •To request funding above the formula, the School Board must make a formal, written request to City Council •Share largest least volatile revenue sources (ex: real estate, personal property, general sales, utility, restaurant, telephone, business licenses) •46.75% of revenue provided to Schools and 53.25% retained by City; if revenues under or over performed through the year, City and Schools shared increases or decreases accordingly •Details steps and process to request “reversion” funds at year end for re- appropriation City/ School Revenue Sharing Formula City General Fund (Net) and VBCPS Budgets Source City % Schools % State $ 134,778,105 14%$ 455,947,171 46% Federal $ 25,492,274 3%$ 14,744,107 1% Revenue Share $ 635,777,865 67%$ 526,563,307 53% Other Local $ 153,552,144 16%$ 4,457,538 0% Total $ 949,600,388 -$ 1,001,712,123 - Use City %Schools % Operations $ 853,522,803 90%$ 948,640,512 95% Debt $ 63,095,110 7%$ 50,071,611 5% Pay -go $ 32,982,475 3%$ 3,000,000 0% Total $ 949,600,388 -$ 1,001,712,123 - City/School Revenue Formula Benefits Challenges Predictability of resources for long term planning and priorities Provides flexibility for Schools to allocate future funding between operations and capital Limited flexibility for funding emerging priorities without impacting other entity Transparency of total local support provided to VBCPS Does not account for State/Federal aid changes Reduced frictions in budget planning between two independently elected boards Calculation not account for changes in demand for service- increases or decreases (example, declining student population, unfunded mandated services, etc.) Links both City and Schools with economic growth/declines to School funding - School Funding Revenue Sharing Formula Comparison Locality Virginia Beach City Hampton City Chesapeake City Norfolk City Roanoke City Prince George County Roanoke County Arlington County Orientation 1998 Around 1999 Around 2004 2018 Around 2000 Around 2005 Around 2005 Around 2001 Formula Includes: Includes Local Tax Revenues  Removes dedicated revenue  Support Capital Program* Reversion Process  Request for additional funding   Includes ADM/population ratio  Adjusts for State/Fed/Other Funding Revisit Revisit  Formula Exceed Minimum SOQ  Direction and Next Steps •Begin working with Virginia Beach City Public Schools staff on considerations for revised/updated formula •Staff would brief School Board and City Council at joint meeting in November on options for consideration •Alternatively, ask if VBCPS are interested in continuation of current policy for another year. 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