On December 1, the Commission on School Construction and Modernization met to review additional information from the Virginia Department of Education (VDOE) on K-12 infrastructure and formally recommended more than half a dozen policy prescriptions to the full General Assembly. Included in the policy recommendations is an expansion statewide of the special taxing authority first given by the General Assembly to Halifax County in 2019 and then expanded to eight additional localities in 2020. This remains a legislative priority for VACo and will likely be a topic of discussion during the 2022 session of the General Assembly. VACo strongly encourages its members to urge your legislators to support this effort.
Other recommendations made by the Commission include an endorsement of VDOE’s and the Department of Treasury’s recommendations to make the Literary Fund loan program more competitive and attractive to school divisions as a funding source for school capital projects. As previously reported, though it is a permanent and perpetual school fund established in the Constitution of Virginia for public school purposes, the vast majority of LF revenues are used by the state to pay the state’s share of Teacher Retirement transfers to the Virginia Retirement System (VRS). Since the financial crisis in 2008, the retirement benefit transfers have significantly increased while loans have virtually ceased. This means that not only are public schools not reaping the intended benefits, but the lack of revolving loans has begun to negatively impact the Literary Fund’s long-term health and accessibility.
The Commission also recommended the creation of a new grant fund, separate from the Literary Fund to help localities finance constructions and renovations. Such a fund would be modeled on unsuccessful legislative efforts proposed by Del. O’Quinn and Senator Stanley during the 2021 session, both of which were supported by VACo. Potential sources of funding for this fund could include dedicated general fund revenue surpluses and the portion of casino gaming proceeds dedicated to school construction and renovation.
Somewhat troublingly, a proposal to allow school boards to keep end-of-the-year unexpended funds allocated to them by their local governing body – with or without the consent of the local governing body – was narrowly endorsed by the Commission on a divided vote. This potentially resurrects a legislative effort from 2019 that was opposed by VACo and defeated in subcommittee. Many local governing bodies already voluntarily engage in the practice of allowing school boards to retain unexpended funds, however maintaining the discretion to do so allows local governing bodies financial flexibility to respond to unexpected crises or revenue shortfalls. VACo has recently increased education opportunities and partnerships that promote improved relations and best practices for working with school boards that would hopefully make such a proposed mandate moot. VACo continues to oppose efforts that would subvert this authority given to localities.
Additional information was provided to the Commission in a presentation from VDOE. Not surprisingly, data from VDOE supports the conclusion that school divisions with higher fiscal stress, on average, have older buildings and longer periods between major renovations. A survey of school divisions revealed 322 renovation projects totaling $3.2 billion not captured in Capital Improvement Plans. This further underscores the need for action by the General Assembly as more than half of all K-12 school buildings in the Commonwealth are more than 50 years and the cost to replace all of them would total more than $25 billion.
VACo supports the work of the Commission to bring attention to the issue of K-12 infrastructure needs and produce recommendations to the General Assembly to provide additional state funding or local financing options to ensure that all of the Commonwealth’s students have access to safe and modern learning environments. VACo staff were present for the meeting and provided comments to the Commission. A full recording of the meeting may be viewed here.
VACo Contact: Jeremy R. Bennett