Management & Budget  |  FY 11-12 Budget FAQs - School Division
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REVENUE

EXPENDITURES

BUDGET PROCESS

REVENUE

Q: What are the sources of School Division revenue?

School Division Revenues

The School Division receives the majority of its funding from local sources such as real estate and personal property taxes. For the 2009-10 school year, the School Division received about 67 percent of its revenue from local sources, 28.5 percent from the state, and less than 3 percent from the federal government. Over the past few years, the amount of money the School Division has received from the state is declining, putting more of the burden for funding education on our local taxpayers. As part of its annual budget development process, the Albemarle County Board of Supervisors allocates a portion of certain types of new local revenue, typically 60 percent, to the School Division. The School Division also has access to federal and state grants and subsidies, and gathers a small portion of revenue from fees, such as for facilities rental.

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Q: How does the local real estate tax rate affect School Division funding?
The vast majority of School Division revenue comes from local tax dollars (about 72 percent of the budget). These local tax dollars are primarily derived from taxes collected on residential real estate owned in the county. The county also collects business taxes, personal property tax, fees such as business licenses, recording fees, dog and fishing licenses, etc., but those funds are not allocated to the School Division.

Residential real estate is assessed at a tax rate per $100 of assessed value of the property. The current real estate tax rate as set by the Board of Supervisors is $0.742 per $100 of assessed property value. The amount of tax a homeowner pays is a combination of the tax rate and the value of the property. For example:

Joe Resident’s home is valued at $280,000. At the current tax rate of 0.742 per $100, Joe owes $2077.60 in real estate taxes for a fiscal year. This will be payable in two installments, in June and December of each year. There are two ways Joe’s real estate taxes can increase or decrease: by changing the tax rate or changing the home’s assessed value. What has happened in the economic recession is that home values have fallen, lowering taxes on homeowners, and lowering the revenue the county receives that is available for schools. For example, as the tax rate remains at $0.742 per $100, Joe’s home is now assessed at $262,000. Joe now owes $1944 in real estate taxes for the same home. This decline in property values has created the decline in local revenue and cuts to County and School Division budgets.

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Q: What about funds from the Virginia Lottery?
It’s a common misnomer that the Virginia Lottery funds public education in Virginia. While it is true that the bulk of the profits from the Lottery are allocated for education funding, those profits do not come close to the amount required to support public education in the state. In addition, whatever lottery profits are directed to education, an equal amount of “general fund” tax dollars are subtracted from education; increased lottery sales does not equate to increased education funding. The Commonwealth uses a formula to determine the amount of lottery funds each locality earns, with the poorest Virginia localities receiving the lion’s share of the funds. Albemarle County receives approximately $1 million, or less than 1 percent of its revenue, from the Virginia Lottery each year.

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EXPENDITURES

Q: How does the School Division spend its budget? 
Education is a “people business”. More than 83 percent of the School Division’s budget is spent on salary and benefits for its ~2,400 employees with the remaining 17 percent covering operational costs. Looking at the expenditures another way, the School Division spends approximately 75.6 percent of its budget on instruction, well above the national target of 65 percent and more than 13 percent above the state average of all school divisions. Approximately 10 percent is allocated to building services, approximately 6 percent to transportation, approximately 4.5 percent to administration, attendance and health, approximately 1.5 percent to technology and 2.7 percent to transfers.

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Q: What is the “composite index” and how does it impact revenue?
The Composite Index is a ratio calculated by the Commonwealth of Virginia to determine our local ability to pay for school services. It is calculated every two years and includes such measures as average salary, average home price, overall local tax revenue, etc for the locality. The Composite Index determines how much money the state will contribute to the School Division to help fund Virginia Standards of Quality (SOQ) requirements. These SOQ are state mandates for numbers and types of positions required for state accreditation. Wealthier localities receive fewer Composite Index funds. Albemarle County is one of the wealthiest counties in the state, relative to other localities, and thus it receives only about 39% of the dollars necessary to fund the SOQ requirements. The state expects Albemarle County to pay the other 61% with its local tax dollars. In counties with less local tax revenue, such as Nelson, Buckingham and Greene, the state picks up more of the cost for the SOQ positions, since the state considers those localities less able to fund the mandated positions on their own.

Albemarle County’s Composite Index ratio is inflated due to two county-specific measures in place: the Revenue Sharing Agreement with the City of Charlottesville and the Land Use Program. In both cases, the state considers Albemarle County to have access to the revenues it shares with the City and the revenues it does not collect from landowners who have agreed not to develop their land.

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Q: What are “unfunded mandates?” 
An unfunded mandate is something the state or federal government requires the School Division to do without providing all of the related funding. The total combined funding from the federal and state governments for schools continues to shrink, although the number of unfunded mandates has increased. This list of mandates requires, in the estimation of our Fiscal Services Department, more than $60 million in funding annually.

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Q: What are some examples of federal unfunded mandates?
An example of an unfunded federal mandate is the No Child Left Behind (NCLB) Act of 2001. There has been a 36 percent increase in the number of SOL tests given since the 2000-01 school year as a result of NCLB, which requires more frequent testing. The School Division must spend money to fund testing coordinators for each school and technology support staff and data and reporting staff to comply with these mandates.

Another example of a federal unfunded mandate is the Individuals with Disabilities Education Act (IDEA). The original IDEA for special education was to provide 40 percent of program funding to serve students; in actuality, Albemarle County Public Schools receives less than 15 percent of the total costs of implementing this legislation. 

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Q: What are some examples of state unfunded mandates?
Standards of Quality for Public Schools in Virginia are part of the Code of Virginia and can be revised only by the General Assembly.  The SOQ specifies required staffing for K-12 public schools but the state only partially funds its share of the costs for these staff. Examples of SOQ-required staffing include:

  • 17 full-time equivalent (FTE) instructional positions for each 1,000 students identified as having limited English proficiency
  • 1 full-time reading specialist in each elementary school
  • 5 FTEs per 1,000 students in grades K-5 to serve as resource teachers in art, music and physical education
  • Two FTE per 1,000 students in grades K-12 with one FTE to provide technology support and one to serve as an instructional technology resource teacher

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BUDGET PROCESS

Q: How is the School Division budget created?
The School Division typically follows a budget development cycle that begins in August and ends in April: 

  • The process includes gathering input from the variety of stakeholders in the school system and community. This includes various Advisory Committees comprised of students, parents, teachers, staff, business leaders and community members.
  • A Division Budget Advisory Committee reviews all budget requests, aligns budget requests to the Division strategic plan, and prioritizes requests as part of its recommendations to the Superintendent. The Superintendent then forms a Funding Request, which is presented to the School Board in January. 
  • The School Board reviews the Superintendent’s Funding Request during a series of work sessions and a public hearing, and makes its own adjustments to the spending plan. 
  • A School Board Funding Request is next presented to the Albemarle County Board of Supervisors, which makes the final decision regarding the amount of revenue to be allocated to the school system. The final budget may then have to be revised based on the revenue the Division will receive.
  • The School Board adopts the final budget in April for the following school year.

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Q: What is the School Board’s responsibility in the budget development process?
The School Board is required by Virginia Statute to request funding that meets the educational needs of the students served by our schools. The Albemarle County School Board Policy also tasks the School Board with adopting an annual budget to provide the financial basis for the buildings, furnishings, staff, materials, equipment, and transportation needed to educate the students of Albemarle County. The School Board also is required to ensure that all funds are accurately accounted for and disbursed according to the adopted budget. Lastly, the Albemarle County School Board provides direction to the Superintendent in terms of the programs, initiatives and priorities that the board would like to pursue to drive the work of the division forward and achieve the strategic plan.

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Q: What role does the School Division’s vision, mission and strategic goals play in the budget development process?
Staff and the superintendent align the proposed funding request with the vision, mission and strategic goals of the School Division. Budget initiatives must be proven to support the strategic goals of the School Division in order to move forward in the budget development process. The Superintendent, the Department of Fiscal Services, the Superintendent’s Budget Advisory Committee, and the School Board each conduct a review of budget initiatives to ensure alignment with strategic goals.

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Q: What method does the School Division use to create its funding request?
Albemarle County Public Schools used a modified incremental approach in developing its 2011-12 request. The baseline for each department was the positions and programs that are required by policy, law, formula or mandate. Each department manager used specific staffing allocation formulas, accepted by our Board, to justify positions based on student needs. All increases in expenditures are specifically tied to increases in costs, or to positions justified by policy, law, formula, or mandate.

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Q: How does student enrollment impact the budget?
Student enrollment affects the budget in two ways: the amount of money received from the state through “Average Daily Membership” and employee staffing. We receive some state funding based on the number of students who attend each of our schools, through a formula known as “Average Daily Membership.” Student enrollment also determines the number of employees to be hired, as well as students who receive services that are mandated by state or federal law, such as English Language Learners or Special Education Services. The more students enrolled in our schools, the more students who require special services, the more teachers Albemarle County Public Schools must hire, the more buses and drivers we need, and therefore an increased budget.

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Q: How does education impact our community’s economic vitality?**
The quality of public schools has become a critical “site location factor” for new businesses and companies that relocate. Economic vitality within a community depends upon public schools because they: 

  • shape the basic skills, soft skills, and attitudes of the local work force
  • play a role in both quality of life and the ability to relocate professional talent within a community 
  • provide sufficient numbers of prospective employees with required work force skill sets 

In 2008, Albemarle County was named one of the Best Places to Raise a Family by Forbes magazine. Only twenty localities nationwide were named to this list, and Albemarle County was the only one in Virginia. This ranking was based primarily on the quality of the county’s public schools and also included other quality of life indicators which are also affected by the quality of schools.

The vitality of our public education in Albemarle County is deeply rooted in the vitality of our entire community, and is a key factor in the County’s continuing to be highly ranked as a place to reside. Many of the features we hold dear as being essential to Albemarle County are a result of the quality of the public schools here.

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Q: How do we determine the components and costs of our employee benefits packages? 
Major components of the Albemarle County benefit package are health, dental and life insurance plans, and retirement benefits through the Virginia Retirement System.  These are comparable to the benefits packages offered by other major employers, including local governments, school systems, and businesses. In order to provide cost-effective and valued benefits, we review our health and dental plans on an annual basis by gathering data from other localities and by looking at the plan design and costs (to employees and to the County).  This review indicates that Albemarle County offers plans in line with other localities.

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Q: How many people does the School Division employ and in what types of jobs?
In 2010-11, the School Division employs approximately 2,422* people in teaching, administration and support staff positions. We are one of the largest employers in Albemarle County. This school year we employ:

  • 1,190 teachers (includes counselors, library media specialists, instructional coaches, gifted, special education, and “regular” classroom teachers)
  • 332 teaching assistants (examples: regular education, special education, library, computer lab, in-school suspension assistants, etc.)
    • 212 bus drivers and transportation employees
  • 120 food service employees
  • 109 administrators (examples:  principals, assistant principals, directors, assistant directors, managers, coordinators, etc.) 55 of these are building level administrators, 54 of these are centralized administrative positions with program oversight or leadership responsibilities (defined as paygrade 16 and up)
  • 77 Extended Day Enrichment Program staff
  • 182 facilities maintenance/building services employees
  • 200 school-based and central support personnel
    *Note: some people hold part-time positions in more than one category.

Q: Can we create a reserve in boom years, so that we have savings available to cover times of shortfall? 
It is possible to have reserves or “rainy day funds” built up to address one-time shortfalls. Our Division has, through hiring freezes and operational reductions over the past 2 years, been able to build a fund balance or “rainy day fund” that has assisted in meeting the revenue shortfalls in the current year and will also offset the severity of the impact of revenue reduction for next fiscal year.  These reserves were accumulated over the past 3 years through cost containment, reductions, efficiencies, hiring freezes and incentivizing early retirement. 

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Q: Why are you proposing giving employees raises in 2011-12 when there is a gap between available revenue and expenses?
The Division uses a competitive market to analyze its compensation and benefits against other school divisions and public and private companies in order to ensure we are able to recruit and retain high quality personnel. We also follow a compensation strategy that places salaries within the top quartile of our competitive market. Analysis of our salaries this year shows that we are below our market in several areas, especially teachers with ~20 years experience. To maintain our strategy and our ability to continue to attract and retain excellent teachers and staff, the 1.95% average raise for teachers and 1% raise for classified staff is recommended.

The County and the School Division, by agreement, follow the same salary scales and adjustments, and seek direction from the Board of Supervisors prior to recommending any compensation increases.

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Q: What is the difference between “recurring funds” and “one-time money?
Recurring funds are revenues that occur annually and can be counted on, either by assessment, policy or contract. In personal finance, recurring funds are like a person’s salary: you know how much you have to spend each month and can plan your budget based on continuing to receive those revenues.

One-Time funds are monies that do not recur. They may be funds from the state or federal government that are able to be used for a single fiscal year, but do not recur the subsequent year. In personal finance, one-time funds are like getting a bonus or a gift from your grandmother. They increase your revenue in the short-term, but not over the long-term.

Recurring funds and One-Time funds must be spent differently. An ongoing budget cannot be maintained with one-time funds because they do not continue. When the one-time funds run out, cuts will have to be made. Thus, one-time funds are often used for capital expenditures, such as the repair/upgrade of facilities or purchase of items, as these are “one-time” costs. Salary and benefits, on the other hand, are recurring expenses, and funding those with one-time funds creates a “funding cliff” when the one-time funds run out. Using one-time money to fund recurring expenses is not a long-term financial strategy; a locality must plan to balance recurring revenues with recurring expenses.

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