Virginia schools are overbudgeted by $130 million in fiscal 2007 due to flaws in the state’s funding formula.
Gov. Tim Kaine decided the school systems will keep the money this year, but they will make due with the fixed formula for fiscal 2008. On Monday, the state found the multimillion-dollar error in the $72 billion biennium budget.
“We acknowledge there was a flaw. We are fixing it because it was our fault. We are going to make sure local school divisions do not feel the impact of our error,” said Kevin Hall, a Kaine spokesman.
Former Gov. Mark Warner’s proposed budget in December set the base for the extended budget discussions during the 2006 legislative sessions. That budget did not account for the abolition of the groceries sales tax. The 2006 session created a sales tax holiday in August on school supplies and cut the taxes that were pre-paid by large businesses, further changing the formula to distribute local sales tax.
The formula error changed the percentages of how much of the local sales tax gets distributed to schools, the transportation trust fund and the state’s General Fund, among other things. Schools received too much.
“School divisions will be pleased. They are not going to have to move funds. … They won’t have to reduce programs to make up for a shortfall in their sales tax revenues,” said Charles Pyle, a Department of Education spokesman. “It is not a question of meeting the standards of quality, but more a matter of delivering less than local expectations.”
Fairfax County Public Schools’ $2.1 billion fiscal 2007 budget would have taken an estimated $17 million hit, said Paul Regnier, a FCPS spokesman.
“If [the proposed plan] is true, that is good news, but every year we have difficulty in getting the budget funded from all different sources. … The state is a big chunk and that makes a big difference for us,” said Regnier, who added the majority of the system’s funding comes from the county.
“It would have posed a significant problem to our jurisdictions and that is why we took immediate and decisive action to correct it,” said Del. Brian Moran, Alexandria, chair of the House Democratic Caucus.
Moran said the official correction should be taken up by the General Assembly before it convenes for the transportation special session.
Virginia’s 5 percent retail tax distribution:
» 1 percent: To the locality where it is collected
» 1/2 percent: To the state’s Transportation Trust Fund
» 1 percent: Distributed to localities based on school-age population
» 1/4 percent: Public Education Standards of Quality and Local Real Estate Property Tax Relief Fund
» 2 1/4 percent: Unrestricted General Fund
cgoodman@dcexaminer.com
