By Christian Basnight
Public schools in Lexington and Rockbridge County are bracing for the impact of a budgeting error committed by the state Department of Education that is likely to lead to hundreds of thousands of dollars less than they had expected this year.
On Jan. 27, the Virginia Department of Education notified local superintendents that K-12 public school districts will receive roughly $201 million less state aid than expected for fiscal years 2023 and 2024. The error includes a $58 million deficit for the current K-12 year.
Rockbridge County Public Schools face six-figure hole in budget
The department’s error could cost Rockbridge County roughly $102,340 for the remainder of the school year and $308,736 for the next. Lexington faces a $19,363 loss for the 2022-23 academic year and $47,841 for 2023-24.
“We’re well over halfway through this current fiscal year, and to be told that we’re going to get less money from the state than we were told previously, it’s very concerning,” said Phillip Thompson, Rockbridge County Public Schools superintendent.
Education department officials blamed a basic aid calculation tool for failing to appropriately account for the state’s elimination of a portion of the grocery sales tax at the start of 2023. Such sales taxes help fund public school systems. Thompson blamed the calculation tool for neglecting to account for the “hold harmless provision,” which ensures localities won’t be negatively impacted by the loss of the grocery sales tax.
The calculation tool has historically given school districts a reliable estimate of the money they should expect to receive from the state. Lexington City Schools officials had relied on the education department’s estimates to draft next year’s budget proposal, which they submitted to the city manager and finance director Wednesday.
“We don’t actually try to double check their work when they send it to us,” said Rebecca Walters, Lexington City Schools superintendent. “We anticipate its accuracy.”
Department officials said a corrected tool will be released later this month to determine the amount of state aid districts should expect to receive.
School districts receive state aid every month. The amount of aid a school district receives from the state is reflected by a locality’s Local Composite Index, a formula that determines each district’s ability to pay for education. Typically, school divisions located in more rural areas have lower index scores, and as a result, receive more money from the state.
“That’s a lot of money.”
-Rebecca Walters
“We get just a little bit more money from the locality than we do from the state,” Thompson said.
The specific amount of state aid that a school division receives largely depends on how many students attend school. Lexington, which has high student enrollment, anticipates receiving roughly $4.6 million in state aid for fiscal year 2024 to help support its $8.8 million budget. The remaining $3.4 million would be covered by the city.
Rockbridge County and Lexington fear the impact of this potential loss, even though the current miscalculations by the state account for a smaller percentage of their school budgets.
“We have an approximately $30 million budget, but $300,000 is still a lot of money,” said Thompson.
Walters says an aid deficit could make a big difference in some areas.
“Forty thousand dollars doesn’t sound like a whole lot, but in a small district, that’s a lot of money,” she said. “That can be part of somebody’s salary or your instructional materials.”
If Rockbridge County and Lexington do indeed receive less money from the state, they will ask the Board of Supervisors and city council, respectively, to make up their deficits. Thompson said he hopes that doesn’t happen.
“I hope they fix the error, and we don’t have to find that money, because the last thing I want to do is go to the locality,” he said.
Rockbridge County school officials are open to the possibly of cutting funding on some areas, including transportation. But they said they remain set on providing salary increases for its school staff.
“While we may have to make some cuts, it will not be in the area of our teachers and our personnel whether they work in the cafeteria or as a teacher assistant,” Thompson said. “There are some other areas we can go to if we need to find that money.”
Lexington city schools ready to weather the financial storm
Lexington also plans to make raises in teacher salaries a priority regardless of the calculation issue.
“We’re still going to work towards increasing teacher salaries and making sure that we’re competitive across the region,” Walters said.
Walters said the school board’s more conservative approach to its budget enables Lexington City Schools to cover the losses for the current school year with surplus funds.
“We’ve been able to have a surplus of funds at the end of each year over the last several, many years,” she said. “That $19,000 would probably be part of that surplus money at the end of the year, so we may just have less than we typically would to be able to put in those reserve funds.”
Walters said she is also optimistic that the potential losses for the 2023-24 academic year can be made up in the budget.
“I think we can figure out how to make that work within our budget, although we’d rather have it in our pocket,” she said. “But we’re hoping that they’ll make it right, which would be the nice thing to do.”
The General Assembly ultimately decides which budget the state will proceed with before the governor signs off on it. Typically, a finalized state school budget isn’t produced until May or June.
Gov. Glenn Youngkin said last week that he’s confident Virginia’s surplus funds can cover the mistake.
“Hopefully, they can make us whole,” Thompson said, “and this error goes away and hopefully never happens again.”