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By Kim, February 8, 2010

A few weeks ago I blogged about the biennial budget proposal for the state of Virginia that would have frozen the Local Composite Index (LCI), a key component of the formula determining the distribution of state funding to schools. The LCI for Northern Virginia dropped relative to other areas of the state, which, by the formula used for decades, should have meant more money for those school districts. The proposed freeze would have done Northern Virginia out of $128 million in funding, of which Fairfax County’s share is $61 million.

The governor of Virginia has today decided to update the LCI, or at least to “support” updating it, which will require a change to the already introduced budget. It remains to be seen what actually happens in the legislature.

Governor McDonnell’s press release:

Governor Bob McDonnell announced today that he will support updating the Local Composite Index (LCI), the formula which determines state and local education funding responsibility, in the upcoming budget. The move will mean another proposed change to the introduced budget, which froze the LCI at its current level. The LCI has historically always been adjusted every two years to account for changing local economic conditions. The proposal to freeze the Index was unprecedented, and would have cost certain localities in Northern Virginia $128.3 million in state education funding.

Speaking about his decision, Governor McDonnell stated, “For nearly forty years, the Local Composite Index has been an impartial means by which to determine state and local responsibility for education funding in Virginia. The application of this Index has always been done in an objective manner, using the most recent fiscal data to most fairly apportion state resources. For many school districts, particularly in Northern Virginia, the biennial update of the Index has meant far less funding from the state than that received by school districts in localities experiencing lesser rates of economic growth. Accordingly, I will not support the proposed freeze in the budget introduced by the previous Administration. The Local Composite Index must be applied to all localities, at all times, in the same objective and fair manner by which it has always been utilized.”

McDonnell continued, “The decision to continue to update the Local Composite Index is one that I reached after extensive meetings with my finance staff, legislators, and local government officials. I thank all these individuals for their input and thoughts during the process. Ensuring that we have a fair formula that is implemented without regard to temporary or political considerations is the best means by which to appropriate education funding in the Commonwealth. Every time the Index is readjusted some school systems gain funding, while others receive less. This has occurred for nearly forty years, and local officials understand the routine and objective biennial implementation of the Index.”

In announcing his decision to undo the proposed freeze of the Index, McDonnell also identified specific budget savings to account for the additional state spending required. The update will cost the state $29 million in FY 2011. To cover this increased funding, McDonnell will recommend to the General Assembly the transfer of $13 million from Literary Fund balances; $8 million through the use of available balances in the Health Insurance Fund to reduce state health insurance premiums; $5.2 million will be found in Real ID savings and an available $3 million will be captured in additional Non-General Fund balances. Budget recommendations will continue to be made and communicated to the legislature in the coming days.

Bravo. Let’s see what happens next.

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By Kim, December 28, 2009

From the Connection Newspapers:

COMMENTARY: Funding Formula Doesn’t Add Up

Governor’s proposed budget freezes Local Composite Index to detriment of Fairfax Schools.

By Sen. Chap Petersen (D-34)

Monday, December 28, 2009

On Dec. 18, Gov. Tim Kaine (D) announced the proposed state budget for the next two fiscal years. The press focused on the governor’s proposal to finally end the car tax and replace it with an additional 1 percent income tax enacted at the local level.

One thing less noted but more insidious to Fairfax County was the governor’s proposal to “freeze” the Local Composite Index for funding public education in Virginia. This is a terrible idea that will specifically take money away from Fairfax and break a promise made to all localities that education funding is based on “need” and not politics.

First, a word of background:

The Local Composite Index is a mathematical calculation which purportedly represents a locality’s “ability to fund” public schools. It measures that by tracking the following public statistics: real property assessments, retail sales and personal incomes.

That aggregated wealth number for each locality is then divided by the number of school age children. The final figure is ranked on a sliding scale from 0 (poorest) to 1 (wealthiest).

The state then funds public education in each locality in inverse proportion to its LCI rating. In other words, if a locality has a 0.20 LCI, then the state funds 80 percent of the basic costs of education. If the locality has a 0.80 LCI, then the state funds 20 percent of the basic costs of education.

For the past couple generations, localities in Northern Virginia have rated high on the LCI, which means we’ve been short-changed on state funding. For that reason, I have contended that the LCI is a pretext that simply enables Northern Virginia’s money to be dispersed around the state for public education.

The process peaked a couple years ago when Fairfax County — the state’s largest school division — reached a .77 LCI, which meant that the state was only funding 23 percent of its base costs to the system educating 170,000 students. Due to our size, nearly every other school division became a beneficiary under the LCI system.

Then a funny thing happened. The real estate market crashed in Northern Virginia and personal incomes also decreased.

For 2010, the LCI is re-balanced. And, shockingly, the numbers were tilting more favorably to Fairfax and its neighboring localities.

For example, Fairfax dropped from .77 to .71. Loudoun dropped from .67 to .58. Prince William fell from .44 to .40.

These marginal increases represent large amounts of money. For Fairfax, the 6 percent change represents nearly $60 million in annual spending for K-12 education — or enough to preserve all-day kindergarten and elementary school music.

That was good news. It was not entirely unexpected. And it was not undeserved. Our localities have been short-changed for years. It was only just that we gain ground.

Then the bad news.

In his Dec. 18 speech, Gov. Kaine stated that his proposed budget would “freeze the LCI” to its present levels in order to give localities “certainty” for budgeting.

Hogwash. In my years in the legislature, no one has ever proposed freezing the LCI before. No other region in this state would let the governor or General Assembly get away with altering a state formula — if it caused them to lose money.

The most infuriating part was the governor’s claim that “seventy-nine school divisions” would benefit from the freeze. Of course, that’s because the big loser is Fairfax County whose size equals all the smaller divisions added together. And our schoolchildren apparently don’t count the same.

Fairfax legislators can embrace the governor’s logic or simply pretend the issue doesn’t exist. Or they can stand up for the schoolchildren and taxpayers of Fairfax County and reject this discriminatory treatment.