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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.