Examining and Correcting School Funding Formulas

The underfunding of Virginia’s public schools recently made headlines, when a new study concluded that Virginia’s K-12 education system receives 14 percent less funding that the average system in America even though Virginia has the 10th highest median family income. This independent analysis collides with Governor Youngkin’s persistent call for more tax cuts.

This year, the state legislature should be adopting budget amendments to reflect adjusted revenues, but we have been unable to agree because of the Governor’s insistence on more tax cuts. Cutting taxes means less revenue for state responsibilities like education and mental health. 

As someone whose 20 years of education were subsidized by Virginia taxpayers from kindergarten through law school, I fully appreciate the importance of robust investments in public education. 

Schools Are Underfunded

Two weeks ago, Virginia’s nonpartisan independent auditor, the Joint Legislative Audit and Review Commission or JLARC, published a long-awaited analysis of the adequacy of funding for Virginia K-12 education. The study found that Virginia’s system receives 14 percent less funding than the average U.S. public education system after adjusting for labor costs or about $1,900 per student. Among neighboring states, we also invest less than West Virginia, Kentucky and Maryland and slightly more than Tennessee and North Carolina.

The report highlighted several disparities baked into our existing education funding approach that hurt our area. First, existing funding underweighs Northern Virginia’s higher increased labor costs and caps state funding for school support employees like guidance counselors, nurses, social workers and teachers’ assistants — an approach that pushes these costs onto local government. 

State funding also does not adequately account for English as a Second Language (ESOL) students, special education or children in poverty, students we broadly label as “At-Risk Students.” This is significant because public schools must teach whoever walks in the door and Fairfax County Public Schools report that elementary students speak 182 different languages or dialects at home.

Schools cannot control the number of at-risk students in their classrooms and Northern Virginia has a disproportionate share of ESOL students compared with the rest of the state and FCPS At Risk Student population would be the 5th largest school division in Virginia if it were its own school division. In addition, state funding for at-risk students has declined on a net basis while actual expenditures have risen, costs funded by local governments.

Fourth, while we do have a program to supplement localities with high labor costs called “cost to compete,” this funding is insufficient. Arlington receives nine percent more funding while its labor costs are 40 percent more than average. 

JLARC did find that the formula currently used to allocate funds called the “local composite index” (LCI) does work. The LCI measures a locality’s ability to pay by comparing each locality’s relative income, real estate taxes and student population. Wealthier jurisdictions receive less state funding and less-wealthy divisions receive more. 

The study also highlights concerns unique to rural areas. It is important to realize that we must construct policies for jurisdictions as large as Fairfax County’s 1.1 million residents and 180,000 students and a system like Highland County, Virginia, with 2,295 residents and 195 students. 

The JLARC analysis basically leaves two questions. First, how do we craft a funding system that more equitably distributes more funds to elementary-secondary education in Virginia. The solution must ensure that ESOL, special education and low-income students are accurately assessed and accounted for in the funding formulas. We also must correctly account for localities’ true labor costs and needs. 

The Senate Moved Forward

This year, the Senate Democratic Caucus took a first step by proposing to eliminate the cap on state reimbursement for support employees, investing significantly more funds in at-risk students and proposing higher teacher raises. Sadly, the House of Delegates Republicans and the Governor are prioritizing tax cuts. Hence, the budget stalemate.

The second issue is finding more resources to invest in education. Annual tax cuts like those proposed by the Governor will not help us make longer-term investments in schools. Virginia’s tax system also needs serious modernization so that revenues keep up with demands for the high-quality services the public expects. 

I am fortunate that public education gave me a foundation for success that I have enjoyed in life and I will continue to fight for policy choices that make those opportunities available to everyone. Please email your views to me at scott@scottsurovell.org