Below are excerpts from the Governor's remarks to the money committees this morning. As you will see, it confirmed what we reported here last evening: (1) the local composite index hold harmless will be eliminated for FY12 and $50M+ will be redirected to VRS and (2) local governments and school boards will be given the authority to require current employees to pay the 5% VRS premium IF they give the employees a 3% raise. Additional money for basic aid is forecast based on projected increases in revenue.
Several amendments have been made to K-12 public education funding.
The rate of student enrollment growth is slowing from what had originally been projected. Since public education is largely funded on the basis of per pupil amounts, these reductions in the enrollment forecast will produce savings in the state’s share of public education funding of approximately $49.4 million in FY 2011 and $43.0 million in FY 2012.
At the end of FY 2010, public school divisions received an additional $18.7 million from increased sales tax revenue collections. Going forward, the net increase in sales tax dedicated to public education, after the Basic Aid offset, will be an additional $19.5 million in FY 2011 and $21.0 million in FY 2012. That means Virginia school divisions will have $59.2 million in additional net revenue from above from what we originally anticipated in the budget.
It is important to note that since you departed last March, this new state money of $59.2 million and federal money of $249 million has been added to K-12 over the biennium. With our amendments to the budget that I am introducing today, state funding for K-12 over the biennium will increase by $57 million over final FY 2010.
As a result of injecting that new money, I have recommended a policy change to reprogram discretionary spending in FY 2012 to address a priority need in teacher’s retirement. At present, $57.6 million had been appropriated in FY 2012 for the 50% Local Composite Index hold harmless. I recommend those funds be reprogrammed to help finance the state’s share of a 2% increase in the teacher’s retirement rate at an estimated cost of $53.2 million. This action will make the teacher pension system stronger, offsetting future growth in retirement contribution rates and reducing the level of this unfunded liability, estimated to drop to only 57% funded by 2014.
· Afford localities the option to require the same 5% local employee share of contributions, but only if such requirement is offset by a 3% or more salary increase.
Click here to read the Governor's remarsk in their entirety: http://www.governor.virginia.gov/News/viewRelease.cfm?id=527