Additional Budget Analysis from VSBA

General Assembly, Governor Youngkin Reach Budget Compromise

The Virginia General Assembly met in Special Session on Monday, May 13, 2024, for the purpose of adopting the 2024 -2026 Biennium Budget. After weeks of negotiations between Senate and House budget writers and Governor Glenn Youngkin, lawmakers maintained the two-year funding levels that were included in the Conference Report adopted by the General Assembly in March. According to a presentation from the House Appropriations Committee staff, lawmakers were able to maintain funding levels found in the Conference Report because revenue collections for fiscal 2024 “are running well ahead of forecast”.

The plan adopted with overwhelming support in each legislative chamber was signed into law by Governor Youngkin on Monday afternoon and will become the Commonwealth’s two-year spending plan from July 1, 2024, through June 30, 2026. Lawmakers will address revisions to the budget when they convene for the short session of the General Assembly next January in Richmond.

To review the entire 2024 – 2026 Biennial Budget, please click here.  

Specific items of interest in the 2024 – 2026 budget pertaining to K12 education are:

Supplemental General Fund Payment in Lieu of Sales Tax on Food and Personal Hygiene Products (Grocery Tax): Appropriates $272,500,000 in Fiscal Year (FY) 2025 and $273,600,000 in FY 2026 holding school divisions harmless for the state’s portion of the Grocery Tax which was repealed in 2022. This appropriation is an increase of $14.1 million dollars over the previous biennium providing for adjustments to generated revenue estimates.

Three Percent of State Share for SOQ Supported Positions in Each Year of the Biennium: Provides $178,149,562 in FY 2025 and $361,023,394 in FY 2026 from the general fund is provided for the state share SOQ Supported Positions. The state share of funding provided to a school division in support of this compensation supplement shall be prorated for school divisions that provide less than an average 3.0 percent salary increase the FY 2025; however, to access these funds, a school division must provide at least an average 1.5 percent salary increase FY 2025. Additional flexibilities are provided in FY 2026 for divisions to access these funds. Please click here for specific details on accessing state funds in each year of the biennium.

At-Risk Add On:

Provides $616,036,160 in FY 2025 and $648,037,570 in FY 2026 from the general fund and $225,180,150 in FY 2025 and $192,396,464 in FY 2026 from the Lottery Proceeds Fund to distribute the state share of funds for the At-Risk Program. This is an increase of over $300,000,000 to the program. Click here for more specific information on the At-Risk Add On appropriation.

English Learner Teacher Payments

A payment of $165,982,653 in FY 2025 and $170,304,480 in FY 2026 from the general fund shall be disbursed by the Department of Education to local school divisions to support the state's share of professional instructional positions for English Learner teachers.  This is an increase of over $72 million from the previous biennium for English Learners.

To provide flexibility in implementing this new staffing standard in FY 2025, the number of English Learner teachers required for each school division for the first year shall be equal to the number of such teachers that were required during the 2023-2024 school year. Please review the staffing standard and other specifics from this appropriation by clicking here.

 

Virginia General Assembly Adopts Budget

The Virginia General Assembly adopted a two-year spending plan today during a one day Special Session. Lawmakers in both chambers pledged to continue to look at ways to expand the tax base and provide additional funding for public education.

Highlights of the 2024-2026 biennial budget are:

• Retains all spending items from the Conference Report adopted by the General Assembly this past March. However, in a compromise with Governor Glenn Youngkin, lawmakers scrapped plans to expand the digital sales tax. This additional revenue ($169 million) would have provided increased funding for K-12 education.
• The Conference Report included $1.4 billion cash and $386 million debt for Capital Outlay projects.
• Conference Report committed $400 million from the Literary Fund - $150 million for teacher retirement in FY 2025 and $250 million for loans split over the biennium.
• HB 6001 moves the $150 million of Literary Funds from FY 2025 to FY 2026 but makes no changes to the overall amounts.
• HB 6001 (HB 30) and HB 6002 (HB 29) assume that the FY 2024 forecast is increased by $525 million 
• This will increase the assumed carryforward into FY 2025.
• Any base adjustments can be picked up as part of the standard fall revenue forecasting process.
• Recognizes an additional $525 million in FY 2024 withholding revenues (no base adjustment).
• Holds School Divisions Harmless for state repeal of the grocery tax.
• Three percent state funding for SOQ position salary increase in each year of the biennium.
• Year-to-date revenue was $1.12 billion ahead of forecast. Of this total, $536 million comes from withholding tax revenues. 
• Year-end revenue collections may well exceed the current forecast by more than $1.2 billion.

To view the entire budget bill, click here.