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‘No-loss’ funding formula deals blow to school budget

SoVaNow.com / February 24, 2021
Mecklenburg County schools could lose nearly $200,000 in state funding under a formula proposed by Gov. Ralph Northam to protect schools from losses associated with enrollment fluctuations during the pandemic.

The proposal, part of the governor’s budget unveiled in December, earmarks an additional $500 million over the next two years to support local K-12 school divisions, which are facing a loss in funding based on declining enrollments tied to the COVID-19 pandemic.

School divisions will receive funding in fiscal year 2021-22 budget based on the number of students that were enrolled in the previous year.

Even temporary drops in enrollment often lead to a decline in revenue for school divisions under Virginia’s education funding formula, which uses average school enrollment numbers (ADM) among other factors when allocating dollars.

In theory, the “no-loss funding” formula means a school division that lost students after the March 2020 closure of schools would still receive funding for those students. But that is not the case for all schools, according to Keith Perrigan, superintendent of Bristol Public Schools and president of the Coalition of Small and Rural Schools in Virginia.

Perrigan said, in practice, schools with the highest share of students living in poverty will lose out on around $5 million under the governor’s proposal. That’s because funding levels would be calculated using projected enrollment numbers for spring 2020, rather than the actual head count of students conducted in March 2020. Rural schools in the coalition — including Mecklenburg — lose out on more than $10 million by using the projections rather than actual spring enrollment.

Perrigan says rural school divisions are already “hammered during the pandemic by high rates of COVID-19 infection and substandard broadband access.”

Mecklenburg County Superintendent of Schools Paul Nichols estimates the county division will lose around $181,000 in state funding for the coming year. The cuts are even greater in Halifax and Brunswick counties.

Each school division’s share of the $500 million in no-loss funding is based on a specific per student cost for education. If student enrollment is undercounted, the division will receive fewer state dollars. It then becomes up to the local government to make up any shortfall, assuming local monies are available. If not, school budgets get cut — a teaching position here, a program there.

In March 2020, the actual student enrollment for Mecklenburg County Public Schools was 3,951 students. FY2021 projections fix Mecklenburg County’s enrollment at 3,821, an undercount of 130 students. Instead of receiving $524,711 in no-loss funding from the state for the 2022 budget cycle, Mecklenburg’s share of these funds is expected to come in at $343,985, a difference of $180,816.

Nichols points out that the $343,985 that MCPS anticipates receiving from the state under no-loss funding is basic state aid. He has not said how the shortfall will impact the school division’s budget for FY2022, which begins July 1.

The differences in student counts for Brunswick and Halifax counties and the impact on funding levels are even more jarring. Brunswick County’s actual student enrollment (ADM) for March 2020, the final month for which counts were reported to the Virginia Department of Education before school was canceled, was 1,477, but the projected count is 1,399. Instead of receiving $537,013 in no-loss funding, Brunswick’s share of these monies is expected to come in at $186,449, a difference of $350,564.

Halifax County’s actual student enrollment for March 2020 was 4,535, but the projected number used for the calculation of no loss funding is 4,397. The school division’s share of no-loss funding is projected at $443,086, as opposed to the $1,074,512 it would receive if actual enrollment numbers were used.

Perrigan said, “The word ‘equity’ has been used in many discussions during this [General Assembly] session, last session, and the election of 2019. It seems, however, that equity has become more of a ‘buzz word’ than a policy driver. I am thrilled that equity is part of the conversation, but our students won’t experience equity short of action. Unless the no-loss funding is commensurate with actual dips in enrollment, school divisions will struggle to afford basic programs and services along with added pandemic-related expenses.”

He said a more equitable solution would be for the state to use whichever enrollment figures are better for each individual school division in terms of no-loss funding. Perrigan’s suggestion is backed by Fund Our Schools, a statewide coalition of education advocates.

The state has balked at that proposal, which could cost an additional $21 million. Virginia Secretary of Finance Aubrey Layne said the administration has used projected enrollment figures as a matter of expedience. He said it keeps everyone funded at the same levels as they were the previous year.

There are 45 school divisions that benefit by calculating their share of no-loss funding using projected instead of actual student counts. Prince William County will see the greatest boost. The Prince William County School district actually lost only 1,824 students since March 2020 but was projected to lose 3,646 students. Under the Governor’s no-loss funding proposal, that school division could gain nearly $10 million in basic state aid for FY2022 compared to the amount received for FY2021.

Eight school divisions will neither benefit nor lose under the current no loss-funding stream, among them Lunenburg County. The remaining 82 school divisions, including Mecklenburg, Brunswick, and Halifax, all stand to lose state aid, as do five other county school divisions in Region 8: Amelia, Charlotte, Cumberland, Nottoway and Prince Edward.

While the earlier federal stimulus package included just over $238 million for Virginia schools — in Mecklenburg County that worked out to about $1.19 million — Nichols said the CARES Act funding was not enough to cover unanticipated COVID-related expenses such as hot spots for students, professional development for educators to be trained to teach virtually, and additional cleaning and sanitation supplies. Nor was it enough to continue to fund the cost of educating the county’s 3,900 students at pre-COVID levels.

To rural and poor school divisions, the state’s insistence on using projected ADM numbers instead of actual counts is one more instance of education inequity.

Perrigan explained the inadequacies of the current no-loss funding proposal this way: “President Joe Biden once said, ‘Don’t tell me what you value. Show me your budget and I’ll tell you what you value.’ If equity truly is a value that Virginia strives for, changes to the proposed General Assembly budgets need to be made, especially to the No Loss funding stream. Hopefully, the final proposed budget by lawmakers in a couple weeks will provide more than lip service to the idea of equity.”

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