Northam’s $250 million HVAC investment leaves education advocates underwhelmed

Gov. Ralph Northam wants to allocate $250 million in federal relief funding for HVAC improvements in K-12 schools but education advocates and actual school system administrators want more equity in how the money is doled out and more flexibility in using it. 

The investment in ventilation systems, a recurrent focus amid the COVID-19 pandemic, didn’t come as a surprise, said Chad Stewart, manager of education policy and development for The Commonwealth Institute for Fiscal Analysis. But he and many advocates, including other members of the Fund Our Schools coalition, say they were taken aback by the structure of the proposal, which must be approved by the General Assembly in a special session next month. 

“What’s unique, at least based on the details we’ve seen so far, is the complete lack of equity,” Stewart said. Many of the state’s school funding programs are based on a division’s local composite index — a measure of its ability to afford education costs. But under Northam’s proposal, localities would be required to use their own rescue funding required to match the state’s contribution, which would be calculated based on student attendance counts, for a total of $500 million. 

In practice, the program would advantage large districts like Fairfax County while largely ignoring small, high-poverty districts without the same ability to pay, said Rachael Deane, director of the Legal Aid Justice Center’s JustChildren program. But for many local administrators, there’s an even more fundamental problem. 

Since the start of the pandemic, Virginia schools have received more than $2.8 billion in federal aid earmarked specifically for public education. Divisions were given the flexibility to use that money for HVAC improvements, and many already have. In Richmond City, for example, there have been 47 completed upgrades since March of 2020, according to data from the state’s Commission on School Construction and Modernization. In Brunswick County, there have been 61, with another 189 still in process.

“So this funding is really duplicative of what we’re already able to do,” said Keith Perrigan, superintendent for Bristol Public Schools and president of the Coalition for Small and Rural Schools of Virginia. “Yes, there are divisions that will benefit from making additional HVAC funds available. But so many of us were really looking for more flexibility.”

Northam’s office said the Virginia Department of Education analyzed 117 capital improvement plans from school divisions, which lay out  projects they plan to complete in the next decade.

“Following plans for new buildings and renovations, school divisions most frequently planned for HVAC repair and replacement projects, with a total of 463 HVAC projects amounting to $623 million. Gov. Northam’s investment will secure the completion of nearly all currently planned projects,” his office said.

Calls for a proactive approach to school construction 

Expanding the scope of school improvement projects has emerged as a pressing issue ahead of next week’s special General Assembly session. According to the most recent data from the Department of Education, more than half of all school buildings are more than 50 years old. The total replacement cost is estimated at more than $24.7 billion. But with a $2.6 billion budget surplus and unprecedented inflow of federal cash, many local administrators were hoping the state would take a more proactive role in school construction. 

That’s largely due to the constraints school divisions have encountered when it comes to education-specific funding. The American Rescue Plan provided $1.9 billion directly to local districts through the Elementary and Secondary School Emergency Relief Fund (more commonly referred to as ESSER). That money, though, must be spent by September 2024. And because of the expedited timeline, current federal guidance strongly discourages using it to pay for new school construction or substantial renovations, according to James Lane, the state’s superintendent for public instruction.

That’s where discretionary funding could come in, at least according to education advocates. Most of the $4.3 billion that state legislators are debating isn’t earmarked for a specific purpose, which means there’s broad flexibility on how to allocate it. And unlike ESSER funds, that money isn’t required to be spent down until 2026.

“That’s really important, because it lends itself much better to school infrastructure projects,” Stewart said. The Commonwealth Institute for Fiscal Analysis is a member of the Virginia Fund Our Schools Coalition, which listed general modernization efforts as one of its top four priorities for discretionary federal rescue funding. The state education department also requested $2 billion in federal aid for a broader range of construction projects — which could include HVAC improvements, according to the agency’s budget request.  But it also listed a slew of other possibilities, including building renovations, grounds maintenance and making school buildings compliant with the Americans with Disabilities Act.

Much of the disagreement comes down to how flexible the rescue plan funding really is. While the U.S. Treasury Department has discouraged school construction, particularly through ESSER funds, there’s more flexibility through what’s commonly known as the “revenue loss provision.” Under the department’s most recent guidance, governments have “broad latitude” to spend income lost during the COVID-19 pandemic on a broad range of services, including schools and education.

Stewart said that carve-out gives Virginia much more leeway to invest in school infrastructure. The administration, though, is taking a different approach.

“There is considerable ambiguity in the guidance related to school construction, as you know, and our finance team believes it is cleaner to invest this money in ventilation and HVAC upgrades,” Northam’s spokeswoman, Alena Yarmosky, wrote in a Monday email. Statewide, there’s also disagreement over how much Virginia should be investing in local school buildings. Since 2010, there’s been no money allocated in the state budget for construction needs. Some lawmakers have argued that localities are responsible for increasing tax rates to provide more school funding.

“No consensus has yet emerged for the commonwealth to take on school construction, which has long been a local responsibility,” Yarmosky continued. “So the governor and General Assembly have decided to prioritize funding for ventilation in schools while awaiting the School Modernization Committee’s report later this fall.”

Advocates, though, say HVAC improvements fall far short of the needs facing local schools. According to Yarmosky, the American Rescue Plan is “forward-looking,” which means funding can only be used for projects started after March 3 (when the bill was signed into law). That means many divisions won’t be reimbursed for ventilation projects they’ve already completed — “penalizing” districts who took proactive measures to make their buildings safer, Deane said.

There’s also broader concern that the funding restrictions will force schools to spend millions on outdated buildings. Perrigan said there are already two schools in Bristol that VDOE  recommended for closure even before the pandemic.

“So if we’ve been recommended to close them, why should we invest money improving their air quality?” he said. “Putting new HVAC on a 1920s building, a 1940s building — it just doesn’t seem like a good use of taxpayer money.”