House and Senate lay out dueling visions for education funding in Virginia

Budget squabbles between the House and Senate are a normal part of business in the Virginia legislature. But debate broke out quickly this year after both chambers released their spending plans for K-12 education, which lay out competing visions on school construction, teacher pay and new “innovation” schools championed by Gov. Glenn Youngkin.

Virginia Democrats claimed the Republican-led House plan would strip schools of funding, while Garren Shipley, a spokesperson for House Speaker Todd Gilbert, R-Shenandoah, described it as “the largest K-12 budget in Virginia history.” And while some rural localities are applauding the House for its school construction plan, Richmond’s public school district is urging families to advocate for the Senate’s proposal. 

The largest K-12 budget in Virginia history, and it includes two 4 percent raises for teachers and other public employees, as well as 1 percent bonuses in each year of the biennium. https://t.co/XWYr0RXUtD

— Garren Shipley (@GarrenShipley) February 21, 2022

Lawmakers still have to reconcile the two plans before they adjourn, meaning the final K-12 budget still has plenty of time to change. But the battle underscores the political divide between both chambers and the diverse range of needs within Virginia’s public school system. It’s true that the House proposal allocates less overall for public education than the Senate spending plan. But it also presents an unconventional mechanism for funding new school construction — a major and long-standing priority for many struggling districts.

“Just like every year, there are parts of the House budget that we like better than the Senate, but there are also parts of the Senate budget that we like better than the House,” said Keith Perrigan, Bristol’s school superintendent and president of the Virginia Coalition of Small and Rural Schools. “But the House school construction recommendation definitely is historic and phenomenal and will help a lot of high-poverty school divisions.”

Getting back to the basics

For many education advocates, though, the construction proposal is overshadowed by more basic differences between the House and Senate education budgets. Both plans represent an increase in K-12 funding compared to previous years, but the Senate budget would allocate roughly $240 million more to schools over the next two years.

Some of the difference traces back to tax policy. The Senate’s plan defers or rejects many Youngkin-backed tax relief proposals, leaving the chamber with roughly $3 billion more in revenue. On the education side, that translates to more per-pupil spending. On average, the Senate plan would provide $7,834 per student total in the first year of the next biennial budget and $7,601 in the second, compared to $7,243 and $7,437 per student in the House proposal.

Funding for low-income school divisions plays a significant role in the discrepancy, according to Chad Stewart, a policy analyst for the Virginia Education Association. The Senate proposal would raise the state’s at-risk add-on — supplemental funding distributed to school districts with high concentrations of students living in poverty — by $268.5 million, the same increase proposed in former Gov. Ralph Northam’s final outgoing budget. The House, on the other hand, is proposing around $210 million less over the next two years.

“That’s going to have a substantial impact and hit rural communities really hard,” Stewart said. According to an analysis by Fund Our Schools, a coalition of parents, students and education advocacy groups, the House proposal — compared to Northam’s introduced budget — would reduce per-pupil spending by roughly $836 in rural districts and $1,023 in the state’s highest-poverty districts. Most other divisions would see an average $442 reduction in per-pupil spending under the chamber’s spending plan.

“That’s a concern because when you’re talking about the districts that have struggled most during the pandemic, there’s a lot of overlap with those districts that have the highest concentration of poverty,” said Phil Hernandez, senior vice president of policy and advocacy for The Commonwealth Institute for Fiscal Analysis (the Richmond-based think tank is a member of the Fund Our Schools Coalition).

The House budget does propose an additional $120 million in general per-pupil spending through state lottery proceeds, according to Kathy Mendes, a TCI policy analyst. But the funding wouldn’t significantly target or benefit localities with high numbers of low-income students. That’s become a concern for both rural and urban school divisions alike.

“While the Senate released a budget that would provide an additional $2 million for us above what we expected, the House has slashed critical funding streams like the at-risk add-on,” Richmond Public schools wrote in a message to families.

“Their budget would reduce our state education funding by $12.5 million from what Governor Northam proposed in December (and what the RPS current budget is based on),” the district added. 

Teacher pay is another area where the House and Senate budgets differ. Like Northam’s introduced budget, the Senate spending plan retains a 5 percent annual raise for educators over the next two years. The chamber also proposed using federal recovery funds to give teachers and staff a $1,000 bonus fully funded by the state. 

The House is proposing a 4 percent raise each year and a one percent bonus for teachers and other school employees. That translates to a nearly $70 million reduction in staff compensation compared to the Senate proposal, according to Fund Our Schools. 

The two chambers also differ when it comes to funding other positions. The House budget includes more than $104 million to add more school principals, vice principals and reading specialists, positions targeted in the Standards of Quality developed by the Virginia Board of Education. The Senate doesn’t include funding for those specific roles, but allocates roughly $272 million in funding for support positions such as school nurses, bus drivers, cafeteria workers and librarians.

“I think it’s obvious to anyone who watches the news that schools were short-staffed even before the pandemic and funding those positions is now even more important,” Stewart said. The Senate’s spending plan also includes $22 million to add more teachers for English language learners — money that was struck from the House budget.

Funding new schools

After decades of underfunding, school construction is a marquee item on both the House and Senate budgets. But it’s also one that’s inspired the most debate among legislators and education advocates. 

The Senate spending plan proposes $500 million in one-time grants for school divisions to use on construction and renovations. The money would be spread across the state and give schools an immediate funding source for capital projects, Perrigan said.

The House, on the other hand, is proposing a more novel way of replacing or repairing aging school buildings. Under the chamber’s spending plan, $541.7 million would go toward a targeted loan rebate program for local school divisions. Schools prioritized under the first tier of the program would receive a 30 percent buydown on the principal and interest payments for any loans they took out to fund new construction projects. Second-tier rebates would go toward the cost of interest, according to House budget analysts.

“The key thing that makes the House version historic, in my opinion, is that it sets up a fund that will be there for years to come,” Perrigan said. Districts would have to apply for the program, but the state Board of Education would establish a set of criteria based on local need, ability to pay and the condition of existing school buildings. The program would also require localities to maintain the same level of operational funding for local school divisions, even if the state helped pay for new capital projects.

Perrigan, like House Republicans, argued the proposal would help the highest-need school divisions and leverage state funding better than one-time grants. House budget analysts also suggested that future casino revenue could help fund the program for years to come, while the Senate hasn’t proposed a sustainable funding stream.

Some education advocates, though, said the House budget ultimately invests less in school construction by drawing $250 million for the program from the state’s Literary Fund, a miscellaneous pot derived from criminal fees, forfeitures and unpaid lottery winnings, among other sources. Historically, the fund has been used to support the state’s share of teacher retirement and provide school construction loans, though it’s rarely used for the latter purpose thanks to strict caps on the maximum loan amount.

“Compared to the Senate and introduced budgets, the House provides $55 million less in general funds toward teacher retirement, which limits the availability of the Literary Fund for school construction,” Fund Our Schools wrote in its analysis. House budget staff, however, said teacher retirement has always been a secondary use for the fund, and that neither spending proposal significantly reduced the state’s contribution toward its teacher retirement program.

One of the biggest disagreements between the two chambers, though, has nothing to do with repairing or replacing existing schools. Unlike the Senate, the House budget allocates $150 million in general fund dollars for 20 new lab schools, a Youngkin priority that remains a core component of his push for school choice. The money wouldn’t take funds away from other public schools, but many education advocates would prefer it to go toward other priorities, according to Stewart.

“Virginia still isn’t fully funding its schools based on its own Board of Education’s recommendations,” he said. “And in our minds, that’s an investment that would be much more beneficial.”