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The Lowdown on Your School Dollars
FY 2011-2012

A Community Update on the School Division's Budget Process for FY 2011-2012

Update as of June 21, 2011
Virginia Beach School Board Asks City Council to Involve the Public in Review of the City-Schools Revenue Sharing Formula

In its Tuesday, June 21 meeting, the Virginia Beach School Board, by a vote of 10-0, adopted a resolution asking City Council to commit to a public process for the impending review of the city-schools revenue sharing formula. Board members stressed that the process "should not be confined solely to members of the Board and City Council and their respective staffs, but should include community representation from individuals whose expertise will facilitate an objective, analytical review."

Local school funds are traditionally allocated through a revenue sharing formula providing schools 51.3 percent of seven of the city's 15 revenue streams. However, on May 10, City Council adopted a municipal budget that lowered its contribution to schools to 50 percent for the 2011-12 fiscal year. A joint summer review of the formula will determine a more permanent approach to education funding in the future.

School Board members adopted a resolution calling for transparency following a meeting between the chairman, vice chairman and superintendent and the mayor, vice mayor and city manager on the morning of June 21. The purpose of that meeting was to discuss how the review process will work. The mayor and vice mayor suggested a process that would involve the city manager working with the superintendent to develop a proposal(s) for consideration. Board members said they were uncomfortable with this process and instead advocated for the appointment of a committee that would include representation from the community as well as experts in the area of business and finance to ensure a more objective, evaluative review.

The School Board resolution suggests that City Council join the Board in establishing the joint committee and work together to make the requisite appointments as well as determine the committee's responsibilities and time line.

Update as of May 10, 2011
City Council Adopts Municipal Operating Budget Which Takes $23.7 Million From Virginia Beach City Public Schools

On Tuesday, May 10, City Council adopted a municipal operating budget which takes $23.7 million in school funds to offset city budget shortfalls. Following Council’s adoption of the budget, the School Board passed a resolution expressing its disappointment in Council’s action and in this year’s budget development process as a whole. In addition, several School Board members spoke from the dais, further conveying their frustration. Read Dr. Todd Davidson’s and Mrs. Carolyn Weems’ remarks here.

Recognizing that employees may have questions about the municipal budget and the impact of a $23.7 million loss in school funding, school administration sent the following communication to all school employees:

Virginia Beach City Council tonight approved a FY-2011-12 budget that takes $23.7 million from Virginia Beach City Public Schools. Of that sum, $14.5 million will come from the school system’s risk management fund and another $9.2 million is the result of Council’s decision to lower the schools’ portion of the revenue-sharing formula to 50 percent of seven revenue streams for one year.(Please note that there are eight other city revenue streams which the city does not share with the schools.)

To help the schools absorb the $9.2 million loss, City Council will allow the School Board to transfer that sum into the operating budget from two school system reserve funds, risk management and technology. However, school system leadership expressed the following concerns about the future:

  • Having the advantage of the schools’ $23.7 million has positioned the city to give its employees a 2.5 percent permanent salary increase and set aside $1.8 million to further increase the compensation of employees they deem “under market.” This has resulted in an inequity for school employees whose proposed compensation increase is not in line with this recommendation.
  • In recent years, the schools have been the beneficiary of considerable one-time funding, much of it from the federal government. Absent that funding, the school system will be facing a $34.2 million “cliff” in 2012-13, putting the budget for that year in a hole.
  • If the revenue sharing formula is permanently lowered to 50 percent, then the division will lose $9.2 million each and every year. Board members expressed concern that this would damage the quality of the school system, forcing leadership to make deep cuts, not in 2011-12, but in the following year. Board member Carolyn Weems noted in a prepared statement, “I can tell you the impact of this will be felt, felt painfully. The School Board will have to look at corresponding cuts – and whether that is layoffs, larger class sizes or cuts to discretionary programs like athletics, academics, or after-school transportation remains to be seen. The bottom line is that the very things that help keep Virginia Beach City Public Schools “ahead of the curve,” – in fact the 5th Best Large School Division in the whole country – will be at risk and it is our children who will pay the price.” This statement was previewed at the Board workshop and then Mrs. Weems formally delivered it at the City Council meeting. Those remarks are posted on the special budget page of as is a written statement from Board member Todd Davidson which he read at the School Board meeting. Dr. Davidson expressed his concerns about the School Board’s budget deliberations with City Council, characterizing them as “littered with mistrust.” He noted, “What I believe has been forgotten is that this is not about numbers, spreadsheets, itemizations and funding streams… it is about people.”
  • Much of the public and media attention has been on the operating budget, but the school system’s capital improvement budget, which pays for renovations and replacement of school buildings, is also adversely affected.  Moving forward, the Capital program approved by Council effectively modernizes or replaces only three school buildings over the span of a decade and requires the school division to take on new debt to fund the projects. For more details on what is happening with the school CIP, again check out the special budget page on

Finally, the School Board unanimously adopted a resolution to send to City Council that expressed the expectation that “funding for the Schools be determined in an open, transparent and collaborative manner in the future regardless of the use of a formula or some other method…”

City Council Approves Disappointing VBCPS Capital Improvement Program Budget

The City Council at its May 10 meeting has voted to approve the revised version of the school division’s revised Capital Improvement Program budget. Among the future projects to be funded in the six-year program are the following:

  • The replacement of Old Donation Center/Kemps Landing Magnet School project is funded and slated to open in 2016.
  • Additional Energy Performance Contracts projects are funded at $2.5 million in each of the first three years of the CIP totaling $7.5 million.
  • The modernization of John B. Dey Elementary School is funded in SY 2015/16 and SY 2016/17.

While this is good news, stakeholders should be aware of the bad news as well. First and foremost, the CIP is woefully underfunded. In better economic times, the School Board has been able to transfer $13.9 million annually from the operating budget to the CIP and as a result speed up work on important projects. That ability is now gone. Why is this happening? In a few words, competing priorities. City Council has taken school system reserves and used them to help cash fund municipal projects. Meanwhile, the school system has been forced to borrow money for renovation/refurbishment projects. In fact, VBCPS has had to incur additional debt in the amount of $18.3 million to finance CIP projects between 2012 and 2017.

It is important to note that in three years – SY 2009/10, SY2010/11, SY 2011/12 – the division has experienced a CIP funding decline of $80 million. In addition, for the third consecutive year, the city budget provides substantial cash/paygo funding for city projects and none for school projects.

The revised CIP which was just passed is the result of a compromise effort that came out of a joint modernization committee meeting. While the School Board approved this revised CIP at its meeting on April 26 and is pleased that some borrowing capacity was restored to the school system, the bottom line is that VBCPS is still being forced to rely on accruing more debt to fund CIP projects.

In a best of times/worst of times scenario, VBCPS has either completely renovated or replaced 29 facilities over the span of 14 years. Moving forward, the Capital program approved by Council effectively modernizes or replaces only three school buildings over the span of a decade.


Update as of May 6, 2011
City’s Latest Budget Proposal Involves Taking $23.7 Million From Virginia Beach City Public Schools

On Tuesday, May 3, Mayor William D. Sessoms Jr. and Vice Mayor Louis R. Jones presented an alternative budget proposal to City Council. (City Manager James K. Spore unveiled his recommendation at a March 29 special session.) What does this proposal mean for Virginia Beach City Public Schools (VBCPS)? School administration has answered the most frequently asked questions below:

  1. The Mayor and the Vice Mayor recommended taking $23.7 million from the schools and yet they are characterizing this budget proposal as “fully funding” the schools. Can you explain this?
    First, the “fully funded school budget” has always been limited in development to the revenue-sharing projections imposed on the School Board by a City Council ordinance. Now the Mayor and Vice Mayor have proposed using $23.7 million of school money to plug a city shortfall of $24 million. Here’s what is happening: The proposal involves taking $14.5 million from the VBCPS risk management fund. At the same time,the Mayor and Vice-Mayor are proposing to lower the city’s contribution to schools by $9.2 million (which totals $23.7 million). In turn, VBCPS will be “allowed” to plug the $9.2 million hole in next year’s operating budget by using savings from two school fund balances (risk management and instructional technology). Simply stated, the city is permitting the school district to use its own funds to replace the money they are taking. By law, schools cannot maintain fund balances, so the city holds them on the school system’s behalf and must give permission for the school system to access them. The reduction of $9.2 million is being accomplished by lowering the schools' portion of the revenue-sharing formula to 50 percent for next fiscal year.

  2. In an electronic publication called City Page, it is noted that the Mayor and Vice Mayor’s recommendation gives the school system “nearly $2 million more than the City Manager had proposed.” Is this accurate?
    It needs clarification. The City Manager had recommended elimination of the Business Professional and Occupational License (BPOL) tax, a move that would have cost the school system $2 million because it would have reduced the amount of dollars the schools would have received from that revenue stream. The proposal from the Mayor and Vice Mayor removes that recommendation. Therefore, this is a restoration of BPOL funding, not additional money. The bottom line is the school system 2011-12 operating budget will be $3 million less than the current 2010-11 budget.

  3. The Mayor and Vice Mayor also recommended elimination of the city-schools revenue-sharing formula. What would be the effect of that recommendation?
    Elimination of the revenue-sharing formula means there would be no minimum guaranteed funding level for schools. At the May 3 City Council meeting, it seemed that most Council members did not support this recommendation because they felt that such a significant proposal deserved detailed study and analysis. It now appears that a joint review of the revenue-sharing formula will take place over the summer.

  4. Why are city employees getting a 2.5 percent permanent and ongoing increase when school employees are getting only a half-percent (0.5) increase to their base pay and a 2.5 percent one-time bonus?
    The proposal to take $23.7 million from the schools puts the city in a better position to provide its employees improved compensation. In addition, the city is now able to set aside $1.8 million for additional salary enhancements for employees identified as under-paid.

  5. In the City Page publication, the Mayor characterized school reserve funds as “funds which have gone unspent over the last few years.” Why didn’t the schools use those monies, especially for employee compensation?
    The city’s characterization of these funds is a point on which there is significant disagreement. The funds in question had attached to them accompanying expenditure plans to put resources into schools over a three-year period, involving significant upgrades to technology infrastructure and textbook/instructional materials purchases. As a result, they were not “unused” or “excess” funds as they have been described, but rather were designated for specific purposes. In addition, those dollars have been used to plug shortfalls in the school system budget when federal, state and local budgets changed. The school system did not use these funds for employee salary increases because they are one-time monies which the division would not have in future years. Salary increases are permanent and ongoing expenses.

  6. What does a loss of $23.7 million mean to the school system?
    Let’s begin with the first portion of that $23.7 million loss: $14.5 million in risk management funds. Loss of this money means the school system will be more financially vulnerable should a catastrophic event occur in the future. The $9.2 million cut will be somewhat offset by the city’s approval for the schools to access their fund balances. However, the lowering of the fund balances means that important upgrades to technology infrastructure will be diminished. The most pressing concern for school administration is future-oriented. Should the one-year reduction to the revenue-sharing formula that is taking place for fiscal year 2011-12 become permanent, then the school system will lose an additional $9.2 million annually and have to identify corresponding budget cuts to address the loss. While not formally made permanent, the city used these funds for permanent pay increases for employees so restoration in future years is highly unlikely.

  7. This isn’t the first year that City Council has taken money from the schools. What’s the total loss?
    This will be the third year in a row that City Council has taken money from the schools to fund city projects. In FY 2010, $8.8 million was transferred to the city to fund road projects. The following year, $8 million was taken from the schools to build a new animal shelter and additional recreation center for Bayside. Add those losses to the pending $23.7 million cut and that’s a total loss of $40.5 million - all money originally allocated for education.

  8. What happens next in this budget process?
    City Council is expected to adopt the proposed budget, which includes the $9.2 million cut to school funding and the use of $14.5 million in school risk management funds on May 10. After this budget is adopted, the next significant financial decision will revolve around the study of the city-schools revenue-sharing formula slated for this summer.

Update as of April 5, 2011
Budget Presentation: School Operating Budget FY 2011/12 & School CIP FY 2011/12 – 2016/17

School Board chairman Dan Edwards presented to the City Council an overview of the school division’s Proposed Operating Budget 2011/12 and Capital Improvement Plan budget for FY 2011/12 – 2016/17 on Tuesday, April 5, 2011. View
. The answers to questions posed by City Council to the School Board regarding the Operating and Capital Improvement budgets are also available.

Update as of March 30, 2011
City budget proposal recommends using $14.5 million of schools’ money

Some Council members say possibility still exists for lowering the schools’ portion of the joint Revenue Sharing Formula

City Manager Jim Spore presented combined municipal/school system operating and capital budgets to City Council on Tuesday, March 29. The combined spending plans are approximately $2 billion. The city manager’s recommendation involves taking $14.5 million from the school system’s risk management fund to help address an anticipated city shortfall. According to a news story in the March 30, 2011 edition of The Virginian-Pilot (“Beach budget: ‘Everything is on the table’): “Several council members said they don’t want to discount taking more money from the schools or changing the long-standing formula that the city uses to fund schools…”

How is the city manager’s proposal different than the School Board’s recommendation? Earlier this year the School Board offered a compromise to City Council that involved providing the city $14.5 million in risk management funds. In  exchange City Council was asked to provided assurance that the city would step forward to address any significant liability issues for the schools caused by losing that money (if indeed that became necessary). At the same time the School Board requested that City Council allow the transfer another $5.5 million out of the risk management fund to the school system’s depleted capital improvement program (CIP) budget.

City Council did not make a decision on whether or not to accept this compromise prior to the School Board’s finalization of its budget proposal.  In the absence of confirmation one way or the other, the School Board submitted a CIP to City Council that included using $20 million in risk management funds to jump start the planned construction of a consolidated Old Donation Center/Kemps Landing Magnet School.  The School Board also decided to proceed with this recommendation because Board members were questioned in a recent City Council-School Board meeting as to why the Board had not recommended transferring risk management fund to the depleted school system CIP.  The ODC and KLMS buildings were selected for expedited consolidation because they had received the lowest condition scores in the school system’s long-range facilities master plan.

School Board Chairman Daniel D. Edwards will present an overview of the School Board’s operating and CIP budget plans at City Council’s April 5 meeting.

How you can weigh in on the city’s plans for school funding

Citizens who want to share their opinions on city plans for school funding for the 2011-12 fiscal year (or any aspect of the city budget proposal for that matter) can plan to attend any or all of the following public input opportunities:

  • Budget Open House: April 6, 6:30-8:30 p.m., Virginia Beach Convention Center
  • Public Hearing: April 21, 6 p.m., Green Run High School
  • Public Hearing: April 26, 6 p.m., City Council Chambers
Public comments can also be made on items on the City Council’s agenda during regular meetings. City Council will address budget issues at its upcoming regularly scheduled meetings, including April 19 (a workshop on family and youth opportunities and the capital improvement program); May 3 (budget reconciliation workshop); and May 10 (scheduled budget adoption).
Citizens may also express their opinions about school funding to City Council through e-mail communication.

Update as of March 15, 2011

On Tuesday, March 15 the School Board adopted a $636.1 million operating budget for the school division for the 2011-12 fiscal year. The final state funding cuts to public education were not as devastating as were proposed in earlier versions of the Commonwealth’s budget. Therefore, the shortfall the school system ultimately had to deal with was $18.3 million rather than the $24.4 million cut  inherent in the Governor’s proposal.

Virginia Beach City Public Schools (VBCPS) managed this shortfall by using $13.3 million from its reserve fund, eliminating 48 positions, moving 85 positions out of the operating budget into a grants budget, planning class size adjustments, reducing the budgets of administrative departments by 3 percent, initiating a retirement incentive program to capture savings and reducing expenses in other areas as well such as deceasing the utilities/fuel budget.

There is good news in this budget for school employees. The School Board’s approved budget includes a 0.5 percent increase to their base salaries as well as a 2.5 percent one-time compensation enhancement.  The superintendent’s earlier budget proposal (known as the Superintendent’s Estimate of Needs) called for a reduction of 209 teaching positions. Because the Board was able to maximize increased one-time state funding and take advantage of one-time federal funding, the net reduction of teaching positions, at 48, is far smaller than that original proposal.

However, Chief Financial Officer Farrell Hanzaker cautioned the School Board that come school year 2012-13 that one-time funding will no longer be available and a “funding cliff” will be created as VBCPS struggles to fund positions in the absence of that money (I.e. the 85 teaching positions that will be funded with  Federal Jobs money will have to be returned to the operating budget).

Since the 2008-09 fiscal year, VBCPS has endured more than $85 million in reductions to operating funds. School Board chairman Daniel D. Edwards noted that it was important to share what could NOT be accommodated in the operating budget as a result. VBCPS cannot offer universal full-day kindergarten. The Advancement Via Individual Determination (AVID) program, a college readiness program designed to increase the number of students who enroll in college, cannot be expanded. Pre-kindergarten services cannot be expanded because the school division lacks the funds for matching grants.


The School Board also approved a $623 million six-year Capital Improvement Budget. The 2011-12 year of the six -year CIP stands at $35 million.

The schools’ CIP funding has been reduced by over $87 million from 2009 through 2011. The dramatic decrease is largely the result of the loss of state construction grants, the loss of lottery funding, the loss of $13.5 million in charter bond capacity because the schools’ share has been subsumed by city projects, and the inability of VBCPS to make what had been an annual transfer of $13.9 million from the schools’ operating budget to the CIP.

Except for a fully funded Kellam High School replacement and funds to finish a few other projects, the school system’s CIP stands relatively gutted.  In a letter transmitting the CIP to City Council,  Chairman  Edwards noted that unless new CIP funding sources are identified or past sources are reinstated, in five years VBCPS will be back where it was 15 years ago with aging infrastructure outpacing funding and construction.

The chairman noted that the General Assembly had appropriated additional funding for the City of Virginia Beach in its adoption of a final state budget, including the allocation of $361 million toward road needs. This improved financial scenario and the fact that Vice Mayor Louis Jones had raised a question in a recent City Council- School Board joint meeting as to why the school system had not recommended moving money out of its risk management fund to address school CIP needs. This conversation gave the School Board the impetus to make an important recommendation.

Consequently,  the Board adopted a CIP that is predicated on moving $20 million out of its risk management fund to jump start the school system’s renovation/replacement program. The School Board ultimately decided that the consolidation of Old Donation Center with Kemps Landing Magnet School, a project originally on the books in 2018, should be fast tracked to 2014. The Board determined this to be necessary for several reasons. First, these two buildings are in the worst shape of the school buildings in the city. Second, consolidation in a new “green” building will result in significant operational savings, especially because it will eliminate a school building. Third, the outdated facilities do not support the schools’ programs as they should. For example, Kemps Landing Magnet is a middle school program that is housed in an old elementary school. The building has insufficient power to support today’s modern educational technology, even with stopgap upgrades. All total, these two campuses have to be served by 14 portables – eight at ODC and six at KLMS. Finally and quite importantly, this is a project that parents have requested for a decade or more.


With the adoption of an operating budget and a CIP, those spending plans are now moved over to the City Council for review. City Council will vote on the recommendations in Mid-May. If Council makes any adjustments the budgets will come back to the School Board for reconciliation.

Update as of March 1, 2011
City Council and School Board Hold Joint Meeting to Discuss School Funding Issues: No Resolution Reached Yet

The City Council and the School Board met on Tuesday, March 1 to continue its discussion on school funding for the 2011-12 school year. As a reminder, the School Board presented the City Council with a compromise proposal on February 2. This proposal was designed to assist the City of Virginia Beach with its projected $20-plus million funding shortfall in a way that would not do harm to the school system’s operating budget next year. At this writing, the City Council has not yet accepted or modified the Board’s five-point compromise recommendation.

As a reminder, the details of that proposed compromise are as follows:

Point 1:
  The School Board will agree to transfer $14.5 million out of its risk management fund in exchange for City Council’s agreement to allow $6.05 million of remaining funds to be transferred into schools PAYGO for its Capital Improvement Program budget. The schools’ risk management fund will be maintained only at the actuarial recommended coverage. However, the City of Virginia Beach will assume any liability that exceeds that actuarial amount.

In exchange for the transfer of the above identified $14.5 million from the Virginia Beach City Public Schools to the City of Virginia Beach, City Council will also agree to:

Point 2: Leave “as is” all other school reserve/restricted fund balances.

Point 3: Maintain the schools’ Share of the Revenue Sharing Formula through the FY 2011-12. City and school officials will participate in a collaborative, objective review in the summer of 2011.

Point 4: Provide lump sum appropriations to the schools for FY 2011 by April 1st and for FY2012 when appropriated.

Point 5: Support the School Board’s consideration of necessary compensation adjustments.

In this meeting, Mayor Will Sessoms noted that the City Council did not intend to take action in a way that would hurt the school’s operating budget. However, he also pointed out that that there are many major decisions ahead for city officials. City Manager James K. Spore will present proposed municipal operating budget to City Council on March 29.

School Board Chairman Daniel D. Edwards concluded the meeting by commenting that it was not a “reasonable way to do business” for monies to be shifted out of the school system’s resources at the “last minute”and expressed the hope that the School Board can receive an answer soon regarding whether or not City Council plans to accept the Board-approved compromise. Last fiscal year the City Council voted to take $8 million in school reserves in mid-May, after the School Board had adopted an operating budget and all formal input on the School Budget had been completed.

This web page will be updated as information as city-school budget deliberations continue.

Posted February 15, 2011
Recommended Operating Budget for 2011-12 Fiscal Year Represents an $8.8 Million Cut Over Current Fiscal Year and a $91 Million Decrease Over 3-Year Period

On Tuesday, February 15, Virginia Beach Schools Superintendent James G. Merrill presented a proposed operating budget for the 2011-12 fiscal year that represents an $8.8 million reduction from the school system’s current fiscal year budget. In fact, over the last three years Virginia Beach City Public Schools has lost $91 million in funding.

BoyThe cumulative effect of three years of decreased funding is such that the impact will most likely now be felt in the classroom. Last budget season, 11th-hour increases in funding, primarily from the state government – combined with a comprehensive VBCPS-initiated savings and efficiency program – staved off recommended teacher layoffs to increase class size as well as an increase to the minimum number of students required to “make” a class at the high school. However, these recommendations cannot be put off again and therefore, are included in Dr. Merrill’s budget for 2011-12, known officially as the Superintendent’s Estimate of Needs (SEON). Budget reduction strategies could result in the elimination of 209 positions. First-year teachers recently received a letter advising them that their contract renewals for next year can’t be guaranteed. However, to help avoid potential staff reductions the school division is offering a Retirement Incentive to all eligible employees.  (Note: Since 2008, 43 administrative positions have also eliminated.)

The SEON does contain some good news for employees. After two years of salary freezes, the FY 2011-12 budget proposal contains a compensation increase for employees. This increase constitutes a 0.5 percent adjustment to the base salaries of all eligible employees along with a 2.5 percent one-time compensation award. The 0.5 percent increase is being paid for by savings associated with the Retirement Incentive and the 2.5 percent one-time compensation award is being funded by Federal Jobs money.  The federal government provided this one-time funding to all of the nation’s school districts to help address salary and benefits/retention issues for public education. Dr. Merrill noted that this federal funding is the primary reason why an increase for employees can be considered.

The superintendent’s entire presentation is posted here along with his letter of transmittal to the School Board. In the coming weeks, the School Board will deliberate on the SEON, before sending a final recommendation to City Council. Citizens who have questions or concerns about the SEON may send them to


Where Discussions Now Stand with City Council on School Funding

School Board Chairman Daniel D. Edwards and Vice Chairman William J. Brunke provided information on school funding issues at City Council’s February 15 meeting. The presentation addressed questions and concerns raised at earlier City Council meetings, such as the status of state funding;  growth in the number of school system positions since 1998; program changes and enhancements; the nature and number of position reductions in recent years; and what programs would most likely be trimmed/cut if the schools’ percentage of the revenue sharing formula is reduced. However, as a quick overview they stressed many important points including:

  • A state funding formula for schools, known as the Local Composite Index (LCI) indicates that the City of Virginia Beach has an increased ability to pay for public education. Therefore, the state’s share of funding for our school division is going down.
  • Program changes and additional staff positions created since 1998 are the result of several factors including, Standards of Learning testing and Federal mandates; the need to integrate technology into instruction; the opening of four new schools; the opening of a full-time gifted elementary school and the addition of a gifted resource program in neighborhood schools; and the establishment of five high school academies along with one middle school academy and two elementary academies.
  • If city leaders reduce local support for schools and the state decreases funding because of the rising LCI, the Board will be able to sustain mandated minimums but will have to consider dismantling discretionary programs, most likely in the areas of gifted education, academies, and athletics.

City Council will continue to deliberate on budget issues. In the meantime, the school system will continue to update this page to keep its community informed.

Posted February 7, 2011
A budget compromise pending between Virginia Beach School Board and City Council

As part of the ongoing budget process, city and school officials have been continuing talks on how to best resolve differences regarding the 2011-12, 2012-13 Biennial Operating Budget. You may recall that some City Council members have maintained that the schools are holding too much funding in earmarked accounts and as a result have expressed the opinion that schools are overfunded. The School Board has refuted those contentions and you can read the rationale in earlier posts on this page. However, the important point now is that a compromise that will help the City of Virginia Beach address its $20 million shortfall is under discussion.

Following are the details of that compromise which has been discussed by the School Board and will be reviewed by City Council on February 8:

  • VBCPS would turn over $14.5 million from earmarked accounts to the city.
  • Other reserve/earmarked accounts would be used by VBCPS as intended.
  • The current Revenue Sharing Formula would remain at 51.3 percent through FY 2011-12 budget appropriations. However, collaborative discussions about the possibility of changing the formula will begin in the summer of 2011.
  • The school system would be returned to lump sum funding for 2011, a move that allows school leadership the flexibility to manage its funding more efficiently.
  • The School Board will continue its consideration of compensation adjustments for employees.

Posted January 25, 2011

In recent weeks there has been a great deal of media coverage regarding the opinion voiced by some City Council members that Virginia Beach City Public Schools (VBCPS) is over-funded.  The bottom line is that their assumptions are wrong. Consequently, school system leadership created this page to clear up misconceptions. It is also the place to get updated information as the budget process moves forward. We have worked hard to make some complex issues understandable here. However, if you still have questions, please email us at We will make every effort to answer you in a timely manner.

The School System Speaks to City Claims of Over-Funding

BoyWhat is the basis for certain City Council members’ opinion that Virginia Beach’s schools are over-funded?  They point to the amount of money we have set aside for future expenditures in the areas of textbooks, cafeteria services, instructional technology, school equipment, athletics, health insurance, risk management, to name a few.   What they fail to mention is that this money is available because we’ve made painful cuts in the past several years – knowing that worse economic times were ahead.

We had the foresight four years ago to begin implementing cost-cutting and efficiency strategies. Our goal was to save enough money to better position the school district to make future expenditures that would maintain, even strengthen, the progress of VBCPS. We felt there was wisdom in this approach considering the uncertain financial climate. Our cost-cutting strategies included:

  • Closing a school
  • Ending five year-round school programs
  • Ending an after-school program at three schools
  • Cutting 43 central office full-time and temporary positions
  • Cutting the budgets of central administrative departments
  • Cutting 245 instructional positions as the result of declining enrollment
  • Delaying the purchases of textbooks and school buses
  • Instituting an aggressive energy savings program through efforts such as a four-day work for summer school and administrative offices during the summer
  • Making changes to health insurance requirements and over-time compensation

All total our savings/efficiency program has saved the taxpayers of this city $23.5 million over the last four years.

It is important to note that many of our strategies are recurring and will continue to save money in the coming years.
For a full understanding of the issues at hand, we encourage stakeholders to read the city’s original letter of concern and our response to that letter.  In a move that dismayed school leadership one City Council member asked the city attorney whether or not the School Board could lawfully accumulate balances in funds other than the operating budget to meet future needs. The city attorney confirmed that the School Board acted completely within its legal rights. You can read his opinion here.

A Troubling Strategy

Some City Council members argue that the school system’s budget should be cut by $9 million starting this year and every year afterwards. This would be accomplished by reducing the schools’ share of the city-schools’ revenue-sharing formula. What is troubling to us is the fact that city officials are making a recommendation for a permanent reduction on the basis of one-time money we received from the federal government (stimulus funding) and a holiday from paying Virginia Retirement System (VRS) contributions. An important note, while that VRS holiday saved the school division $23 million last June, we have every reason to expect that we will have to reimburse the Commonwealth in the future. Another important factor:  Next year student enrollment is projected to increase. Rising student enrollment means rising costs.

What Is a Revenue Sharing Formula?

Virginia Beach City Council funds the schools on the basis of a revenue-sharing formula. The school system currently receives 51.3 percent of seven tax revenue streams:

  • Real estate
  • General sales
  • Personal property
  • Business license
  • Utility
  • State telecommunications
  • Cable franchise

These are the significant revenue streams that the city does not make available to the schools:

  • Restaurant tax
  • Amusement tax
  • Hotel room tax
  • Cigarette tax
  • Automobile license tax
  • City tax on deeds
  • Bank stock tax
  • Real estate taxes from some districts, such as Lynnhaven Mall and the Town Center

Where Does the School System Go From Here?

There will be further conversations with city leadership in the future. Many of the issues raised most likely will be addressed through the budget planning process for the coming fiscal year.

Last Modified on Monday, January 30, 2017