The week leading up to crossover is always busy, although it usually lands on a Tuesday. This year it lands on a Friday – just one more unique feature of this session. While many hot topic issues have been discussed this week from the abolition of the death penalty to the legalization of marijuana, I want to focus this week on our public schools.
School funding is always a tough issue. The idea at the state level is to spread the tax money out in a fair way throughout the state. About 49 percent of state income tax revenue comes from Northern Virginia – Prince William, Fairfax, Loudoun, Arlington Counties and the Cities of Alexandria, Falls Church, Manassas and Manassas Park. Traditionally schools are funded based on the composite index, a formula that was designed many years ago to reflect a local government’s ability to pay. The formula is supposed to be equally fair, equally unfair. Nobody really loves it, and everybody complains about it. The composite index is supposed to fund somewhere between 20 and 80 percent of the Standards of Quality in every locality. Theoretically, poor localities with a lower tax base and per capita income receive closer to the 80 percent mark and wealthier localities receive closer to 20 percent share from the state. Nearly everybody can find something wrong with the formula.
A discussion about the composite index is important this year. Not only does the state share of SOQ funding for public education eat up a huge chunk of our state budget, Senator Bill Stanley has once again introduced a constitutional amendment to require the state provide equal educational opportunities in every locality in the state. This is a concept that sounds good but is somewhat complicated.
Nearly 30 years ago the Supreme Court of Virginia said that the Constitution did not require equality in funding throughout the state, only that we fund public education. True equality in funding would require the state to come up with a new formula or to take more into account local funding. It is hard to know exactly what or how a constitutional amendment like the one proposed by Senator Stanley would be interpreted.
During the committee hearing for the bill, Senator Jennifer McClellan offered an amendment that would change the focus of the constitutional amendment from equal educational opportunities to providing equity throughout the state. There are folks who argue about the meaning of equality or equity, but the adoption of that language change makes even cloudier the interpretation of this potential amendment to our Constitution.
Virginia’s Constitution is a lot more detailed than the federal Constitution and is amended nearly every couple years. Many amendments have been considered this year in the Senate and in the House of Delegates and are awaiting final action. Some are very important, but in my mind, it’s more important that we consider and get right the language we put in the state Constitution.
The other measure related to education funding introduced by Senator Stanley is somewhat related to a bill that I introduced. You will recall that I sponsored a bill to raise the income tax by .15 of a percent for income earned over $150,000 a year. The increase would have generated about $140 million a year to fund school construction and law enforcement pay raises. The school construction needs throughout Virginia have been documented at over $18 billion. While the needs are spread all over Virginia, they are most acute in rural areas and older cities. School construction is typically funded by local taxes, either through the issuance of bonds or direct appropriations from local governments. The ability of local governments to pay for capital needs varies throughout the state. My effort was to provide a dedicated stream of revenue into a pot from which localities could draw to make improvements.
Senator Stanley’s proposal would provide for an advisory referendum in 2022 to allow the people to vote on the issuance of a $3 billion general obligation bond to be used for school construction. Both approaches have the same goal. My idea would only put about $70 million a year into the fund for school construction, but it would be a consistent flow of money year after year. His idea would borrow $3 billion to try to fill the $18 billion hole.
The problem with borrowing money is that you have to pay it back. Virginia has a self-imposed 5 percent debt capacity model, which means that over the course of time our debt service payments cannot exceed more than 5 percent of our general fund revenue. The limit helps us maintain a AAA bond rating, which translates into low interest rates when we access the bond market. The $3 billion in new debt would put us over the 5 percent cap and put the AAA bond rating in jeopardy.
One of the responsibilities I gained last year is the chairmanship of the Capital Outlay Subcommittee of the Senate Finance and Appropriations Committee. The new role provides me with a fair amount of influence with respect to capital projects and a fairly intimate knowledge of our debt capacity. I would prefer to raise the cash at the state level to allot to localities than to borrow money. This is an interesting debate that will continue.
Thank you for allowing me to serve you. This is the most unusual session in my experience. The Pocahontas Building where our offices are located is nearly deserted. The senators spend long days at the Science Museum where our makeshift chamber and committee rooms are. A typical day starts about 7 o’clock in the morning, either at the office or the Science Museum, and runs until 9 p.m. or later. We are working toward getting a budget finished this weekend. If I may be of service to you or answer any questions, please contact me at [email protected] or by calling (804) 698-7525. If you would like to register your views on a bill, you may call the Senate Message Center at (833) 617-1821.