HJR 105: Joint Subcommittee Studying the Level of the Commonwealth's
Assistance to Localities Necessary for Developing Adequate K-12 School
The Joint Subcommittee
Studying the Level of the Commonwealth's Assistance to Localities Necessary
for Developing Adequate K-12 School Infrastructure, established by House
Joint Resolution 105 (2004), held its final meeting on November 29 at
the General Assembly Building in Richmond.
Members of the joint
subcommittee are Delegate Beverly Sherwood, chairman, Senator Harry B.
Blevins, vice chairman, Delegate M. Kirkland Cox, Delegate Terry G. Kilgore,
Delegate Terrie L. Suit, Delegate Algie T. Howell, Jr., Senator R. Edward
Houck, Senator Stephen D. Newman, Carl R. Shaw, Jr., Arthur E. Anderson,
II, Richard L. Hurlbert, Jr., Robert Mills, Peter A. Blake, Thomas M.
Jackson, Dr. Jo Lynne DeMary, and Judith W. Jagdmann.
The joint subcommittee began its meeting by hearing presentations on school
infrastructure needs from three local school superintendents from geographically
diverse school divisions. First, Dr. Edgar Hatrick, Superintendent of
Loudoun County Public Schools, explained that growth is the greatest challenge
facing his school division. Currently, Loudoun County has 47,361 students
in 67 schools, and the number of students is expected to rise to 69,708
in 2012. To accommodate this increase in population, 20 more schools would
need to be built at a cost of approximately $971,930,000. Loudoun projects
that, unless it receives it receives more money from the state for capital
projects, the school division will reach "buildout" at approximately
130,000 students. At that point, the school division will no longer be
able to maintain the debt required to educate additional students.
Dr. Hatrick noted
that his school division has had particular success curbing construction
costs by using prototypical school designs. Repeat use of school designs
saves time and money by reducing design and review time, but also provides
consistency for students changing schools within the school division and
parity in the school division's facilities. Such cost-cutting strategies
are essential in light of the school division's total outstanding debt
of $1.7 billion.
Next, Larry Massie,
Superintendent of Buckingham County Public Schools, spoke to the joint
subcommittee about the infrastructure needs of his school division in
particular and of rural school divisions in general. The Buckingham County
School Division has 2124 students in six schools. Unlike Loudoun County
which currently has no mobile classrooms, Buckingham County has 20 trailers
surrounding its elementary schools. Other than a middle school built in
2003, Buckingham's newest school was built in 1980. The oldest operating
school was built in 1939.
Mr. Massie estimates
that Buckingham County has a need for approximately $30 million for new
school construction. Without additional funding for capital projects,
some of the county's schools will continue to operate without air conditioning
and up-to-date computer technology, and the reliance on trailers will
persist without the construction of additional classroom space.
Dr. Stephen Jones,
Superintendent of Norfolk Public Schools, noted that urban school divisions
like his face many of the same infrastructure problems as suburban and
rural school divisions like Loudoun and Buckingham. Norfolk City operates
49 schools serving approximately 35,000 students. In the near future,
the school division expects to spend approximately $125 million on capital
projects. However, at the current level of state funding to local school
divisions, Dr. Jones believes that his school division will never be able
to meet its capital needs.
In particular, Norfolk
faces the challenge of providing the necessary infrastructure to support
growing technology needs for instruction and state mandated assessments,
to meet minimum security standards, to update laboratory facilities in
secondary schools, to provide adequate classroom space to offer universal
pre-kindergarten and early learning programs in each elementary school,
and to create facilities for extended-day opportunities for students.
Additionally, Norfolk could use additional funds to eliminate over 150
mobile units that are currently being used as primary classroom sites.
After hearing from the local school superintendents, the subcommittee
was provided with an overview of the Virginia Public School Authority
(VPSA) by Richard Davis. The VPSA serves as a bond bank that provides
low-cost financing of capital projects for primary and secondary public
schools in Virginia localities. As of June 2005, VPSA's total indebtedness
on behalf of local school construction was over $3.0 billion.
The VPSA is able
to finance all types of real and personal property for public schools
including land, buildings, and equipment, and is one of the best vehicles
for localities to obtain the necessary funding for capital projects. Not
only does the VPSA consistently offer the lowest rate to localities for
borrowing money for construction costs, but VPSA bonds also have a double-A
plus bond rating by the three major rating agencies. Also, under the Virginia
Constitution, local issuers of general obligation school bonds are not
required to obtain voter approval for bonds sold to the VPSA.
VPSA also offers
an Interest Rate Subsidy Program that is available for localities with
projects on the Board of Education First Priority Waiting list for direct
Literary Fund Loans, subject to availability of appropriations. The purpose
of the subsidy program is to fund localities' projects while providing
debt service schedules equivalent to what they would have paid had Literary
Fund Loans been available.
Dan Timberlake, Assistant Superintendent for Finance at the Department
of Education, gave a status report on the Literary Fund. The Literary
Fund is a permanent and perpetual school fund that began in 1810 and was
later established in the Constitution of Virginia. Revenues to the Literary
Fund are derived primarily from criminal fines, fees, and forfeitures,
unclaimed and escheated property, and repayments of prior Literary Fund
loans. The fund has typically been used to provide low-interest loans
for school construction, grants under the interest rate subsidy program,
debt service for technology funding, and to support the state's share
of teacher retirement required by the Standards of Quality.
As of June 30, 2005,
the principal of the Literary Fund was approximately $481.5 million. Since
fiscal year 2002, the majority of the Literary Fund revenues have been
transferred to pay teacher retirement in order to reduce the pressure
placed on the general fund by growing costs in public education. No Literary
Fund revenues have been transferred for school construction since 2002.
Robert Schultze, Director of the Virginia Retirement System (VRS), concluded
the presentations by discussing provisions in Title 22.1 of the Code of
Virginia permitting local school boards to borrow money from VRS for school
construction. According to Chapter 10.1 of Title 22.1, school boards may
contract to borrow money from VRS for capital projects for school purposes
with the approval of the locality's governing body and the Board of Trustees
of the Virginia Retirement System. Referendum approvals are not required
for such borrowing. The authority and constitutionality of the statute
was challenged in 1959 and upheld by the Virginia Supreme Court. Mr. Shultze
noted, however, that since the statute was passed in 1958, no school board
has approached VRS to borrow money in this manner. Although VRS loans
remain an option for localities to obtain funds for school infrastructure
construction, the VPSA is able to offer lower financing than would be
available through this method.
In lieu of making
official recommendations for new programs, the subcommittee emphasized
that the General Assembly should continue to monitor the viability, liquidity,
and accessibility of existing programs and sources of funding for school
capital construction such as the Virginia Public School Authority, the
Literary Fund, and the Lottery Fund.
The Hon. Beverly