A miscalculation in school funding from the state may impact both the current year’s budgets and spending plans for next year.
Teddy Martin, chairman of the Henry County School Board, said the school board has not met since learning about the mistake. However, “if nothing changes, I would say the impact next year would be about $1.5 million” impact to the school division.
“But that is an estimate,” he stressed.
Callie Hietala, Communications and Community Outreach Coordinator said school officials predict “a preliminary estimate of $40,402 in loss of funding for the current fiscal year. “We do not anticipate asking for additional local funding.”
The estimated impact in the city “is based on our understanding of the current guidance from the state,” Hietala said, and noted the school division “won’t have a final answer” on the impact “until a completed budget is released by the General Assembly.
However, “based on initial discussions, it appears the impact on our budget will not be as significant for our division as it may be for some other localities,” she said.
Martin said the issue first came to light on January 27 when school superintendents were alerted via email that the Basic Aid Calculation Tool released in mid-December “contained an error related to the Grocery Tax Hold Harmless amount,” Monica Hatchett, director of communications for the division, said of the payment that started in FY 2023 as part of the offset in the Basic Aid formula.
The miscalculation was due to human error at the Virginia Department of Education (VDOE), according to the email.
While Martin said he initially heard reports that ranged from $54 million, current reports indicate the miscalculation means that VDOE overestimated Basic Aid payments to school divisions by an estimated $200 million during the Fiscal Year 2023 – 2024 biennium, including $58 million in the current budget year.
The county school division “could experience possible losses of approximately $587,000 for the current school year and $1,452,000 for the coming school year,” Hatchett said.
Martin said the estimates include both local and state funds because the amount of state funding “also plays into your matching funds from the locality.” He explained that is due to the tool the state uses to determine the local match or the amount of funding the local government must provide.
Smaller school divisions such as those in Henry County and Martinsville, receive more state funding based on the locality’s ability to pay, Martin said.
“So, it’s a bigger hit to us” than to a larger school division which receives fewer state funds, Martin said, adding he does not know what remedy, if any, the county would offer.
“Because we operate on a very strict budget already, we are working to analyze our current and upcoming school year budgets so that we are prepared to make decisions accordingly,” Hatchett said.
Martin said he is hopeful there will be “some type of action at the state level” to address the gaffe. Otherwise, the division would look at the overall budget to try and identify areas to cut costs.
“It will be a question of staffing ratios, student class sizes,” and determining “what stuff you have to have, and can you delay those purchases” included in the budget, Martin said.
Compounding the issue is “the number of requirements that are put on us” in terms of local funding, he said. Because the county provides categorical funding, the school division is required to maintain a certain amount of funds in each category of its budget, Martin said.
The amount of discretionary funding available to the school division “is not that high,” he said.
Like Martin, Hatchett said she is hopeful the state will address the issue.
“We certainly understand that our legislators and VDOE colleagues are working diligently to ensure that any loss experienced is minimal,” Hatchett said, adding administrators “are working closely with VDOE to ensure the accuracy of anticipated funding for both the current and upcoming school years and will adjust as needed based on final information that we expect to receive in the very near future.”
Hietala said school administrators in Martinsville “will continue to participate in discussions with state officials and adjust estimates if necessary. As with any budget process, providing our students with an exemplary education remains our top priority.”
