A preliminary look at the state budget
House and Senate Budget Conferees announced this week that a tentative budget deal has been reached and could be passed as the 2015 General Assembly adjourns sine die on Saturday, February 28. Many of the budget items approved by the Conference Report were advocated by local governments, VACo and VML.
VACo President Penny Gross stated, “We asked our counties to lobby their state representatives on budget issues that had a negative impact on county revenues. Our members stepped up and were heard. The elimination of the $30 million in local aid to the state was a VACo priority issue and needed to be eliminated from the budget. This budget agreement accomplishes that goal. I am appreciative of the local support and for our state representatives in listening to VACo’s requests.”
Aid to Localities
The Report provides $29.8 million to eliminate the Aid to Local Government Reversion Clearing Account.
Joint Subcommittee established to provide recommendations for reforming the Virginia Preschool Initiative. The goals and objectives of the Joint Subcommittee will be to consider increasing accountability, flexibility, innovation, clarification of the state’s role and policy relating to providing a preschool for economically disadvantaged children, and to further develop the facilitation of partnerships between school divisions and private providers for the Virginia Preschool Initiative.
Conflict of Interests and Ethics Advisory Council
The Report provides $393,000 and three positions from the general fund for the Virginia Conflict of Interest and Ethics Advisory Council, pursuant to House Bill 2070 and Senate Bill 1424 of the 2015 General Assembly. A companion amendment to the budget eliminates $500,000 that was included in central appropriations for ethics reform in the introduced budget. This amendment is contingent upon final adoption of House Bill 2070 and Senate Bill 1424.
Local Fines and Fees
The Report modifies the procedures for the deposit of local fines and fees into the State Treasury. The Report removes local fees from the calculation of the amounts to be returned to the Literary Fund and provides that one-half of the amount by which local fines and forfeitures exceed 65 percent of total collections be returned to the Literary Fund. The budget language provides that only the state collections are to be deposited into the State Treasury. The current budget language requires that all local collections be deposited into the State Treasury, which in turn requires that checks for the local amounts not transferred to the Literary Fund be sent back to the localities. The intent of this amendment is to eliminate that administrative expense.
The Report earmarks $113.9 million, contingent on specific revenue requirements, for compensation actions for state employees and state supported local employees and to increase the retirement contribution rates for the state employee, SPORS, VaLORS, and JRS plans up to 90% of the Board certified rates. Specifically, state supported local employees salaries shall be increased by two percent on September 1, 2015. These positions include a. Locally elected constitutional officers; b. General Registrars and members of local electoral boards; c. Full-time employees of locally elected constitutional officers and, d. Full-time employees of Community Services Boards, Centers for Independent Living, secure detention centers supported by Juvenile Block Grants, juvenile delinquency prevention and local court service units, local social services boards, local pretrial services act and comprehensive community corrections act employees, and local health departments where a memorandum of understanding exists with the Virginia Department of Health.
Deputy Sheriff’s Compensation
The Report appropriates $1.2 million to increase the minimum starting salary for entry level grade 7 deputy sheriffs employed in sheriffs’ offices and entry-level grade 7 regional jail officers employed in regional jails by 4.63 percent effective September 1, 2015. This funding, in addition to the 2 percent salary adjustment for state supported local employees included in the Report, which is contingent on revenues, is sufficient to increase the minimum salary for entry level grade 7 deputy sheriffs and entry level grade 7 regional jail officers to $31,009 effective September 1, 2015.
Effective September 1, 2015, the Compensation Board shall establish salary increases associated with the reclassification of a deputy sheriff or deputy regional jail officer from grade 7 to grade 8 upon the first of the month on or following the one year anniversary of the date of hire into a Compensation Board funded position based upon the salary actions authorized in this Act. Budget language is eliminated that required localities to automatically provide, and fund, future salary increases when the income levels for the federal Supplemental Nutrition Assistance Program is increased.
The Report reduces the state reimbursement for construction, enlargement, and renovation of regional jails from 50 percent to 25 percent, effective for projects approved by the Governor on or after July 1, 2015, consistent with Senate Bill 1049 of the 2015 General Assembly. This amendment is contingent upon final passage of Senate Bill 1049.
Prince William County Regional Jail
The Report authorizes the reimbursement of 50 percent of eligible costs for the expansion of the Prince William-Manassas Regional Jail.
Pamunkey Regional Jail
The Report authorizes reimbursement of $288,575 or 50 percent of the eligible costs for the Pamunkey Regional Jail Authority, which serves Caroline and Hanover counties, for the conversion of recreation area to dormitory beds needed to relieve overcrowding.
Jail Per Diems
The Report provides $2.5 million to fully fund the estimated shortfall in jail per diem payments in fiscal year 2015.
Employee Health Insurance
The Report authorizes DHARM to conduct a comprehensive review of the public employee health programs in the Commonwealth. DHARM shall provide a report detailing the findings and recommendations by October 31, 2015.
As part of the review, DHARM shall conduct an actuarial review of the impact on the state, the school boards, and other political subdivisions, from including the employees, and their dependents, of local governments including local school divisions in the state employee health program or in one statewide pooled plan for employees of political subdivisions. Local school boards and localities shall provide information to DHARM as requested for the actuarial analysis.
The review shall also include an examination of the Local Choice program’s policies, including its pooling and rating methodology, to determine whether overall improvements may be made to the program, with a specific goal of trying to increase The Local Choice program’s appeal among rural school divisions and local governments.
The Report removes authorization for the Department of Elections to establish and administer a program to require localities to replace existing voting equipment with approved voting equipment, using bond proceeds. The Report also eliminates reimbursement to localities that have already replaced existing equipment with compliant equipment.
Lyme Disease Study
The Report directs the Secretary of Agriculture and Forestry to convene a task force to identify high areas of Lyme disease concentration, determine costs of implementing a prevention program and how those costs could be covered.
Virtual School Programs
The Report provides $250,000 to support the Virtual Virginia program. The funding will be directed toward the Department of Education hiring additional teachers as well as providing additional seats for student enrollment. The Virtual Virginia program offers pre-Advanced Placement (AP), honors and AP classes as well as academic electives and world languages. The program is designed to meet the needs of students who otherwise would not be able to take these courses due to a lack of availability or scheduling conflicts within their school. Eligible students enroll in Virtual Virginia through their local schools.
The Report provides $52.8 million for instructional and support positions the state’s share of a 1.5 percent salary increase for funded SOQ instructional and support positions and for a 1.5 percent salary incentive for the Academic Year Governor’s Schools instructional and support positions. Although state funding is calculated based on 1.5 percent with an effective date of August 16, 2015, the local required match is based on an average of 1.5 percent with an effective date of no later than January 1, 2016. School divisions must certify that a minimum 1.5 percent increase will be provided to employees by this date. Budget language specifies that in meeting the salary increases to be eligible for this incentive funding, school divisions may not include any increases that were provided in fiscal year 2016 to offset the cost of required member contributions to the VRS. Furthermore, this allocation is contingent on the state revenue forecast performance.
The Report provides $25 million from additional Literary Fund revenues from the sale of old unclaimed stocks for the state share of teacher retirement costs. This should pay down the state share of unfunded liabilities. Additionally, the budget re-purposes $25 million from Interest Rate Subsidy grants to reflect $19.2 million for teacher retirement costs and $2.9 million for additional school construction loans and $2.9 million to pay down a portion of the remaining outstanding balance of the deferred contribution of the unfunded liability for teacher retirement.
The Report authorizes a one-time transfer of $42.9 million in Literary Fund proceeds to the outstanding 10-year deferred contribution balance of $356.1 million. The remaining balance of $313.2 million is amortized over the remaining six-year amortization period to produce a savings. The VRS teacher rate was recalculated based on the lowered deferred contribution amount and reflects a change from 14.50 percent to 14.06 percent for FY 2016.
The Report mandates that local plans indicate the number of at-risk four-year-old children to be served, and the eligibility criteria for participation in this program shall be consistent with the economic and educational risk factors stated in the 2014-2015 programs guidelines that are specific to: (i) family income at or below 200 percent of poverty, (ii) homelessness, (iii) student’s parents or guardians are school dropouts, or (iv) family income is less than 350 percent of federal poverty guidelines in the case of students with special needs or disabilities.
The Department of Education is directed to compile from each school division the aggregated information as to the number of enrolled students whose families are (i) at or below 130 percent of poverty, and (ii) above 130 percent but below 200 percent of poverty. The Department shall report this information annually, after the application and fall participation reports are submitted to the Department from the school divisions, to the Chairmen of House Appropriations and Senate Finance Committees. In addition, the Department will post and maintain the summary information by division on the Department’s website in keeping with current student privacy policies.
Comprehensive Services Act
The Report instructs the Secretary of Health and Human Resources, in cooperation with the Secretary of Education, to convene a work group to provide recommendations regarding the role of the State Executive Council for Comprehensive Services for At-Risk Youth and Families, including recommendations related to (i) whether the Council should be a supervisory council or a policy council, as each is defined in § 2.2-2100 of the Code of Virginia; (ii) the appropriate composition of the Council; (iii) the role of the Council regarding decisions relative to funding streams; (iv) the appropriate relationship between the Council and the executive branch of state government; and (v) whether the Council should have authority to promulgate regulations in accordance with the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia). The Secretary shall report on findings and recommendations by December 1, 2015.
The Report also requires the State Executive Council to convene a work group and make recommendations by September 1, 2015, concerning how to meet the education costs for students who have been admitted to or placed in psychiatric or residential treatment facilities as authorized by the Medicaid program. Currently, education costs are borne by the facilities rather than the local school divisions or the state. These costs are not eligible for Medicaid reimbursement.
Agricultural Best Management Practices
The Report provides an additional $10.7 million in FY 2016 to level fund the Agricultural Best Management Practices Cost Share and Technical Assistance Programs of the Soil and Water Conservation Districts.
Stormwater Local Assistance Fund
The Report provides $5 million to the Stormwater Local Assistance Fund to supplement funding previously authorized from bond proceeds. The Stormwater Local Assistance Fund is used to provide matching grants to local governments for stormwater best management practices that reduce water quality pollutant loads.
Counties with Police Departments (HB 599)
The Report reinserts language that was included in previous budgets to clarify that the amounts distributed to each locality in FY 2015 and FY 2016 shall be the same as the amounts provided in FY 2014. This amendment does not change the total appropriation for state aid to localities with police forces, as contained in the introduced budget, which is $172.4 million each year from the general fund.
Transportation Network Companies (TNC)
The Report provides $1 million nongeneral fund sources to support legislation that establishes a legal framework for the operation of Transportation Network Companies in Virginia and authorizes DMV to conduct periodic reviews of the TNC to confirm compliance and authorizes fees to cover DMV’s costs of administering the program, including an annual fee of $50 per TNC partner vehicle, an initial TNC license fee of $70,000, and an annual license renewal fee of $3,000.
VACo Contact: Dean Lynch, CAE