Key Elements of House and Senate Budgets

February 8, 2019

The House Appropriations Committee and Senate Finance Committee reported their budgets on February 3, and the full text of the budget amendments was made available on February 5.  The House and Senate debated and voted on their respective budgets on February 7; the Senate made several amendments on the floor before passing its budget unanimously, while the House ultimately passed the Appropriations budget with no changes.  The House has already announced its intended conferees, and the two budgets will be formally placed into conference early next week. Below is an overview of the key elements of the two budget proposals.

K-12 Education

House

  • Provides $43.8 million in General Funds in FY 2020 for the state share of a payment equivalent to a 2.0 percent salary incentive increase, effective January 1, 2020, for funded SOQ instructional and support positions. Funded SOQ instructional positions include teacher, guidance counselor, librarian, instructional aide, principal, and assistant principal positions funded through the SOQ staffing standards for each school division in the biennium. The base budget includes $131 million in the second year for a 3 percent salary incentive pay increase with an effective date of July 1, 2019. The state share of the 3 percent salary increase would be given to school divisions that certify that they will provide at least 3 percent in either the first or second year or through a combination over both years. The state share of the 2 percent salary increase would be given to school divisions that certify that they will provide at least a 2 percent salary increase by January 1, 2020. Any local school division pay increase provided in the first year that is above the 3 percent, will not count toward the 2 percent salary increase in the second year.) (Item 136 #14h).
  • Adds $27.4 million in General Funds in FY 2020 to the Supplemental Lottery Per Pupil Allocation account. School divisions receive the Lottery PPA with total flexibility as to how the funds may be budgeted and there is no local match requirement. Each division can spend the funding on locally determined initiatives and tailored priorities to support their students’ needs. The additional funding increases the Per Pupil Amount by almost $40, from $367.44 to an estimated $406.90. This is in addition to the approximately $35 million in additional Lottery funds proposed by the Governor. (Item 136 #11h).
  • Testing Coordinator and Licensed Behavior Analyst (Language Only) adds additional flexibility language for school divisions to hire testing coordinators and licensed behavior analysts with At-Risk Add-on funds, which may help reduce workloads of school counselors and free-up the counselors’ time which then can be dedicated to supporting students’ non-academic related needs. This is intended as an accompaniment to HB 1729 (Landes). (Item 136 #2h).
  • Maintains $36 million in General Funds in FY 2020 of the Governor’s proposed amendments to provide the state share of funding for reduced school counselor to student ratios. The elementary school ratio would go from 1:500 to 1:375, Middle School from 1:400 to 1:325, and High School from 1:350 to 1:300.
  • Provides $55,000 in General Funds in FY 2020 to cover staffing costs at the Virginia Department of Education associated with HB 2574 (LaRock) which allows a school board, when applying for its school division, to be designated as a School Division of Innovation, to apply to the Virginia Board of Education (BOE) to replace certain Standards of Learning (SOL) assessments with performance-based assessments. Funding is dependent upon passage of HB 2574. (Item 130 #2h).
  • Provides $240,000 in General Funds in FY 2020 for the Grow Your Own Teacher pilot program to provide scholarships to low-income high school graduates who are committed to attend a baccalaureate institution of higher education in the Commonwealth and to subsequently teach in high-need public schools in the school divisions in which they graduated from high school. This is budget language similar to HB 1724 (Krizek). (Item 141 #3h).

Senate

  • Provides $87.6 million in General Funds in FY 2020 for the state share of a payment equivalent to a 2 percent salary incentive increase, effective July 1, 2020, for funded SOQ instructional and support positions. This matches the Governor’s proposal. The base budget includes $131 million in the second year for a 3 percent salary incentive pay increase with an effective date of July 1, 2019. The language specifies that school divisions shall be entitled to a proportionate share of funding for a raise of up to 5 percent over the biennium if they have provided a salary increase of at least 3 percent (Item 136 #1s).
  • Provides $70 million in General Funds for Literary Fund school construction support, utilizing interest rate subsidy to expand impact to more school divisions. (Item 136 #8s). This is $10 million less than the Governor’s proposal.
  • Provides $12 million in General Funds in FY 2020 for reduced school counselor to student ratios. (Item 136 #2s). This is approximately $23.9 million less than the Governor’s proposal, and as result has a higher ratio than the introduced budget.
  • Composite Index Adjusted for Land Use (2020-22 Biennium) (Language Only) modifies the current calculation of local composite index to incorporate land-use assessment value for properties located within a land-use plan. (Item 136 #7s).

School Safety

House

  • Provides $3 million in General Funds in FY 2020 for the School Resource Officer Incentive Grant Fund, the amount provided for the fund would increase to a total of $4.7 million, funding an additional 44 School Resource Officer positions. This is a recommendation of the House Select Committee on School Safety. (Item 395 #2h).
  • Active Shooter Training (Language Only) provides that $280,000 out of the approximately $3 million in General Funds in FY 2020 proposed by the Governor to the Department of Criminal Justice Services for Training and Standards to provide annual active shooter trainings to school and communities, consistent with the recommendations of the House Select Committee on School Safety. (Item 392 #1h).
  • Expand Training for School Resource Officers (Language Only) provides $428,000 out of the approximately $3 million in General Funds in FY 2020 proposed by the Governor to the Department of Criminal Justice Services for Training and Standards for additional training to school resource officers and school security officers, consistent with the recommendations of the House Select Committee on School Safety. (Item 392 #2h).
  • Expand Threat Assessment Team Training (Language Only) provides $721,000 out of the approximately $3 million in General Funds in FY 2020 proposed by the Governor to the Department of Criminal Justice Services for Training and Standards to expand training provided to local threat assessment team members, consistent with the recommendations of the House Select Committee on School Safety. The amendment also provides for the development of a threat assessment team case management system, consistent with the provisions of HB 1734 (Marshall). (Item 392 #3h).
  • Expand K-12 Public Safety Training (Language Only) provides $1.3 million out of the approximately $3 million in General Funds in FY 2020 proposed by the Governor to the Department of Criminal Justice Services for Training and Standards to enhance and expand the school safety training provided by the Department of Criminal Justice Services to Virginia school personnel, consistent with the recommendations of the House Select Committee on School Safety. (Item 392 #4h)
  • School Security Equipment Grant (Language Only) This amendment increases the School Security Equipment Grant annual allocation from $6 million to $12 million beginning in the second year. It also increases the total amount of the grant awards from $30 million to $60 million over any ongoing revolving five-year period. (Item 136 #13h).

Senate

  • The Senate keeps the provisions of the Governor’s proposal to provide approximately $3 million to the Department of Criminal Justice Services for additional training and standards with two minor exceptions. Item 392 #1s maintains $330,630 in General Funds in FY 2020 to increase school resource officer training, but removes funding for one additional FTE position. Item 392 #2s provides $871,890 for three additional FTE positions to increase training and technical assistance to schools, instead of six in the Governor’s proposal.

Communications Sales and Use Tax Trust Fund

The 2018 Appropriations Act diverted $2 million per year from the Communications Sales and Use Tax Trust Fund, representing savings in the telecommunications relay contract that is paid for out of the Fund, to the state General Fund.  VACo opposed this action, as these dollars would otherwise remain in the fund for distribution to localities.  The revenues in the Fund are to be held in trust for localities, not used for general state purposes.  The introduced budget eliminated the diversion in FY 2020.

House

  • Restores the transfer in FY 2020; language in the budget amendment explanation indicates that the intention is to redirect the money in both years to the Virginia Telecommunication Initiative. (Item 3-1.01 #6h)

Senate

  • Restores the transfer in FY 2020; funds would be swept into the state General Fund in both years. (Item 3-1.01 #1s)

Machinery and Tools Taxes

Senate

  • Language directs the Secretary of Finance to convene a workgroup of stakeholders to develop a proposal for elimination of machinery and tools taxes on new equipment for its first five years and reimbursement of localities for foregone revenues, up to $50 million per year. (Item 255 #1s)

Compensation

House

  • Removes the proposal in the introduced budget to increase the retiree health insurance credit for members of the State Police Officers’ Retirement System (SPORS), the Virginia Law Officers’ Retirement System (VaLORS), and sheriffs and deputy sheriffs and redirects a portion of the funding to decrease the amortization period for the unfunded liability for the state employee and teacher retiree health insurance credit from 25 years to 20 years. (Item 474 #1h) A companion amendment provides $4.3 million GF in FY 2020 to fund the costs of similarly reducing the amortization period for the unfunded liability for the teacher retiree health insurance credit. (Item 136 #9h)
  • Eliminates the proposed one percent bonus for state employees and state-supported local employees included in the introduced budget and redirects the funding to enhance the across-the-board salary increases included in the 2018 Appropriations Act from 2 percent to 2.75 percent for state employees, and from 2 percent to 3 percent for state-supported local employees. Increases the merit-based salary increases for state employees in the 2018 Appropriations Act from 2 percent to 2.25 percent. (Item 474 #5h)

Senate

  • Reduces the proposed increase in the retiree health insurance credit for SPORS and VaLORS members who retire with at least 15 years of creditable service. The introduced budget proposed to increase the credit for these members from $4 to $6 per year; the Senate Finance amendments increase the credit to $5 per year.  Similarly, the introduced budget proposed to increase the credit for sheriffs and deputy sheriffs from $1.50 to $5; the Senate Finance amendments instead increase the credit to $3. (Item 474 #5s)
  • Eliminates introduced budget’s proposed one percent bonus for state employees and state-supported local employees. (Item 474 #2s)  Retains salary increases included in the 2018 Appropriations Act (2 percent for state employees and state-supported local employees).
  • Provides $139,611 GF in FY 2020 for an additional three percent salary increase for general registrars, effective July 1, 2019, and directs the Department of Elections to study registrars’ salaries relative to Constitutional officers’ salaries. (Item 474 #3s)(Item 83 #2s)

Workers’ Compensation

House

  • Provides $300,000 in General Funds in FY 2019 to support consultant and actuarial costs associated with JLARC’s review of the Workers’ Compensation program. (Item 31 #1h).

Senate

  • Provides $600,000 in General Funds in FY 2020 related to the costs associated with adding certain types of cancers to the list of diseases with presumption of compensability, which impacts LODA costs. This is contingent upon passage of Senate Bill 1030 of the 2019 General Assembly, which currently has an enactment clause. (Item 474 #4s).

Body-Worn Cameras and Commonwealth’s Attorneys’ Offices

House

  • Provides an additional $747,808 GF in FY 2020; this funding, added to the $723,420 included in the introduced budget, funds approximately 20 percent of the unfunded positions in Commonwealth’s Attorneys’ offices, based on the Compensation Board’s FY 2019 staffing standards. (Item 70 #1h)
  • Language directs the Executive Secretary of the Supreme Court to convene the workgroup examining workload effects on Commonwealth’s Attorneys’ offices that was established in budget language in 2018 (which was convened by the Compensation Board in fall 2018) and expand its scope to examine workload effects and other fiscal and policy impacts on the state’s public safety and judicial agencies. (Item 38 #3h)

Senate

  • Includes language from the Compensation Board’s workgroup report providing that localities will be able to negotiate the issue of additional staffing with their Commonwealth’s Attorneys; if an agreement cannot be reached, the locality would be required to provide funding for additional positions at a ratio of 1 position for 75 cameras in use. The workgroup would be continued to collect additional data and make additional recommendations.  (Item 73 #1s)

Procurement

House

  • Directs the Department of General Services to evaluate current law and best practices on the statute of limitations on state contracts for construction services. (Item 80 #1h)

Economic Development

House

  • Increases funding for Enterprise Zone Grant Fund by $1.5 million (Item 107#1h) from the general fund in the second year to reduce pro-ration of the Real Property Improvement Grant.
  • Clarifies that the installation of solar panels is an eligible expense for the Enterprise Zone Real Property Grant Program (Item 107#2h) provided the investment is at least $50,000.
  • Removes $20 million in FY 2019 that provides additional support to the Virginia Business Ready Sites program (Item 122 #1h), and instead provides $5 million in FY 2019 to VEDP to assess, characterize and develop potential industry sites owned partially or entirely by the Commonwealth, its political subdivisions, or public bodies corporate and politic or its local governments (Item 122 #2h).

Senate

  • Removes $19 million in FY 2019 that provides additional support to the Virginia Business Ready Sites program (Item 122#1s)

Broadband

House

  • Removes proposal in introduced budget to provide additional $46 million GF in FY 2020 for the Virginia Telecommunication Initiative (VATI), which would have brought the funding level to $54 million over the biennium (Item 106 #1h). Instead provides $16 million GF in FY 2020, for a total of $24 million over the biennium ($2 million per year of this funding would appear to be transferred from the Communications Sales and Use Tax in a separate amendment). (Item 106 #3h)  Removes stipulation that funds are to be provided exclusively to assist private sector broadband providers to extend service to unserved areas. (Item 106 #5h)

Senate

  • Reduces proposed additional allocation for VATI by $31 million GF in FY 2020, for a total of $23 million over the biennium. (Item 106 #1s)

Housing Trust Fund

The introduced budget provides an increase of $14.5 million in FY 2019 and $4.5 million in FY 2020, for a total increase of $19 million over the biennium.

House

Senate

  • Reduces proposed additional deposit by $13 million in FY 2019 and $3 million in FY 2020, for a total increase of $1.5 million over the biennium. (Item 105 #1s)

Elections

House

  • Provides $261,265 GF in FY 2020 for the Department of Elections to implement pending legislation that would assist localities with review of GIS maps used when redrawing boundaries and to provide localities with GIS maps upon request. (Item 83 #3h)

Senate

  • Provides approximately $50,000 GF in FY 2020 for the Department of Elections to implement pending legislation that would assist localities with a review of voter assignments before the November 2020 general election, including the provision of GIS maps upon request. (Item 83 #4s)
  • Removes $5.9 million GF for FY 2020 that was included in the introduced budget to fund costs associated with the 2020 Presidential primary. (Item 475 #1s)

Children’s Services Act

House

  • Requires the Department of Education to serve as the lead agency to collect and report data measuring the progress of students in private special education day placements, in keeping with the recommendations of the workgroup convened in 2018 to develop potential outcome measures for progress in these placements. Directs the Department to begin collecting data beginning with the 2019-2020 school year. (Item 129 #1h)

Senate

  • Provides $20,000 GF in FY 2020 to fund costs associated with implementing a pilot program to identify services necessary to serve children currently educated in private school placements pursuant to an Individualized Education Program within the public school setting. This funding is contingent on passage of the legislation setting out the parameters of the pilot program, which has passed the Senate but not yet been heard in the House. (Item 129 #1s)
  • Delays the final report of the study of private day special education rates from July until October 2019. Private providers had requested additional time in order to provide the consultants conducting the study with the detailed information requested. (Item 282 #1s)
  • Directs the Department of Education and the Office of Children’s Services to establish a workgroup to further refine the private day outcome measures recommended in the 2018 workgroup. The department is directed to begin collecting outcome data in the 2019-2020 school year if possible, and no later than the 2020-2021 school year.  (Item 282 #2s)

Mental Health

House

  • Redirects proposed $9 million in funding for general crisis stabilization services included in the introduced budget and directs that $8.8 million of these funds be used instead for crisis services pursuant to the STEP-VA plan adopted in 2017. (Item 312 #2h, Item 312 #3h)
  • Retains language in the introduced budget allowing the Department of Behavioral Health and Developmental Services (DBHDS) to make funding available at the end of the fiscal year to Community Services Boards (CSBs) whose Medicaid billings for previously-uninsured clients have fallen more than 10 percent short of their General Fund reductions incorporated in the 2018 Appropriations Act.

Senate

  • Redirects $8 million of the $9 million included for crisis stabilization in the introduced budget to provide $5 million to fund additional outpatient services as part of the STEP-VA plan, as well as $3 million for crisis services for children. (Item 312 #1s)
  • Includes language requested by VACo, VML, and the Virginia Association of Community Services Boards to allow DBHDS to make funds available prior to the end of the fiscal year and to require reporting on how the expected general fund savings compare to actual Medicaid payments for FY 2019, so that adjustments may be made for FY 2020 during the 2020 General Assembly session, if necessary. (Item 310 #2s)
  • Provides an additional $3 million GF in FY 2020 for permanent supportive housing. (Item 312 #2s)
  • Includes several recommendations of the Joint Subcommittee Studying Mental Health Services in the Commonwealth in the 21st Century: providing $500,000 GF in FY 2020 for a pilot psychiatric emergency center (Item 312 #3s); allowing unspent funds allocated to the Appalachian Telemental Health Initiative to be carried forward rather than reverting to the General Fund (Item 312 #4s); requiring DBHDS to prepare a plan to “right-size” the state hospital system (Item 310 #5s); increasing the telehealth originating site facility fee in the Medicaid program to 100 percent of the Medicare rate (Item 303 #5s); and allowing schools to be designated as allowable telehealth originating sites for Medicaid. (Item 303 #9s)

Foster Care

House

  • Provides $851,000 GF in FY 2020 for training, technical support, and other costs associated with establishing evidence-based programming that will qualify for federal funding under the Family First Prevention Services Act. (Item 344 #3h)

Senate

  • Provides $1.8 million GF and $1.3 million NGF in FY 2020 to implement several recommendations from the recent Joint Legislative Audit and Review Commission study of the state’s foster care system, which are included in legislation under consideration by the General Assembly. The recommendations include establishing a state director of foster care health and safety, funding additional regional foster care staff, funding a regional project manager, funding staff to provide temporary assistance to local departments, funding a caseload standard of 15 cases per worker, and funding positions for monitoring foster care services.  (Item 339 #1s)
  • Language directs the Virginia Department of Social Services (VDSS) to develop a recruitment and retention strategic plan for foster families. (Item 344 #1s)
  • Language directs VDSS to review all cases of children in congregate care and assist local departments to find family placements. (Item 344 #2s)
  • Provides $611,000 GF in FY 2020 for VDSS to contract with service coordinators to develop a continuum of evidence-based services that will qualify for federal funding under the Family First Prevention Services Act. (Item 344 #3s)

Human Trafficking

House

  • Provides $14,091 GF in FY 2020 to fund state foster care maintenance payments through the Children’s Services Act for child victims of trafficking who are placed in the temporary custody of local departments of social services; provides approximately $86,000 in FY 2020 for assessments and other activities required of local departments of social services in suspected cases of child trafficking in accordance with legislation under consideration by the General Assembly. (Item 282 #1h, Item 344 #1h)
  • Provides $145,000 GF in FY 2020 for the Department of Criminal Justice Services to develop a statewide response plan to address sex trafficking in Virginia. (Item 393 #2h)

Senate

  • Provides approximately $100,000 in FY 2020 to fund the assessments for child trafficking victims required to be conducted by local departments in accordance with legislation under consideration by the General Assembly. (Item 341 #2s)
  • Provides $145,000 GF in FY 2020 for the Department of Criminal Justice Services to develop a statewide response plan to address sex trafficking in Virginia. (Item 395 #2s)

Water Quality

The introduced budget includes a mandatory $73.8 million deposit in FY 2020 to the Water Quality Improvement Fund (WQIF) from the FY 2018 surplus, as well as a supplemental deposit of $20 million in FY 2019 and $15 million in FY 2020, for a total deposit of $108.8 million over the biennium.  It also includes $50 million for the Stormwater Local Assistance Fund (SLAF) in FY 2020.

House

  • Retains mandatory $73.8 million deposit to the WQIF in FY 2020. Eliminates proposed $15 million supplemental deposit in FY 2020, for a total deposit of $93.8 million over the biennium.  Eliminates proposed $50 million deposit to SLAF in FY 2020 (Item 362 #1h, Item 368 #1h)

Senate

  • Retains mandatory $73.8 million deposit to the WQIF in FY 2020 but eliminates proposed supplemental deposits in the introduced budget. Provides a one-time deposit of $5.9 million GF in FY 2019 to the WQIF for livestock stream exclusion practices.  Reduces proposed $50 million deposit to SLAF to $10 million in FY 2020. (Item 362 #1s, Item 362 #3s, Item 368 #1s)

Jails

House

  • Eliminates proposal in introduced budget to extend jail mental health pilot programs for an additional 12 months in FY 2020 and eliminates language authorizing the Department of Criminal Justice Services to expand the pilot program to additional sites. (Item 395 #1h)

Senate

  • Directs the Board of Corrections to review the approval process and funding levels for the state’s share of local or regional jail capital projects that differ from the traditional models, such as secure facilities for offenders who require addiction treatment. (Item 475 #4s)

Transportation

House

  • Language directs the establishment of a working group to evaluate the effect of increased fuel efficiency and increasing use of hybrid and electric vehicles on transportation revenues and options to develop a sustainable funding source for transportation infrastructure. (Item 433 #2h)
  • Allows the Commonwealth Transportation Board to allocate supplemental operating funds in FY 2020, not to exceed $3 million in nongeneral funds, to transit operators that may otherwise lose operating funds as a result of the new performance-based allocation process developed in 2018. (Item 445 #1h)
  • Removes proposed deposit in the introduced budget of $75 million GF in FY 2019 to the Virginia Transportation Infrastructure Bank. (Item 450 #1h)

Senate

  • Delays new statewide prioritization process for the Commonwealth Mass Transit Fund from July 1, 2019, to July 1, 2020, and requires that the funding distribution formula address additional congestion mitigation metrics. (Item 445 #1s)
  • Removes proposed deposit in the introduced budget of $75 million GF in FY 2019 to the Virginia Transportation Infrastructure Bank. (Item 450 #1s)

Reserves

The introduced budget includes the mandatory deposit of $262.9 million GF to the Revenue Stabilization Fund (“Rainy Day Fund”) in FY 2020, based on the FY 2018 surplus.  It also proposes to deposit $235.2 million in the new Revenue Reserve Fund based on the FY 2018 surplus, plus an additional $554.1 million over the biennium, for a total of $789.3 million in new deposits to the Revenue Reserve Fund over the biennium, over the amounts included in the 2018 Appropriations Act.

House

  • Retains Revenue Stabilization Fund deposit. Reduces proposed deposit to the Revenue Reserve Fund by $529 million over the biennium, for a total new deposit of $279.6 million over the biennium above amounts included in the 2018 Appropriations Act (this amount also includes estimated revenues of $77 million in FY 2019 and $177.5 million in FY 2020 attributable to permanent provisions of the federal Tax Cuts and Jobs Act, which a companion amendment requires to be deposited in the Revenue Reserve Fund, as well as any revenues attributable to the temporary individual provisions of the federal law after implementing any legislation enacted in 2019 to provide relief to taxpayers affected by the indirect effect of the TCJA on Virginia). (Item 266 #1h, Item 475.10 #1h)

Senate

  • Retains Revenue Stabilization Fund deposit.  Reduces proposed deposit to the Revenue Reserve Fund by $307.3 million over the biennium, for a total new deposit of $247 million over the biennium above amounts included in the 2018 Appropriations Act. (Item 266 #1s)

Studies of interest

Senate

  • Language directs the Compensation Board to convene a workgroup to address staffing standards in sheriffs’ offices (Item 71 #1s)
  • Language directs the Commission on Local Government to examine different structures by which localities provide animal control services. (Item 109 #1s)
  • Extends a study by the Joint Subcommittee to Evaluate Tax Preferences on options for modernizing cigarette taxes by one year. (Item 3-5.17 #1s)

VACo Contacts: Katie Boyle; Joe Lerch, AICP; Chris McDonald, Esq., and Jeremy Bennett

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