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Composite Index of Local Ability-to-Pay (LCI) Published for 2024-2026 Biennium

On November 27, Dr. Lisa Coons, State Superintendent of Public Instruction at the Virginia Department of Education (VDOE), released a memo publishing The Composite Index of Local Ability-to-Pay for the 2024-2026 biennium, which will begin on July 1, 2024. These figures are crucial to calculating the state share of projected school division payments for the Governor’s introduced budget, but also any final budget agreement for the coming fiscal year. The LCI was calculated using 2021 base-year data provided by the Department of Taxation for Virginia adjusted gross income (AGI), taxable retail sales, and true value of real property. The estimates of local population for 2021 are provided by the Weldon Cooper Center for Public Service at the University of Virginia, and the actual March 31, 2022, average daily membership (ADM) is based on data reported by school divisions to the Virginia Department of Education.

The calculation of the LCI is a complicated process. At the most recent meeting of the VACo Education Steering Committee, Jim Regimbal of Fiscal Analytics gave a detailed presentation on how VDOE calculates these figures. The slides of his PowerPoint may be viewed here. In addition to population and ADM data, the data points used in the formulation of the LCI are weighted in the following percentages:

  • True value of real property (weighted 50 percent)
  • Adjusted gross income (weighted 40 percent)
  • Taxable retail sales (weighted 10 percent)

Each locality’s index is adjusted to maintain an overall statewide local share of 45 percent and an overall state share of 55 percent. In short, a lower LCI means the state will provide a higher share of funding for the Standards of Quality (SOQs). As previously reported, funding of the SOQs only accounts for a portion of the actual cost of K-12 education. Local governments provide the majority share of funding.

More information on the LCI and the Excel sheet showing the data points may be viewed here and here respectively.

VACo Contact: Jeremy R. Bennett

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