Governor Offers Amendments to Caboose and Biennium Budgets

April 17, 2020

In order to address the repercussions of the COVID-19 pandemic on state revenues, Governor Northam offered extensive amendments to the FY 2020 “caboose” and 2020-2022 biennium budgets on April 11, making 37 amendments to the caboose budget and 144 amendments to the biennium budget.  The bulk of the amendments to the biennium budget “unallot” new discretionary spending that was included in the budget as passed by the General Assembly; in his cover letter to legislators, the Governor characterized these actions as placing that spending “on hold” until a revenue reforecast can be completed.  The amendments freezing spending in this fashion provide that the funds would be held in abeyance “until re-enacted by the General Assembly after acceptance of a revenue forecast that confirms the revenues estimated” in the Appropriations Act.  

It is unknown at this time when the General Assembly might convene for further work on the budget after the reconvened session on April 22.  It is expected that additional guidance will be forthcoming from the federal government, possibly as soon as next week, on the use of Virginia’s share of the Coronavirus Relief Fund included in the CARES Act enacted in March, which may assist the state in assessing its revenue situation.  Congressional leadership is also discussing an additional aid package that would provide more funding to states and localities, as well as more flexibility in the use of the funds.  

Key elements of the Governor’s proposed amendments to the caboose budget include the following:

Finance

  • Removes planned deposit of $601.8 million to the Revenue Reserve Fund in order to preserve liquidity. (Amendment 8)
  • Authorizes the Treasury Board to issue up to $500 million in tax and revenue anticipation notes on behalf of the state in order to manage cash flow; authorizes up to $250 million in tax and revenue anticipation notes to assist with cash flow for counties, cities, and towns.  Similar language is included in the biennium budget amendments.  (Amendment 37)
  • Defers interest on income tax payments due between April 1 and June 1, 2020, as long as payment is made by June 1; waives interest on sales tax payments that were originally due March 20 if the Department of Taxation had already waived penalties, provided that payment is made by April 20.  Similar language is included in the biennium budget amendments. (Amendment 27)

Education

  • Authorizes the Superintendent of Public Instruction to grant temporary flexibility and issue waivers in areas such as accreditation, testing, and reports.  Similar language is included in the biennium budget amendments. (Amendment 5)
  • Authorizes the Virginia Department of Education to temporarily suspend Supplemental Lottery Per Pupil Allocation payments made to school divisions in the event of a shortfall in lottery proceeds.  (Amendment 6) 
  • Waives required local effort and required local effort and local match obligations for FY 2020 due to the state of emergency and school closures. (Amendment 7) 

Child Care

  • Appropriates additional federal Child Care Development Block Grant funding provided in the CARES Act and directs that it be used to provide incentive grants for child care providers, emergency child care, elimination of co-pays for participants in the child care subsidy program, and paid absence days to centers that are temporarily closed.  (Amendment 14)
  • Uses $2 million in balances from the Child Care Development Fund for full-day authorization for child care for school-age children and sibling enrollment for families already approved for care. (Amendment 15)
  • Authorizes an exemption from licensure for child day programs serving children of essential personnel, provided that programs file with the Department of Social Services and abide by certain basic health and safety requirements.  Exempts staff from securing an additional background check provided that a background check was conducted within the previous two years.  Similar language is included in the biennium budget amendments. (Amendment 17)

Other

  • Provides authority for the Director of the Department of Corrections to discharge certain offenders from incarceration or place them in a lower level of supervision in order to assist in maintaining health, safety, and welfare while preserving public safety. Similar language is included in the biennium budget amendments.  (Amendment 21)
  • Authorizes public bodies to hold meetings by electronic means under certain circumstances during a state of emergency, provided certain notice and record-keeping provisions are met.  Similar language is included in the biennium budget amendments. (Amendment 28)
  • Sets out a process for delaying the May 5, 2020, general and special elections until November 3, 2020.  (Amendment 36)

Key elements of the Governor’s amendments to the biennium budget are as follows: 

K-12 Education

  • Authorizes the Superintendent of Public Instruction to grant temporary flexibility and issue waivers in areas such as accreditation, testing, and reports.  Similar language is included in the caboose budget amendments. (Amendment 26)
  • Unallots $7.1 million GF in FY 2022 that would develop the Virginia Learner Equitable Access Platform, an online depository of curriculum and other educational resources to be used and shared among school divisions to aid in classroom instruction (Amendment 27)
  • Unallots $650,000 GF in each year of the biennium for Virginia Preschool Initiative classroom observations and professional development.  (Amendment 27).
  • Unallots $21.7 million GF in FY 2021 and $28.4 million in FY 2022 to retain school counselor ratios at FY 2020 levels.  VACo had requested delayed implementation of HB 1508 (McQuinn) / SB 880 (Locke) as means of mitigating additional Standards of Quality staffing ratio expenses and requirements. (Amendment 28)
  • Unallots $185.3 million GF in FY 2021 and $305 million GF in FY 2022 in discretionary spending amounts related to Direct Aid to Education. (Amendment 29)  Some notable unallotments in this Amendment include:
    • $35 million GF in FY 2021 and $48 million GF in FY 2022 that would increase the Virginia Preschool Imitative (VPI) per pupil allocation, provide additional support for students on waitlists, and create a pilot program for at-risk three-year-olds.
    • $3 million GF in FY 2021 and $5 million GF in FY 2022 for early childhood educator recruitment/retention incentives in hard-to-serve preschool classrooms.
    • $1.8 million GF in FY 2021 and $2 million GF in FY 2022 for no-loss funding to localities to ensure that no school division loses state funding in FY 2021 or FY 2022 as compared to that school division’s FY 2020 state distribution.
    • $5.3 million GF in each year of the biennium for school meals expansion to reduce or eliminate the cost of school breakfast and school lunch for students who are eligible for reduced price meals under the federal National School Lunch Program and School Breakfast Program.
    • $94.7 million GF in FY 2021 and $192.5 million GF in FY 2022 for 2 percent salary increases in each year for the state share of funded Standards of Quality instructional and support positions.
    • $26.2 million GF in FY 2021 and $35.2 million GF in FY 2022 for At-Risk Add-On funding disbursed to local school divisions based on the estimated number of federal Free Lunch participants, in support of programs for students who are educationally at risk.
    • $2.5 million GF in FY 2021 and $2.1 million GF in FY 2022 for relief to school divisions with fewer than 10,000 students experiencing unexpected enrollment loss greater 2 percent over the summer between school years.
    • $9.6 million GF in FY 2021 and $10 million GF in FY 2022 for Cost of Competing Adjustment (COCA) to partially restore funds to eligible school divisions (nine school divisions in Planning District 8 and nine adjacent school divisions).
  • As of now, no changes to the appropriations for biennial rebenchmarking of the Standards of Quality have been proposed.

Compensation and Retirement

  • Unallots $118.1 million General Funds (GF) in FY 2021 and $146.8 million GF in FY 2022 that would support compensation actions for state employees and state-supported local employees (for state employees, a three percent bonus effective December 1, 2020 and a three percent salary increase effective June 10, 2021; for Constitutional officers and their employees and state-supported local employees, a two percent bonus, effective December 1, 2020, and a three percent salary increase, effective July 1, 2021; for sworn employees of the Department of State Police with three or more years of continuous state service, $110 for each year of service up to 30 years, effective August 10, 2020, as well as a two percent salary increase effective the same date). (Amendment 124)
  • Unallots $3.9 million GF in FY 2021 and $4.1 million GF in FY 2022 that would reduce the amortization period for the state employee retiree health insurance credit.  (Amendment 124)

Judiciary/Public Safety

  • Unallots funding for additional district court clerk positions ($5.7 million General Funds (GF) in FY 2021 and $7.6 million GF in FY 2022). (Amendment 2)
  • Unallots funding for additional public defenders ($3.8 million GF in FY 2021 and $5.7 million GF in FY 2022). (Amendment 3)
  • Unallots $8.6 million GF per year in additional aid to localities with police departments (“HB 599”). (Amendment 103)
  • Unallots $2.3 million GF per year for expansion of local pretrial and probation services.

Constitutional Officers (Amendment 6)

  • Unallots $358,578 GF in FY 2021 and $391,176 GF in FY 2022 that would fund a minimum of three staff in each Circuit Court Clerk’s office.
  • Unallots $1 million GF per year for technology in Clerks’ offices.
  • Unallots $1.8 million GF in FY 2021 and $2 million GF in FY 2022 that would fund deputy circuit court clerks’ salaries in order to reach parity with General District Court clerks’ salaries.
  • Unallots $979,399 GF in FY 2021 and $1.1 million GF in FY 2022 that would fund 25 percent of the court services staffing need in Sheriffs’ offices.
  • Unallots $1.4 million GF per year that would fund 25 percent of the staffing need in Commonwealth’s Attorneys’ offices.
  • Unallots $950,656 GF in FY 2021 and $1 million GF in FY 2022 that would support unfunded or underfunded positions in offices of Commissioners of the Revenue.
  • Unallots $821,028 GF in FY 2021 and $1.6 million GF in FY 2022 that would support unfunded/underfunded positions in Treasurers’ offices.

Agriculture and Forestry

  • Includes new language directing the Commissioner of Agriculture and Consumer Services to administer an agricultural pilot program to study the growth, cultivation, and marketing of industrial hemp. (Amendment 11)
  • Unallots funding for staff in VDACS ($425,042 over the biennium) and the Department of Forestry ($866,032 over the biennium) associated with implementation of the phase III watershed implementation plan (Amendments 12 and 13).

Elections

  • Unallots $2.5 million GF per year, which would support funding for full reimbursement for the state-established compensation levels for general registrars and electoral board members’ salaries (Amendment 10)
  • Retains state match for Help America Vote Act funding included in the federal spending package enacted in December 2019 and language directing the use of the federal funds for replacement of the state voter registration system.

Economic Development

  • Unallots $250,000 GF per year for Enterprise Zone grants. (Amendment 17)
  • Unallots $294,000 GF per year in additional funding for Planning District Commissions. (Amendment 17)
  • Unallots $12.5 million GF in FY 2021 for the Business Ready Sites Program. (Amendment 21)

Broadband

  • Unallots $16 million GF per year for the Virginia Telecommunication Initiative (leaving the FY 2020 appropriation level of $19 million). (Amendment 17)

Housing

  • Includes new language allowing the Department of Housing and Community Development (DHCD) to waive the requirement for homeless prevention program funds to be matched with local or private funds (Amendment 15); additional language allows DHCD to use funding from the Housing Trust Fund to address housing issues resulting from the COVID-19 pandemic. (Amendment 16)
  • Unallots proposed addition of $23 million GF per year in support for the Housing Trust Fund (leaving the FY 2020 base of $7 million per year). (Amendment 17)

Aid to Local Public Libraries

  • Unallots $1 million GF per year in additional aid to local public libraries. (Amendment 55)  

Children’s Services Act

  • Unallots $250,000 in FY 2021 that would continue the second phase of the rate study for private special education day placements that was partially completed in 2019.  Directs the Office of Children’s services to submit preliminary findings on the continuation of the study to the Joint Legislative Audit and Review Commission no later than September 1 for incorporation into JLARC’s CSA study.  Retains language directing the implementation of rate setting on a statewide basis, effective July 1, 2021. (Amendments 72 and 73) 

Medicaid

  • Unallots proposed addition of 250 Developmental Disability waiver slots in FY 2022 (these slots were added by the General Assembly; retains the 1,135 waiver slots added over the biennium in the Governor’s introduced budget as part of the state’s agreement with the Department of Justice). (Amendment 81)
  • Unallots proposed funding for care coordination for inmates prior to release from incarceration ($347,803 GF in FY 2021 and $465,440 in FY 2022). (Amendment 81)
  • Unallots funding for a proposed new Medicaid dental benefit for adults ($8.7 million GF in FY 2021 and $25.3 million GF in FY 2022). (Amendment 81)
  • Unallots funding for a new voluntary home visiting benefit. ($12 million in FY 2022) (Amendment 81)
  • Unallots the Medicaid-funded portion of additional STEP-VA services proposed to be funded over the biennium ($486,951 GF in FY 2021 and $2.3 million GF in FY 2022). (Amendment 81)

Behavioral Health

  • Unallots $4.2 million GF per year in additional support for the Virginia Mental Health Access Program, which assists pediatricians in providing mental health care to children. (Amendment 83)
  • Unallots proposed funding for pilot programs to reduce census pressures at state hospitals ($7.5 million GF per year). (Amendment 83)
  • Unallots proposed increases in funds for permanent supportive housing ($8.5 million GF in FY 2021 and $17 million GF in FY 2022). (Amendment 84)
  • Unallots proposed additional funding to expand forensic discharge planning in jails ($1.4 million GF in FY 2021 and $2.1 million GF in FY 2022). (Amendment 84)
  • Unallots funding for continued phased implementation of STEP-VA ($19.7 million GF in FY 2021 and $30.2 million GF in FY 2022, which would provide additional funding for outpatient services, veterans services, and peer support and family support services).  Provides that Community Services Boards are not required to provide STEP-VA services beyond what was funded in the 2019 Appropriations Act. (Amendment 84)

Social Services

  • Unallots $100,000 in FY 2021 and $200,000 in FY 2022 that would support foster care youth obtaining drivers’ licenses.  (Amendment 93)
  • Unallots $1.2 million GF per year that would increase TANF benefits and income eligibility.  (Amendment 93)
  • Unallots $3.4 million in FY 2021 and $8.4 million in FY 2022 to fund prevention services for children and families as part of the state’s implementation of the federal Family First Prevention Services Act and $12.5 million in FY 2021 and $17.4 million in FY 2022 to establish prevention services in local departments of social services.  Also unallots $1.1 million GF per year that would support development of evidence-based services in accordance with the 2018 changes to federal foster care funding streams.  (Amendment 93)
  • Unallots $5.6 million GF per year that would increase minimum salaries in local departments of social services. (Amendment 93)
  • Unallots $75,000 GF per year to develop an emergency approval process for kinship caregivers. (Amendment 93)

Natural Resources

  • Unallots proposed spending increases for state park operations and maintenance ($3.2 million over the biennium). (Amendment 95)
  • Unallots proposed supplemental Water Quality Improvement Fund deposit in FY 2022 of $25.4 million and proposed Supplemental Water Quality Improvement Fund deposit of $3.8 million in FY 2021, but retains the mandatory appropriation in FY 2021. (Amendment 95)
  • The Governor’s amendments do not appear to address the $50 million in bond authorization for the Stormwater Local Assistance Fund that was included in the enrolled budget.  However, the Governor’s amendments include language allowing the Governor to direct state agencies or authorities to delay the initiation or continuation of capital projects supported by General Fund or state-supported debt appropriations in response to cash flow or debt capacity concerns. 

Transportation

  • Includes language amendment providing that the Six-Year Improvement Program adopted in June 2019 shall remain in effect until June 30, 2021, or until a new program is adopted that reflects an updated Commonwealth Transportation Fund revenue forecast reflecting the effects of the pandemic.  (Amendment 110).
  • Includes language providing that the Commonwealth Transportation Board may adjust funding allocations to transportation agencies to ensure the continuation of core services that may be threatened by revenue reductions associated with the pandemic. (Amendment 111)

Reserves

  • Unallots proposed voluntary $300 million deposit to the Revenue Reserve Fund in FY 2022. (Amendment 70)

VACo Contact: VACo Legislative Team

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