Governor’s Budget Proposes Formula Update for Local Health Departments

January 8, 2021

The Governor’s introduced budget includes a proposed update to the Cooperative Health Budget, the state-local partnership that funds local health departments. Under the proposal, the local shares would be recalculated, resulting in increased state contributions (and lower local matches) in 59 localities and decreased state contributions (and increased local matches) in 54 localities. Twenty localities are already contributing the maximum 45 percent, which would remain unchanged. A spreadsheet prepared by the Virginia Department of Health displaying current and proposed local match rates may be found at this link.

The Cooperative Health Budget structure was established in 1954 and slightly revised in 1964; it established a range of local contributions, with the minimum and maximum local matches set at 18 and 45 percent, respectively. The formula was revised in the early 1990s, in keeping with the recommendations of a 1988 JLARC study, to base local contributions on local revenue capacity and median household income (rather than the estimated true value of real property, as had previously been used to determine local shares). The revised formula retained the 18-45 percent range of local contributions. Since that time, the formula has not been updated regularly. In materials prepared by the Virginia Department of Health as part of the agency’s budget proposals, the Department points out that the outdated local match rates have “resulted in a growing set of localities (predominantly urban and rural) that have seen their cooperative budget match rate remain the same despite significant improvement or declination in their financial/revenue capacity.”

Under the Governor’s proposal, local match rates would be recalculated using current revenue capacity, and an amount not to exceed $10.2 million would be provided in order to fund the additional state contribution that would be required in localities whose ability to pay has decreased, as well as to hold harmless localities that would otherwise be required to contribute an increased local share. Budget language warns that the hold-harmless funding should not be assumed in future years, and directs the Virginia Department of Health to conduct an analysis of match rates and report to the Governor every two years. VACo is working to request additional time to phase in the increased local contributions for affected localities and is interested in working with the Administration and the legislature on additional support to local health departments, as the COVID-19 pandemic has underscored the importance of a robust public health system.

VACo Contact: Katie Boyle

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