School Board Reversion of Unexpended Funds Bill Recommended to be Amended to Address Local Government Concerns

January 18, 2022

SB 276 (Stanley), as originally written, would permit any school board to finance school capital projects with any funds appropriated to it by the local governing body that are unexpended by the school board in any year. Currently, local governing bodies have discretion as to whether to permit local school boards to retain these funds. This bill would wrest that decision from local governments and give it to local school boards. VACo has strong concerns and a long-held legislative position opposed to this preemption of local authority.

Retaining the discretion currently held by local governments to maintain reversion of unexpended funds allows local governments to respond to any unanticipated crises such as the impacts of a natural disaster or economic downturn. Given the myriad functions for which local governments are responsible for in addition to the major funding of K-12 education, it is important for local governments to be able to retain the option to use unexpected funds appropriated to the school board elsewhere. Additionally, many local governments already have voluntary agreements in place with their local school board that allow local school boards to retain end-of-year unexpended funds for school capital needs. Though the intent of this legislation was recommended by the Commission on School Construction and Modernization, it was the only recommendation to face contentious discussion by Commission members and to pass with a non-unanimous vote. VACo supports the other recommendations of the Commission.

Thankfully, VACo and VML were able to work the bill’s patron and propose language to amend the bill and address our concerns. Specifically, the language would state that “Any local governing body may by resolution allow the local corresponding school board to retain unexpended end of year funds appropriated to the local corresponding school board by the local governing body for us to finance school capital projects.”

The bill was heard in the Senate Education and Health Committee’s Public Education Subcommittee, which voted unanimously 4-0 to recommend the bill as amended to the full committee. VACo is appreciative to Senator Stanley for his willingness to work with local governments and to the Subcommittee to identify solutions on an issue of mutual concern. The bill will next be hard by the Senate Education and Health Committee.

However, additional legislation has been filed on this issue. HB 608 (Bourne) is identical to SB 276 in its original form. HB 251 (Simonds) and SB 481 (McClellan) encourage, but do not require local governing bodies to allow school boards to retain unexpended locally appropriated funds for school capital projects. However, they prevent any school board that fails to enter into such an agreement from participation in any state grant, loan, or bond program that supports school maintenance, renovation, or construction. VACo has reached out to the patrons of these bills expressing our concerns and hopes to work with the patrons to find common ground that does not undermine the existing appropriating authority of local governments.

VACo Contact: Jeremy R. Bennett

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