THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Sunday, January 26, 1997 TAG: 9701260053
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY ALETA PAYNE, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: 184 lines
Linda Cruciano looks at school funding through the eyes of a parent.
``You don't want to tie the teachers' hands'' with a lack of money, the mother of students at Tallwood High and Brandon Middle schools said. ``Ultimately, those people suffer when there's not enough.''
But Cruciano also looks at the issue through the eyes of a taxpayer.
``I don't want anyone telling me I have to pay more,'' she said. ``For me, that's not a consideration, paying more taxes.''
This balance between needs and dollars that Cruciano must work through as an individual is not unlike the balance that city and school officials are working through as a government. That deliberation has resulted in two plans under discussion in the Beach that would fundamentally change the way the school district's share of local money is allotted. One of those plans or some sort of compromise could be in place in time to affect next year's school budget.
It is a decision that ultimately will affect every classroom and every child. Because although spending big dollars doesn't guarantee a quality education, how much money is spent will determine what supplies are purchased, how much employees are paid, and which basics and extras make their way to students.
``We are at a pivotal point,'' said school superintendent Timothy R. Jenney. ``We have the opportunity to improve and prepare for major changes. Or we can continue fighting and watch the decline of the quality of life in this city.''
Budget season has become a feud between the City Council and the School Board, with each questioning the priorities of the other. The board offers up a wish list, the council counters, and the two bodies negotiate to a grudging compromise while invoking the needs of the citizenry and generating months worth of ill will. City officials say their proposal is one way to defuse the annual rite while also giving school leaders a measure of fiscal autonomy.
The proposal prepared by the city's staff and unveiled in late December calls for the schools to receive 53.13 percent of what is projected to be collected from the six fastest-growing and most stable tax streams - the equivalent of about 43 percent of all the city's general fund revenues. If school leaders decide they need more money, additional funds would have to come from a tax increase - earmarked for the schools - and supported by the community.
The formula would be periodically reviewed and could be adjusted to meet the changing needs of the city and the district.
The city's proposal is based on the local contribution in last year's budget because it was the most local money ever. However, the unprecedented jump in local funding was to adjust for years of miscalculation, not to enrich programs or provide for new initiatives.
A committee put together by the school division recommended in a report released Tuesday that the schools receive 53.13 percent of what is actually collected from all non-dedicated tax streams. Because the city traditionally underestimates revenue, and because more taxes would be involved, this plan would give the schools $29 million beyond the city's proposal for the next year, according to school officials.
Under the city's proposals, the schools would receive about $11 million more next year than the $202.1 million they received this year. However, because of growth, inflation and other factors, school officials say finances would still be grim. The schools would not be able to function at the current level of services and the division would face a $12.2 million shortfall, before declining federal aid or employee raises are even factored in, according to the report.
City Manager James K. Spore said the number of tax revenue sources could be increased beyond the city's proposal, but the percentage the schools received would be decreased proportionately so that the amount of money would remain the same.
``The philosophy of the policy is it takes the best year they ever had as a starting point,'' Spore said. ``I don't know how we can be more generous than that.''
The city's proposal may leave the schools facing tough financial times, but Spore said that reflects what the city faces as well.
``The reality of the situation is the same for us as it is for them,'' he said. ``They can begin to make their priority choices themselves rather than forcing the council to make them.''
Jenney said the schools are still playing catch-up from past financial problems. So the base on which the policy is built will be crucial. The school proposal, he said, is fair to both sides.
``It works both ways. It works for us because we have a better opportunity for an equal share of the resources,'' he said. ``And from the city's perspective, if we're working from actual (figures) rather than budgeted, we share in the downturn. We share in the profit as well as the pain.''
Some school leaders have questioned whether the city's proposed formula is in the best interest of the division and say they feel the measure may be pushed through whether school leaders sign off on it or not. Privately, some also say they believe the city is trying to punish the school division for the financial crisis that culminated in a special grand jury investigation last year and for the board's deferral on deciding whether to consolidate some services with the city.
Spore said that he can't speak for others but that the idea behind the policy was his and was not intended to punish anyone.
``I wanted to provide a better framework for budgeting and to find some way to end this incessant bickering over the budget process. I think the public is tired of it,'' he said.
If the policy is being supported as some sort of revenge, Jenney said, that's unfortunate and dangerous.
``If that's one of the motivations, it is the beginning of self-destruction,'' he said. ``The life and health and vitality of this city is a direct result of the quality relationship between its governing bodies. And if one believes it can profit at the expense of the other . . . it's not possible.''
Members of the school committee that came up with the proposal include Giles Dodd, a former assistant city manager for finance; and three former board chairmen from the days when the City Council still appointed members to the board - James Fletcher, Gregory Stillman and Samuel Meekins. Jenney said the composition of the committee was deliberate.
``My mission was to utilize the skills and talents and experience, but also to send the message of credibility. That this was a group that could do the right thing.''
In several places, the school committee's report suggests both sides work together to come up with a funding proposal that is agreeable to all. Among the committee's other recommendations:
Establish a special revenue fund for one-time costs and capital improvements, such as buses and cafeteria equipment. The fund would also provide a buffer in tough economic times.
Allow the school system to earn interest on cash balances for the operating fund. That interest would go into the special revenue fund. That interest now goes to the city.
Distribute the city's budgeted contribution in equal monthly installments to the schools rather than allotting money as needed.
Virginia Beach is by no means the first locality to consider a funding formula. Because there is no apparent exact match for the city or the formula, comparisons are difficult. But experts in school finance have seen variations on the theme.
Dick Salmon, a professor of Educational Leadership and Policy Studies at Virginia Tech, said a formula based on a fixed percentage can be problematic and that it has the potential to become a cap on funding rather than a base.
Rapid growth in school needs could easily outstrip revenue growth, he said.
``I don't much like these kinds of things. I think it begs the question of representative government,'' he said. ``That's one of (the council's) jobs, to look at the budget.''
When California voters passed Proposition 98 in 1989, they guaranteed 40 percent of state funds for the schools. The bottom promptly dropped out of the California economy and schools lost ground to inflation for five years. Class sizes soared and test scores dropped. The state's economy is now booming and additional money is flooding the schools. But the five years students lost can never be made up.
``It depends on the size of the pie. When the pie is shrinking, it doesn't provide you with any floor,'' said Michael Kirst, a professor at Stanford University and director of an education think-tank, Policy Analysis for California Education. ``Moreover, it's not a floor, but you do have a ceiling.''
Both Spore and Jenney said the schools could only expect to absorb their share of any economic downswing and would have to do so whether a formula was put in place or not.
``(The schools) have some very tremendous and legitimate needs. So does the city,'' said Spore, the city manager. ``The way to address that is not to cannibalize one set of needs for another.''
``I think it would be irresponsible to assume there's an endless resource of money,'' said Jenney, the superintendent. ``If the bottom falls out for the city, it falls out for the schools.''
The schools are willing to do their share of the suffering should that happen, he said. ``But I also want full exposure to the gain.'' ILLUSTRATION: Color photo by STEVE EARLEY, The Virginian-Pilot
Linda Cruciano, middle, whose daughters Carrie, left, and Angela,
right, go to Tallwood High School and Brandon Middle School,
respectively, recognizes there's a balance needed to be struck
between paying taxes and receiving basic school needs.
Graphic TWO PROPOSALS
City proposal:
53.13 percent of the budgeted revenue from the six
fastest-growing and most stable tax streams.
Additional money would have to come from a tax increase earmarked
for the schools.
The schools would be allowed to keep any money left in the
division's budget at the end of the year and would not lose money if
the city came up short of projected revenue.
The formula would be revisited periodically and could be
adjusted.
School committee proposal:
53.13 of the actual revenue from all non-dedicated tax streams.
The schools would get the same percentage of any money left over
in the city coffers at the end of the fiscal year.
The division would be allowed to accumulate a special reserve
fund for one-time expenses and as a buffer for tough economic times.
The division would be allowed to accumulate interest on cash
balances for the operating fund.
KEYWORDS: VIRGINIA BEACH SCHOOL BOARD VIRGINIA BEACH CITY
COUNCIL BUDGET