Good afternoon and Happy New Year! I hope that everyone had a terrific break and was able to quickly get back into a groove today!

The Virginia General Assembly is about to begin its 2017 Session next Wednesday (1/11/17).  As always, we will be following a large number of bills and offering input based on the Legislative Positions for the 2017 General Assembly adopted by the Salem City School Board.  Among the most significant are the “budget bills” introduced by the Governor recommending his proposed budget.

In November of each year, the Salem City School Board approves SCS Budget Priorities, Procedures, and Calendar to govern the annual budget development process.  In late December, we receive the Governor’s Budget Proposal.  Toward the end of the General Assembly Session, we receive separate budget bills from the Virginia House of Delegates and the Virginia Senate, at which point in time we ask the Board to adopt a budget by the end of March for our City Council to consider.  Local revenue is generally not known until later, so it is usually May before we ask the Board to adopt salary schedules and make associated budget adjustments.

While the legislative process usually features many fits and starts, we purposefully try to not inundate employees with every tidbit of information that comes our way.  Customarily, we communicate after receiving and analyzing: 1) the Governor’s Proposed Budget; 2) the budgets adopted by the two houses; and 3) the final state budget from the House and Senate Budget Conference Committee.

Governor’s Proposed Budget

For those who may be interested in all the numbers and an abundance of detail, please see the Report to the Board about the Governor’s Proposed Budget next week, which will be available in BoardDocs on Friday.  In the meantime, here is a summary:

Current Year (FY 17; SY 16-17)

The Governor’s budget includes amendments to the current fiscal year (FY 17).  It is common for there to be “technical updates,” but this year, the amendments address  the fact that the state revenue projections fell short and triggered the automatic elimination of the state’s share of a raise…a reduction for SCS of $152,201.

This increase from the state was supposed to take effect in December, but our Board had resolved to make the raise effective at the beginning of the school year, meaning that the full cost of the raise provided this year (SY 16-17) will be entirely at local expense and the budget reductions and changes in assumptions this year will need to be carried forward into next year.

Other “technical amendments” for FY 17 reduce our state revenue by another $30,781 for a total reduction in state funds of $182.982 in the current year.

Next Year (FY 18; SY 17-18)

Using our current budget enrollment assumption of 3710 students for an “apples to apples” comparison of this year to next, the Governor’s proposed budget would increase state revenue to SCS by $611,353, but $350,000 of this increase would have to go toward the state’s already-adopted VRS pension contribution rates for FY 18.  It is also unclear whether the House Appropriations and Senate Finance Committees will consider the bonus proposal this proposed increase includes.  Further, if any one-time bonus funds are in the state final budget, they would only be for the state minimum required positions in the Standards of Quality.  Like all of the other 132 school divisions in Virginia, SCS exceeds the minimum established in the SOQ, so the cost for all other employees for a bonus would need to be budgeted for locally.

Next Steps

At the School Board Meeting next week, a more complete analysis of the Governor’s Proposed Budget will be presented (will be available in BoardDocs beginning this Friday).

Historically, every Governor’s Proposed Budget is fiscally conservative because it is developed using preliminary state revenue projections.  The General Assembly’s “money committees” (House Appropriations and Senate Finance) get updated information during the session that often helps budget matters some, but the currently required increase in VRS rates and seeking to budget the recurring costs of the already implemented raise this year in the next year without state revenue presents a significant challenge for our budget development process.

As always, all employees are welcome to contact the Business Office, or me, if you have any budget questions, suggestions, or concerns.  You are also welcome and encouraged to follow the legislative process and advocate for issues important to you with your state representatives.  You can expect another budget update from the Business Office after we receive and analyze the House and Senate budgets later in the session.

Introducing Sydney Jean Hall

Lastly, speaking of the Business Office, I am delighted to report that Mandy and Shannon Hall welcomed their new baby girl, Sydney Jean Hall on Sunday, December 18 weighing in at 7 lbs 9.5 oz!

We are fortunate to have Mr. Crew available in the office on select days to assist, so if you have any questions or comments you are welcome to direct them to mcrew@salem.k12.va.us (until Mandy’s expected return in February) or to me directly.

Best regards to all,

Alan