Local schools expect to lose millions in funding

With millions of dollars in state funding in jeopardy, public schools across South Hampton Roads are bracing for even tighter budgets the next two school years.

The Virginia Department of Education has notified school divisions about their new composite index numbers. The index is calculated using an equation to determine how much a locality can afford to pay for public education. The higher the index, the more the state expects a locality to contribute to its school system's budget. For many of Virginia's school divisions, including the five in South Hampton Roads, the index went up.

However, the figures are based on 2 -year-old data.

In South Hampton Roads, Virginia Beach schools expect to lose the most state dollars next fiscal year. Farrell Hanzaker, the division's chief financial officer, estimated a loss of $15.5 million with the new composite index. The school system's 2009-10 budget is roughly $695 million.

"It's not a crisis, but it's significant because this is going to be on top of additional cuts," Hanzaker said.

Based on preliminary calculations, Chesapeake schools expect to receive about $9.5 million less from the state. That system's current budget is about $397 million. Norfolk schools estimate a reduction of $7.2 million. Their 2009-10 operating budget is about $327 million.

Suffolk and Portsmouth school divisions each expect to lose roughly $4 million. Current budgets are about $150 million in Suffolk and $149 million in Portsmouth.

"The only good part is everyone is in the same boat," said Vicki Lucente, assistant superintendent for budget and finance for Chesapeake schools.

To compound the problem, school systems anticipate a second wave of stimulus funds for next year, but they still don't know whether that money will be available.

School divisions will get more details Dec. 18, when Gov. Timothy M. Kaine releases his proposed budget for the next two years. Virginia is facing a revenue shortfall predicted to be about $3 billion.

When calculating a locality's composite index, the state considers real estate values, retail sales taxes, adjusted gross income, population and student enrollment. The formula also takes into account statewide trends.

The newest indices take effect in July and will be used through June 2012. They're based largely on 2007 data provided by the Virginia Department of Taxation. It's the latest information available, said Kent Dickey, the state Education Department's assistant superintendent for finance.

From 2005 to 2007, real estate values and taxable retail sales jumped considerably in all five South Hampton Roads cities. Adjusted gross income also rose all around.

The economic crisis began not long after that, and current figures aren't so rosy. School officials said their cities don't have the extra money to handle the shift in financial responsibility. Proposed budgets for the next fiscal year will be released in early 2010.

"The cities will be squeezed," said Dan Pendarvis, the Portsmouth school division's assistant superintendent for budget and planning. "There's no doubt about it."

In recent years, local school systems dealt with tightening budgets by cutting positions, delaying bus purchases, eliminating equipment upgrades, scaling back on utility usage and conserving fuel. Those measures and probably more, school officials said, will be back on the table.

"It's highly unlikely that we'll be able to give raises again," said Hanzaker, the chief financial officer for Virginia Beach schools. "It's been two years in a row."

Hattie Brown Garrow, (757) 222-5562, hattie.brown@pilotonline.com

Anticipated losses

School division   Total budgets  Projected funds cut

Va. Beach             $695M                $15.5M

Chesapeake        $397M                $9.5M

Norfolk                  $327M                 $7.2M

Suffolk                   $150M                 $4M

Portsmouth          $149M                 $4M