Did the School Board get everything it wanted in the City Manager’s proposed budget?
Not everything – but a little more than half. The School Board requested $36.4 million in extra City funding. The City Manager recommends $18.8 million in extra funding.
Where did this extra money come from?
| 2-cent increase in the real estate tax rate |
$9.6 million |
| City fund balance for School operations |
$5.2 million |
| City fund balance for 5% VRS pay raise |
$4.0 million |
| Total |
$18.8 million |
Where will this extra money go? Restoring JV sports? Buses for academies? More teachers? Pay raises? Technology?
That’s entirely up to the School Board. The City Council doesn’t decide how the School Board spends its money. The City Council decides how much total money the School system gets. The School Board then decides how to spend that money – on academics, technology, sports, administration, etc. The School Board is an independently elected body that makes its own spending decisions.
How much money does the City Manager want to take from School reserves this year?
None.
How much money does the City Manager proposed giving to Schools from the City’s reserves this year?
$9.2 million.
If the City Council raised the real estate tax rate 4 cents – including 2 cents for School spending – what would that cost a typical homeowner?
Because of declining home values, 57% of all homeowners would pay less, even with the higher rates. The typical homeowner would pay $9 less next year. (That’s based on the median home value in Virginia Beach of $219,900.) Nearly all homeowners would pay less than they did four years ago. Please visit our Real Estate Tax Calculator for calculations.
What if the City Council does not approve a tax rate increase?
Then the City Council would have to cut $9.6 million from the School budget, or raise the money from somewhere else.
How does Virginia Beach’s real estate tax rate compare with other cities?
It is the lowest in Hampton Roads. It hasn’t been changed since 2008, when it was lowered 10 cents. Here’s how we compare:
| Virginia Beach |
$0.93* |
| Chesapeake |
$1.05* |
| Hampton |
$1.04 |
| Newport News |
$1.10 |
| Norfolk |
$1.11 |
| Portsmouth |
$1.27 |
| Suffolk |
$0.97 |
* These rates are proposed for FY12-13. All others are current rates for FY11-12.
To see what you would pay in real estate taxes in each City for the same value house, take your home value, divide it by $100, then multiply it by the rate. |
How much money would the City raise from each 1 cent increase in the real estate tax rate?
About $4.8 million.
If the City Council raised the real estate tax rate 4 cents, would it still be the lowest in Hampton Roads?
Yes.
How much does the School Board propose raising salaries?
3 percent. That would cost $13.5 million. If the Schools reduced the proposed raise to 2 percent, it would save $4.5 million. This amount could be used for other School expenses.
Didn’t City employees get a 2.5% raise last year while School employees got only a 0.5% raise?
Yes, but School employees also got 2.5% bonuses last year. City employees got no bonuses. (About 9% of full-time City employees also received an additional 5% pay raise to bring their salaries closer to the prevailing market rate.)
School employees got higher raises than City employees in fiscal 2009 (3.5% versus 2.5% for City employees) and fiscal 2007 (7% versus 4.5% for City employees). In all other years since 2007, School and City employees got the same pay raises.
Why did the City Council underfund Schools last year?
We didn’t. The City Council gave the School Board every penny it requested. The School Board asked for $853 million and the City Council funded $853 million – exactly what the School Board asked for.
Yes, but the City Council also took money from School reserves. Why didn’t the City take money from its own reserves?
We did – much more than from School reserves. Here’s how much money the City took from City reserves and School reserves over the past three years:
Year Money from City Reserves Money from School Reserves
2010 $70.3 million $8.8 million
2011 $71.9 million $8.8 million
2012 $38.1 million $9.2 million
Wait a minute. The School Board says the City Council took much more money than that from the School systems’ reserves.
That’s misleading.
Yes, the City Council used more money from School operating reserves for pressing citizen needs elsewhere. But then the City Council gave the School system more money in new buildings and renovations. Here’s what happened:
Early in last year’s budget process, the School Board chairman agreed to give up $14.5 million from the Schools’ risk management (insurance) reserve fund. The chairman agreed, in writing, that this “will have no impact on classroom instruction or the day-to-day operations of the Schools.” In return, the City agreed to assume “catastrophic liability” for the Schools – that is, to insure the Schools against big losses.
Later in the budget process, the City Council used an additional $9.2 million, in part, to eliminate the need for an increase in the real estate tax rate. This allowed the City Council to fund critical citizen needs – including Schools – without raising the tax rate. In return, the City Council agreed to move up several School building projects that were previously delayed, including John B. Dey Elementary, Thoroughgood Elementary, Princess Anne Middle and Princess Anne High School.
In other words, the City got something from the Schools and the Schools got something from the City.
Why did the City Council take money from the School Board to build a new animal shelter and a new recreation center?
The City Council has to balance all of the needs of all city residents. That includes Schools, roads, emergency services (police, fire, EMS and 911), water, sewer, parks, libraries and much more.
The Williams Farm Recreation Center is being built in western Bayside – a part of the City with a large concentration of low-income families that have been historically under-served by City services. This recreation center was a high priority for many years. It will serve thousands of children – including many children who use the City’s before- and after-school services in the recreation centers.
The Animal Care and Adoption Center was another desperately needed facility. The old animal shelter was dilapidated and unsafe. The City faced fines of $1,000 a day from the State if it did not repair or replace the shelter. This was not optional.
How does Virginia Beach compare to other cities in school funding?
Virginia Beach currently spends more per student in local funds than any other city in Hampton Roads -- $212 million more than the State requires. Here are the latest per-pupil spending numbers:
| Chesapeake |
$4,464 |
|---|
| Newport News |
$3,653 |
|---|
| Hampton |
$3,652 |
|---|
| Suffolk |
$3,482 |
|---|
| Norfolk |
$3,352 |
|---|
For FY13, Virginia Beach’s per-pupil spending would rise to $5,435, based on projected enrollment. This includes the additional $18.8 million City contribution to Schools in the proposed budget.
What’s causing the budget gap for Virginia Beach Schools?
Dramatically higher costs. The two biggest problems facing the School system – and facing the City, too – are higher costs for retirement and health care. Those two items account for most of the Schools’ problem:
Higher retirement costs: $28.7 million
Higher health care costs: $6.4 million
The same two issues will cost the City an additional $16.1 million.
In other words, it’s mainly an expense problem, not a revenue problem. All told, $35.1 million of the School Board’s gap come from just these two areas.
Who decides how much the School Board must spend on retirement costs?
The General Assembly in Richmond.
What other problems stem from Richmond?
To help the State budget, Governor McDonnell proposed using a 2% inflation index for School expenses, rather than the normal 3%. This saved the State (and cost Virginia Beach Schools) nearly $2 million. He also proposed that the State no longer pay for support positions in Schools. As a result, the Schools will either eliminate the jobs or the City will have to make up the lost funding -- $5.3 million.
Why does the City have less money to spend next year? The real estate tax rate hasn’t changed.
True – but real estate prices have plummeted. As a result, the City gets less money every year from the real estate tax. And that’s the City’s biggest revenue source. Real estate assessments have dropped four years in a row. The City Assessor believes assessments will continue to drop for two more years.
Let’s put that in perspective. In 2009, the median home value in Virginia Beach was $259,400. For 2013, it will be $219,900 – nearly a 15% drop over four years. So even with a 4-cent increase in the real estate tax rate, the owner of a median-valued home in Virginia Beach would pay $263 less in real estate taxes next year compared to FY 2008-09.
How can I talk to City officials about my concerns?
Budget Open House – Meet City Staff:
April 5 - Virginia Beach Convention Center, 6 to 8 p.m.
Representatives from every City department will be there to answer questions and listen to your concerns.
City Council Budget Public Hearings:
April 18 - Cox High School, 6 p.m.
April 24 - City Council Chamber at City Hall, 6 p.m.
The City Council will hear concerns about overall funding issues and proposed program changes.