RICHMOND – When the General Assembly convened in Richmond for its 2022 session in January, a historic budget surplus allowed them the unique opportunity to finally take on one of Virginia’s most pressing challenges – the repairing and replacing of the state’s crumbling public schools. Setting their ideological differences aside, a group of rural Republican lawmakers, mostly from Southwest and Southside, and urban and suburban Democrats, formed an unlikely coalition to find a solution for the problem that has been plaguing the commonwealth for decades.
Six months later, on June 1, the legislature passed its biennial budget that for the first time included a record investment in public education, such as a 10% salary increase and one-time bonus for teachers and $1.25 billion to leverage more than $3 billion for school construction and modernization projects.
“I think we’ve made a gigantic stride this year, and it’s going to really pay off for a whole lot of school divisions,” said Del. Israel O’Quinn, R-Washington County, who took on a leading role in the House in this matter. “Pretty much all school construction has been falling on the localities for a long time, and to go from what I would characterize as basically zero dollars up to, wholly leveraged, $3.1 billion, is a massive jump,” O’Quinn said in a phone interview.
Bristol City Schools Superintendent Keith Perrigan, who also serves as president of Virginia’s Coalition of Small and Rural Schools, said that he was “thrilled” that the state is now “an active participant in improving learning environments” in the commonwealth. The budget compromise will provide $1.6 million for Bristol to use on improving school facilities, Perrigan said, adding that it also provides “the potential for us to leverage an additional $8 million.”
Gov. Glenn Youngkin, who traveled to Bristol earlier this week for a groundbreaking of a new elementary school, continues to review the budget and potentially amend and sign it before the new fiscal year begins July 1, his spokeswoman Macaulay Porter said in an email.
Porter added that the governor is “excited to deliver on the largest education budget in the history of Virginia that includes raising teacher salaries, creative structures to support school construction, investing in programs for students with disabilities, and lab schools.” The latter is an initiative pushed by the administration that would allow any institution of higher learning and private companies to form lab school partnerships with localities.
While Youngkin did not single out school construction and modernization during his campaign last year, he told Cardinal News in April that “historically, school construction has been a local responsibility,” but that “the state should step in and help.”
Lawmakers have long been aware of the dire situation at many aging Virginia schools. During the final weeks of Bob McDonnell as governor in 2013, his administration compiled a list of all the school construction needs in the state totalling $18 billion. That year also marked the last time that school construction grants and other funding were made available to localities by the state. More recent data provided by the Virginia Department of Education shows that the total cost to replace about 1,000 schools that are at least 50 years old would carry a price tag of more than $25 billion.
In Virginia, public school divisions get the bulk of their funding for school construction and modernization needs from their local tax base – an increasingly difficult undertaking especially for localities in the far Southwest suffering from population decline and economic downturns.
For many years, help from the state was mostly limited to providing access to the Literary Fund, a permanent and perpetual school fund established in the Constitution of Virginia that provides low-interest loans for school construction, grants under the interest rate subsidy program, and debt service for technology funding.
Revenues to the Literary Fund are derived primarily from criminal fines, fees, and forfeitures, unclaimed and escheated property, unclaimed lottery winnings and repayments of prior Literary Fund loans. In recent years, most school divisions primarily used the fund to help pay for teacher retirement. “It was so restrictive that practically no one was using it,” O’Quinn said.
But in December, outgoing Gov. Ralph Northam – facing a flush general fund and a billion-dollar surplus after an influx of federal COVID-19 relief money – proposed in his final budget an unprecedented $500 million in grants for school construction and renovations.
Also in December, the newly formed Commission on School Construction and Modernization – which the General Assembly created in 2020 to examine the state of K-12 school infrastructure across the commonwealth – asked lawmakers to create incentives for localities and school boards to set aside unspent education funding for capital projects. Consequently, Sen. Jennifer McClellan, D-Richmond, the chair of the commission, filed Senate Bill 481, that would have allowed localities to do just that.
But when the legislative session started on Jan. 12, it was off to a rough start when McClellan’s proposal – which was merged with SB 276, sponsored by Sen. Bill Stanley, R-Franklin County – was stopped in a House subcommittee after passing the Senate with unanimous support. It’s companion measure, House Bill 251, which had been introduced by Del. Shelly Simonds, D-Newport News, shared a similar fate.
Stanley, a longtime advocate for school construction funding, also sponsored SB 276, a measure seeking to permit any school board to finance capital projects with any funds appropriated to it by the local governing body that are unexpended by the school board in any year. The legislation was rolled into McClellan’s SB 481, and it passed unanimously in the Senate before being killed by a House subcommittee.
Stanley’s SB 603, which would have required the Virginia Department of Education to make recommendations to the General Assembly for amendments to the standards of quality in order to establish standards for the maintenance and operations, renovation, and new construction of public elementary and secondary school buildings, failed to make it out of the Senate Finance Committee. HB 1100, a similar proposal by Del. Dave LaRock, R-Loudoun, was defeated in a House subcommittee.
Another recommendation by the Commission on School Construction and Modernization pushed the legislature to allow all localities in Virginia to impose a 1% increase in their sales tax – subject to voter approval and to be used solely for school construction or renovation – was rejected by the legislature. Several lawmakers had sponsored such proposals – including Sen. Creigh Deeds, D-Bath County, whose SB 298 passed in the Senate but was defeated by a Republican-led House subcommittee.
In a phone interview on Monday, McClellan said that failing to give localities the ability to raise the sales tax “so that they could fund construction on their own” was a missed opportunity.
“That’s particularly frustrating because we kept hearing throughout the budget process that school construction is a local matter, and yet we didn’t give them the tools to help them raise that money. It would have been very helpful to them going forward,” she said.
Perrigan, the Bristol superintendent and McClellan’s fellow member of the Commission on School Construction and Modernization, said he hopes that the General Assembly will reconsider giving localities the ability to hold a referendum to raise sales tax for the purpose of improving school facilities in the future. “I can’t think of a more fiscally conservative way to make a decision about raising taxes than to allow local citizens to decide whether or not they want to increase their own taxes,” Perrigan said in an email.
O’Quinn said that while he wasn’t against the idea to allow localities to hold such referendums, he doesn’t believe that a universal approach was the solution. “The General Assembly has generally authorized every locality that makes that request to have those referendums, and if that locality passes that resolution and comes and says we want to do this, then voters have the ability to vote it up or down,” O’Quinn said. “I just don’t know if there is the appetite to throw that out as a blanket policy or not, but certainly if a locality specifically comes and asks then most likely they are going to get it.”
But while some proposals failed, others were well received. For instance, the legislature approved a measure sponsored by Sen. Jeremy McPike, D-Prince William, that requires the Department of Education – in consultation with the Department of General Services – to develop and maintain a data collection tool to assist local school board to determine the relative age of each public school building in their divisions and the amount of maintenance reserve funds that are necessary to restore each such building.
SB 238 passed into law during the regular session, going into effect July1. It was funded in the budget last week with $130,000 per year. HB 252, an identical proposal by Simonds, failed to advance in the House in February.
The General Assembly also favorably viewed a key recommendation by the Commission on School Construction and Modernization that would adopt changes to the state Literary Fund, freeing up more cash for local school divisions through loans with lower interest rates than currently allowed by law.
SB 471, sponsored by McClellan, moved to a second conference committee last week. The Senate appointed McClellan and Sens. Todd Pillion, R-Washington County, and Ghazala Hashmi, D-Chesterfield County, as conferees (the House has yet to follow). The legislation was approved in the budget, which allocates $400 million over the next two years for Literary Fund loans. But HB 253, a companion proposal introduced by Simonds, failed to advance in a House subcommittee.
Most significant, however, is the creation of a school construction fund and program aimed at strengthening school modernization projects in the commonwealth.
SB 473, sponsored by McClellan, was adopted by the House on June 1 during the special session and needs to pass the Senate again. While HB 254, the companion sponsored by Del. Shelly Simonds, D-Newport News, stalled in the House in February, HB 563, a similar proposal by O’Quinn, was merged with McClellan’s legislation during the regular session after being amended to require unobligated state gaming proceeds be directed to the construction fund for the purpose of awarding grants to local school boards.
The tax revenue from the five casinos planned to open in Virginia in the coming years is going to be “a pretty significant” funding source for school construction, McClellan said in the interview. “Because that’s supposed to be the ongoing source, and going forward, this is going to be a huge piece of the puzzle, but I hope it’s not the only one,” she said.
The compromise in the budget based on McClellan’s and Quinn’s proposals includes a $1.25 billion plan for loans and grants that will help local school divisions raise more than $3.15 billion to replace or repair the state’s deteriorating school buildings.
Both sides acknowledge that their trade-off resulted in an unprecedented agreement. “I think the state’s funding for school construction overall is very significant, it’s $1.2 billion in three different buckets for grants, low-interest loans and traditional loans,” McClellan said. “Of course we could have done more, and I would have been happy to do more, but compared to what the state has done in the past, it is significant.”
McClellan also gave credit to her Republican colleagues from Southwest Virginia – O’Quinn, Stanley and Pillion in particular – in addition to House Appropriations chair Barry Knight, R-Virginia Beach. “This was such a big priority for those guys, that’s part of what caused him to take a second look,” she said, referring to Knight.
Lawmakers finally understood that school construction and modernization should be a priority in all parts of the commonwealth, McClellan said. “This is a really good example of us coming together and say, look, this is an issue that affects all of us, and we have got to make some progress going forward. But I’m not at all taking this victory to say our work is done. It’s more a matter of this is a tremendous first step, but we have to keep going.”
O’Quinn called the budget deal “a huge step” in the right direction. “I had bills and budget amendments in 2020 and 2021 that were tanked, there was clearly no interest in actually tackling this issue,” he said. “I filed them all over again this round, and here we are. If at some point we need to potentially front-load some more money into it, then I think we can.”
O’Quinn, too, praised the bipartisan spirit of the agreement. “We realized that when you put rural Republicans together with urban Democrats, all of a sudden you got enough votes to actually get something pretty major done,” he said. “For both sides there might be a different path of how we got there, but it can be a pretty powerful coalition when it comes together, and this is proof of that.”