In Southwest, Southside and other parts of rural Virginia, school leaders are watching a troubling trend unfold — one that demonstrates the inequities and inconsistencies in how we currently fund public education in the commonwealth of Virginia.
Across the commonwealth, Local Composite Indices have risen faster in many rural divisions than in more affluent suburban ones. On paper, that suggests a growing local capacity to support schools. But in reality, it reflects a formula that is increasingly disconnected from the economic realities of rural communities. When 27 of the 30 divisions with the highest LCI increase this biennium are members of the Coalition of Small and Rural Schools of Virginia, it calls attention to a need to review and adjust the formula.
Take Southwest Virginia as an example. Washington County had the 24th-highest LCI increase out of 132 school divisions. Nearby Bristol, Norton and Tazewell experienced even larger increases. These localities don’t have booming local economies. They are communities working hard to maintain strong schools despite limited tax bases, fewer resources and declining populations and enrollment.
So why does the LCI suggest they can pay more?
In my opinion, the answer partially lies in how “capacity” is measured. The LCI relies heavily on income averages that can be skewed by a small number of high earners, while overlooking the broader financial picture for most residents. Residents whose income falls below the income tax filing limit are not included in the LCI equation. Rural Virginia has a disproportionate share of non-filing residents. As a result, the LCI captures wealth on paper — not necessarily the reality of the communities we live in. Yet as LCIs rise, these same communities are expected to pick up a larger share of the education bill.
At the same time, Virginia’s funding model ignores a very important variable: small school divisions cannot achieve economies of scale. Larger divisions can spread costs across an extremely large number of students. Small and rural divisions cannot. They still must run buses across long distances, maintain facilities and offer a full range of academic programs — with far fewer students to spread the cost. As a result, per-pupil expenses can be between 25% to 50% higher in smaller divisions.
The consequences are measurable. Virginia has more than 3,500 teacher vacancies, and rural divisions often struggle the most to compete for talent. When funding formulas underestimate costs and overestimate local capacity, the gap is felt at the most important and vulnerable level, in classrooms.
There are practical solutions on the table. A modest economies-of-scale adjustment identified by state researchers (JLARC Recommendation 13) would cost an estimated $80-$90 million — less than 1% of total state education spending — while helping correct a long-standing imbalance. This simple change would give divisions like Dickenson County an additional $3,404,000 in education funding. Dozens of other states already include similar adjustments for small divisions, and Virginia’s rural students deserve no less.
The same pattern is playing out in other parts of rural Virginia. In Rappahannock County, for example, rising LCI figures suggest a level of local wealth that does not reflect the lived reality of many residents. According to Rappahannock’s county administrator and superintendent, the county’s small size and limited tax base make it difficult to achieve efficiencies, while the funding formula continues to overestimate local capacity — leaving the community to shoulder a disproportionate share of education costs. Rappahannock would receive an additional $3,047,000 if Recommendation 13 were implemented.
JLARC also suggests changing the LCI to a 3-year average (Recommendation 7). This would help divisions better absorb changes that are felt when there are drastic changes to the local LCI between biennia. Based on recent data, this change would have reduced Pittsylvania County’s local share by $427,000.
Another solution recommended by JLARC (Recommendation 6) suggests using a division average rather than a linear weighted average when determining prevailing costs. This change would help every school division, especially those in rural Virginia. For example, Smyth County would receive an additional $1,229,000 in SOQ funding if this change were implemented.
A further recommendation that JLARC presented was to weight population and enrollment equally in the LCI formula. Currently, enrollment is weighted 2/3 and population is weighted 1/3. As a result, changes in enrollment have the highest impact on the LCI formula. When rural schools lose students, their locality, counterintuitively, absorbs a higher share of funding education. Making population and enrollment equal in the formula would fix that issue. This simple formulaic change would reduce Franklin County’s local share of education funding by $564,000.
For rural localities in every corner of Virginia, fairness isn’t about equal treatment. It’s about recognizing different realities — and funding our schools accordingly. This is not about asking for more; it’s about asking for accuracy. A fair funding system should reflect the real cost of educating students, not just a formula that looks balanced on paper. Until that happens, rising LCIs will continue to send the wrong signal — suggesting strength where there is strain, and capacity where there are real constraints.
Virginia has an opportunity to get this right. Since both the Senate ($1,250,000) and House ($250,000) have provided dollars for Joint Subcommittee on Elementary and Secondary Education Funding in their proposed budgets, now is the time for Virginia to have a long-overdue conversation about how we fund public education. Adequate and equitable school funding is not just for the neighborhoods in the shadows of the capital, but also in the mountains, the farming communities and the localities that have poverty which is hidden by the LCI formula. For more detailed information, please review JLARC’s report on education funding and visit COSAR’s website to view an infographic focused on rural education funding.
Keith Perrigan is superintendent of Washington County schools and heads the Coalition of Small and Rural Schools of Virginia.
