Virginia underfunds K-12 education with flawed formula, report finds

The findings became immediate policy fodder for education advocates and state leaders, including Gov. Glenn Youngkin (R), as state lawmakers continue to debate education funding and develop policies to attract and retain educators in Virginia.

The study found that the state’s Standards of Quality (SOQ) formula, used to calculate funding, did not account for students with higher needs, regional labor costs and school division size, leading to regularly underestimating the needs of schools. For example, in fiscal 2021, the formula calculated that school divisions needed $10.7 billion in state and local funding, but school districts actually spent $17.3 billion on operations, $6.6 billion more than the formula calculated.

Education advocates in the state have long noted that the SOQ formula was a problematic approach to school funding that leads to wide disparities in resources for students around the state. Advocates and school administrators saw the report — and its recommendations for reform — as a spotlight on the problem and a hopeful indicator of change.

“Virginia’s school funding model lags the nation and policymakers at the state level must seek practical solutions to assist our divisions whose localities cannot afford to fund the resources needed to provide students with a quality public education,” David R. Woodard, president of the Virginia School Boards Association, said in a statement.

Gov. Glenn Youngkin (R) used the findings to tout his own investments in education, including a proposed budget amendment of a $427.7 million increase in spending on public education. The proposed amendment did not pass the General Assembly this year after lawmakers could not reach a budget agreement, leaving money unspent. The Democratic-controlled state Senate had proposed adding about $1 billion to K-12 education, more than what the Republican-controlled House of Delegates proposed.

“Today’s report should serve as a wake-up call that our biggest problem and greatest opportunity is how we reform our system to drive dollars to improve student academic achievement, support our teachers, and deliver results to parents,” Youngkin said in a statement.

The complex SOQ formula has three main steps. First the formula determines the total number of staff positions needed for each school division, then calculates how much it will cost to fund that level of staffing. Finally, that total is divided between the state and local governments based on local ability to pay.

The staffing-based formula is a complex system that only eight other states in the country use. Most states instead use a student-based funding formula that allocates a specified amount of funding per student. The report found that the Virginia formula also regularly underestimated staffing needs. In fiscal 2021, the formula calculated that divisions needed 113,500 full-time staff, but the school districts employed more than 171,000 full-time staff. According to the report, between fiscal year 2019 and 2021, every school district in the state employed more staff than the SOQ formula calculated. And in interviews, school district administrators told JLARC that the state’s staffing standards were unrealistic.

“It’s a misnomer to call it the SOQ; it’s not quality at all”; one administrator told the committee. “If we just funded at SOQ level, it would be a catastrophe.”

Other pitfalls of the formula, the report found, include underestimating salary costs, not accounting for the volume of high-need students like those in special education programs and English learners, and not considering the challenges of small and rural school divisions that don’t have the same tax base for local funding as their larger counterparts.

The report also includes a number of policy recommendations to change the formula. Short-term changes include discontinuing a cap on the number of support staff the state will fund that was put in place during the Great Recession to save money; and factoring in additional funding for at-risk students.

One policy option suggested by JLARC would be to replace the entire staffing-based SOQ formula with a new student-based formula that is based on average school division expenditures.

“It very clearly shows two things. One is that we have drastically under invested in education for a long time. As we move forward, the second thing it shows is just how needed a reform of how the state funds education is,” Del. Schuyler T. VanValkenburg (D-Henrico), a public school teacher, said in an interview. “We really desperately need to be like some of the states that are on the cutting edge with reform and that’s not a partisan issue.”

Kristy Somerville-Midgette, superintendent of Brunswick County Public Schools and president of the Virginia Association of School Superintendents, said that the funding formula has long led to disparities in the way schools are funded. The model, she said, leaves small and rural districts with less funding.

She used a middle school with 400 students as an example. The state formula estimates that funding one counselor is enough to meet the school’s need, but Somerville-Midgette said it’s most likely not. A wealthier district might have enough local funding to hire a second counselor, but a small, rural district may not.

After the report was presented to lawmakers, Sen. Jeremy S. McPike, (D-Prince William), said the problem was apparent for families who’s children have attended schools with crowded classrooms.

“So this report is not surprising to this parent,” McPike said.

State Secretary of Education Aimee Rogstad Guidera and Superintendent of Public Instruction Lisa Coons wrote in a letter to JLARC director Hal Greer that the report highlights the need for significant reforms in order for increased investment to translate into better student outcomes.

“To meet our Constitutionally mandated goal of establishing and continually maintaining a high-quality education for all students, we must not only build off the historic investments made over the past two years, but reform our system to drive dollars into the classroom in a way that improves outcomes for our students,” they wrote.