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Financial report on Charlottesville schools to guide strategic plan
20130814-Ed Gillaspie
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Ed Gillaspie presents recent school funding trends at the Blue Ribbon Commission's first meeting
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by Tim Shea | Friday, May 30, 2014 at 4:01 p.m.

On Monday, the Charlottesville City Council will receive an update on the strategic planning process.

Part of that work, City Manager Maurice Jones said, is the Blue Ribbon Commission’s report on sustainable school funding.

“The strategic plan helps us identify where we want to be over the next three years by prioritizing the wants, needs and resources in the community,” Jones said. “Needless to say, education will be a key part in those discussions.”

“As we get further in for implementation,” Jones added, “the School Board would certainly be part of the conversation, but some of the issues are falling on the City Council right now.”

Appointed by Jones, the Blue Ribbon Commission was a 13-citizen group charged with identifying a sustainable funding model for Charlottesville City Schools.

According to the Commission’s January report, “state funding for Charlottesville City Schools has decreased by 29.4 percent over the past six years.” This reduction, the report points out, has caused local government to increase spending on schools “in order to avoid decreased quality of services.”

The conflict in this new formula, which the report highlights as a “challenge,” is that Charlottesville’s new revenue heading to the General Fund has dropped, “while the demands on city resources have increased.”

To address the issue, the Commission provided a list of near- and long-term “action alternatives” for the elected officials’ considerations.

Three of the five near-term actions include tax hikes:

  • Increasing the meals tax
  • Increasing the real estate tax
  • Increasing the lodging tax
  • Adjusting tuition rates for out-of-district students
  • Finding operational savings

A one percent meals tax increase would net the City an additional $2 million in new revenue, budget documents show.

Raising the real estate tax rate one cent would fetch about $550,000 in new revenue, documents show. Currently, Charlottesville’s rate of 95 cents per $100 of assessed value ranks 13th out of 35 cities with rates that range from 57 cents to $1.65.

A one-cent lodging tax increase would raise $480,000, but Jones said that one-third of these funds go to the Charlottesville Albemarle Convention and Visitors Bureau, so it would have minimal effect on the schools.

In February, the Charlottesville School Board voted to raise tuition for out-of-district students by 10 percent over two years.

The long-term “action alternatives” include:

  • Increasing the tax base by boosting middle-income housing in City neighborhoods
  • Sharing services with the University of Virginia and charging UVa for other services
  • Collaboration between Charlottesville and Albemarle schools
  • Closing an elementary school

Local Reactions

City Councilor Kristin Szakos praised the Commission for their report, but said she wished Council would have acted sooner to impact the FY15 budget.

“Change is going to be hard no matter what we do, and we need a certain amount of courage to implement any of these suggestions,” Szakos said. “I think we have to just brace ourselves and do it.”

That said, Szakos added, many of the long-term alternatives are complex and could come with consequences.

“When you start talking about boosting property values in low-income neighborhoods, what that means to a lot of people is gentrification,” Szakos said.

City Council Kathleen M. Galvin said she’d like to see more City and School employees living in the City, which would require more workforce housing.

“With the student apartment buildings going up [on West Main Street], some nearby single family homes might be freeing up, so I want to look at that closely,” Galvin said, adding that staff could also revisit current property assessments throughout the City.

City Councilor Dede Smith said she’d like to revisit the report’s point that “we have made a series of school policy decisions over the years that have increased school costs significantly.”

“Everything from special programing for targeted populations, to an open-door policy for out-of-district children,” Smith said.

One large cost the schools face is the amount of buildings it operates. Charlottesville’s current enrollment is about 4,000, whereas building capacity could meet the needs of about 6,000 students. The Commission estimated the division could save between $1.5 and $2 million per year from closing one elementary school.

But Galvin said it would be premature to do so, as the City’s increasing density could bring more children who will use the public schools.

Szakos agreed about elementary schools, arguing that increasing the distance families must travel to school is likely to decrease a family’s engagement in that school’s community.

Szakos did, however, question the necessity of Walker Upper Elementary School.

“That, in a way, is the least politically volatile idea because you’re not cutting one neighborhood school out…and you still have fewer buildings, so you get that efficiency that you’re looking for,” Szakos said.

Despite finding efficiencies, Charlottesville School Board Member Ned Michie said Walker is a necessary component to the division’s reconfiguration plan. Under that plan, 5th graders would return to their home elementary schools, Buford Middle School would absorb 6th graders, and Walker would house the division’s preschool program.

Charlottesville School Board Member Willa Neale said she’s interested in collaborating more with Albemarle County Public Schools.

“We’re a small division and it makes sense not to duplicate efforts,” Neale said. “We have to keep coming to the table and asking questions about where we can collaborate. A lot of tax payers without kids ask me why we aren’t doing more with Albemarle.”

Local Money

Charlottesville’s schools receive about one-third of the General Fund, which, in the last seven years, has netted the division approximately $40 million from the City annually. The division’s recently-adopted FY15 budget totals just over $73 million, which is a four percent jump from last year’s budget. Almost $46 million of that total comes from local dollars.

In order to balance the operating budget for FY13, the City gave the schools $1.8 million in one-time money from the General Fund, and the schools used $1.49 million in capital improvement money. For FY14, the City gave the schools $2.63 million to balance the division’s operating budget.

What’s more, localities across the Commonwealth are expected to continue face rising Virginia Retirement System contributions moving forward. Charlottesville saw its VRS payment increase by three percent, or about $908,000 in the FY15 budget.

“I think we have shifted to a new normal [of outside funding],” Szakos said. “There’s not that much money flowing in from somewhere else, so if you want something for your community, you have to figure out how to pay for it.”

“I think that our tax structure and the way we expect to pay taxes and the way we expect to do our local budgets hasn’t entirely caught up with that,” Szakos added.

Galvin said any tax increase discussion will require “thoroughly talking about it with the community.”

“Any time the suggestions involve tax increases, everyone really pauses and wants to look at everything else too,” Galvin said. “At the same time, we have to look at those to see what those would mean.”

 

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