HD45 - State Funding of the Regional Vocational Education Centers in Virginia

  • Published: 1991
  • Author: Joint Legislative Audit and Review Commission
  • Enabling Authority: House Joint Resolution 100 (Regular Session, 1990)

Executive Summary:
Participation by some Virginia school divisions in regional vocational centers began to develop in the mid-1960s. There are currently 11 regional vocational centers. In the 1989-90 school year, these centers provided vocational education programs to 4,908 regular day school pupils. Most center pupils attend the center for half of their school day. Instructional programs at the centers are varied, but typically include auto mechanics, welding, horticulture, cosmetology, electronics, electricity, small engine repair, nursing, carpentry, masonry, data processing, drafting, food service, and air conditioning and refrigeration.

The Joint Legislative Audit and Review Commission (JLARC) was directed by House Joint Resolution 100 of the 1990 session to study the funding of the regional vocational centers. The resolution required JLARC to consider the State's commitment to provide quality education and funding methods that are efficient and economical.

This report was prepared to address HJR 100. The conclusions of the report are:

• Currently, the expenditure levels at the centers appear sufficient to enable the centers to provide high quality programs.

• State SOQ funding and other State aid reflect a substantial State commitment to support center costs.

• The State Board of Education should review the standards for the regional vocational centers to determine if standards requiring principals, assistant principals, and guidance counselors are appropriate and should be funded as part of the SOQ.

• Pending the Board of Education review, the General Assembly may wish to consider retaining a portion of the State supplemental payment to pay a State share of the compensation costs for center principals.

• State funds should go directly to the designated fiscal agents of the centers rather than to the school divisions.

• The general approach to calculating costs and State funding levels for the regional vocational centers appears appropriate and equitable.

Sufficiency of Current Expenditure Levels to Achieve Quality

JLARC staff visits to the regional centers indicated that, with some limited exceptions, all of the facilities appeared to be in good condition. Also, of the 11 regional center directors, between nine and 11 (depending on the item) indicated that they currently: have adequate classroom and workshop space; have a safe and pleasant environment for instruction; provide up-to-date training for students; have course materials, equipment, and machinery that are adequate in quantity and in good condition; and are generally satisfied with their total budgets. Center directors also indicated high employer satisfaction with the graduates of the centers. Student surveys from the Department of Education's VEEVA (Vocational Education Evaluation in Virginia) process indicate positive student attitudes about the quality of the centers.

State Commitment to Funding the Centers

While center directors indicated general satisfaction with their total budgets, the directors usually cited the support of the local school divisions and industry as the primary reason that their budgets are adequate. Perceptions at the local level that State support is low are based on revenue analyses indicating that State revenues support 20 percent or less of the center budgets. However, these revenue analyses are in error because they do not account for the largest source of State funding for the centers. Basic aid has not been included in the revenue analyses as a State revenue for the centers. This has occurred because the State has not separately identified this center funding.

The 1990 Appropriations Act directed the Department of Education to separately identify the State's Standards of Quality (SOQ) funding, which includes basic aid, for the regional vocational centers. The department has provided this information to participating school divisions, the center directors, and JLARC staff. Based on a comparison of data from DOE and data obtained from the regional centers, JLARC staff found:

• On average, State SOQ funding pays 56 cents per dollar in the regional center budgets for regular day school operations

• On average, State SOQ and categorical funding, even completely excluding a State supplemental payment, pays 54 cents per dollar of the total regional center budgets (including adult education and all equipment costs, but excluding facility capital outlay costs).

The data indicate a substantial State commitment to funding the centers.

Policy Options for the State Supplemental Payment

At the time that changes were made in the State SOQ funding methodology (1988), the General Assembly decided to provide additional State funding in the 1988-90 Appropriations Act for the regional vocational centers. The additional funding was above and beyond the amounts already calculated by the State SOQ methodology (and already included in local government allocations). In essence, the special payment "double-funded" a portion of the SOQ costs for the regional vocational centers, because the costs were already captured in the school division allocations.

The purpose of this action was to ease the transition to the new funding methodology. Accordingly, the payments are currently being phased out. The reductions that have been made in the payments appear to be appropriate, but the General Assembly has several options for future action. The General Assembly could continue to eliminate the payment, or could choose to retain a portion of the supplemental payment to contribute to the costs of the principal positions at the centers.

State standards do not require principal positions at the centers, and that is why the costs are not recognized as SOQ costs. However, the State recognizes principals for other secondary schools, and the local governments of all 11 regional centers have chosen to establish and support these positions at the centers. Based on pupil enrollment levels, the State recognizes costs for assistant principals at many secondary schools, and the State recognizes costs for guidance counseling. However, these costs are not recognized by the State at the centers.

The Department of Education pays a portion of the costs of principals and assistant principals from the State's "extended contracts" account, but this has the effect of reducing the State contribution from the account to other schools. If the State funded center principals consistently with the way it funds secondary principals in the SOQ, it is estimated that the State share of the cost for the principals in FY 1991 would be approximately $412,000. This amount would increase in FY 1992 if there were an increase in the recognized salary in the Appropriations Act.

Recommendation (1). The Board of Education should review the standards for the regional vocational education centers to determine if standards requiring principals, assistant principals, and guidance counselors are appropriate and should be funded as part of the SOQ.

Pending the review by the Board of Education, the General Assembly may wish to retain a portion of the supplemental State payment to contribute to the cost of principals at the regional centers. The General Assembly may wish to eliminate the remainder of the supplemental State payment.

Funding the Centers Directly

One of the problems noted in House Joint Resolution 100 is related to the distribution of State and federal funds to the regional centers. Specifically, the resolution states that "funding for these regional centers was transferred to the school divisions, leading to delays in distribution of the funds and in the administration and operations of these centers." JLARC staff's review found that there are minor delays and local procedural inconsistencies that indicate a need for procedures to eliminate these problems.

Recommendation (2). The Department of Education, in consultation with the Auditor of Public Accounts and representatives of the regional vocational centers, should revise the fund transfer process for the regional centers. The revised process should allow for the direct transfer of State and federal funds to the designated local fiscal agents of the regional centers. The revised process should adhere to all applicable requirements of the Code of Virginia and ensure that expenditure information is reported in a manner comparable with other localities in the Commonwealth.

Recommendation (3). Fund transfers from the participating local school divisions to the regional centers should flow directly from the school divisions to the centers' designated fiscal agents for deposit into the centers' accounts. Notification of these transfers should be sent to the centers at the time the transfers are performed.

Appropriateness of Approach to Funding Regional Vocational Centers

Under the current State cost and funding methodology, the programs of the regional centers are funded consistently with the way that programs are funded if they are provided in school divisions. This approach achieves equity in funding across vocational education programs, and is consistent with the rationale for establishing the regional centers. The rationale for the centers is that through collaborative effort, localities can establish programs that are more economical, or of higher quality, or both, than they could individually. By providing State funding for the jointly operated centers using the same methodology that would be applied if the divisions operated separately, the localities with centers are able to realize benefits form the regional operation. For example, through the current approach, the regional centers receive credit in State funding for 1.2 teachers per six periods taught, instead of the one position that they would receive under an actual cost or approved cost approach.

Alternative funding approaches have been suggested for the regional vocational centers by some center principals and the Board of Education. In Senate Document 10 (1990), the Board of Education recommended use of the special education regional center funding approach. The background for the recommendation was school division concern that the current methodology for regional vocational centers "does not calculate accurately the cost of operating these programs." However, the current SOQ funding methodology is intended to fund SOQ costs, not actual costs incurred. Further, even if actual costs are used as a benchmark for comparison, this report shows that calculated SOQ costs are realistic compared to center operating budgets, particularly when it is considered that principal and assistant principal costs are funded by the State outside of the SOQ structure.

Because the regional vocational education and special education centers are fundamentally different, it is difficult to draw firm conclusions as to how the State would adapt the special education approach to meet vocational education needs. However, a review of the special education regional approach raises concerns that a similar structure applied to vocational education could make the administration of State funding more complex, less predictable, less equitable, and more highly regulated. The main benefit that the special education regional approach would appear to offer to the centers is that funding to the special education centers is based on an aggregate State share of 60 percent, which is higher than the aggregate State share for SOQ accounts. The use of a higher aggregate share, however, is purely a policy choice.

Recommendation (4). The Department of Education should continue to apply the State SOQ cost and funding methodology to the regional vocational centers.