RD3 - State Spending on Standards of Quality (SOQ) Costs, FY 2007


Executive Summary:
State Spending on Standards of Quality (SOQ) Costs, FY 2007

Article VIII of the Constitution of Virginia requires that Standards of Quality (SOQ) for the school divisions “shall be determined and prescribed from time to time by the Board of Education, subject to revision only by the General Assembly.” The standards, which apply to elementary and secondary schools, address various matters, including the availability of types of staff and resources. The costs of the SOQ are to be determined and apportioned by the General Assembly between the State and local units of government.

After determining SOQ costs, the State currently contributes to the costs in two ways. First, it provides State-appropriated sales tax dollars. Second, it pays an average of 55 percent of the remaining SOQ costs (the actual percentage varies from locality to locality, based on local ability to pay). With regard to local government SOQ contributions, the Code of Virginia (§ 22.1-97) states that funding must be provided that is sufficient to meet the “required” expenditure for the SOQ (a locality match for State SOQ expenditures). Appropriation Act language over the years has addressed the question of how required local expenditures are to be calculated. Most localities have consistently provided local funding for education that is well above their SOQ-required expenditure level. However, a few localities have had some difficulties in paying their share of the SOQ cost.

Section 22.1-97 of the Code of Virginia was amended by the 2003 General Assembly to require a more formal annual reporting process comparing required SOQ and actual local expenditures by local governments. Reports on local SOQ spending are to be annually prepared by the Virginia Department of Education. In addition, JLARC is required to annually prepare a report on State expenditures for SOQ purposes. This JLARC special report on State SOQ spending in FY 2007 is the fourth annual report.

Based on data reviewed for this report, in FY 2007 the State expended $5.03 billion from SOQ accounts. The major accounts constituting the bulk of these funds were basic aid ($2.95 billion) and State sales tax ($1.14 billion). The amount of State SOQ spending equated to an average of about $4,229 per pupil. The range in State SOQ spending in individual divisions was from $2,064 to $6,827 per pupil. An important factor in the varying size of State SOQ per-pupil spending levels in school divisions is the State’s use of a local ability-to-pay index in determining State and local shares of SOQ costs.