In accordance with Item 125, Paragraph B.14, Chapter 725, 2025 Acts of Assembly, the Department of Planning and Budget (DPB), in coordination with the Department of Education (DOE), has prepared the annual report on the update to the Standards of Quality (SOQ) based upon the most current data available. This report includes technical updates to the SOQ accounts that are calculated on an annual basis as well as biennial updates associated with the rebenchmarking process.

Specifically, this report contains the following updates and projected state costs for the Standards of Quality and additional Direct Aid to Public Education programs in fiscal year 2026 and the 2026-2028 biennium:

• Updates for the 2026-2028 biennial SOQ rebenchmarking process;

• Update of the Composite Index of Local Ability-to-Pay for the 2026-2028 biennium;

• Update of fringe benefit contribution rates for funded positions in the SOQ model based on Virginia Retirement System board-certified rates for the 2026-2028 biennium;

• Update of the Lottery Proceeds Fund estimate based on the Virginia Lottery’s October 2025 forecast for fiscal year 2026 and for the 2026-2028 biennium;

• Update of the latest yearly estimate of school age population provided by the Weldon Cooper Center for Public Service for the distribution of sales tax revenues to school divisions; and

• Routine updates to Direct Aid to Public Education program data available as of report date.

Additional routine updates are not available at this time:

• Update of fall membership and average daily membership projections based on September 30, 2025, fall membership data for fiscal year 2026 and for the 2026-2028 biennium; and

• Update of sales tax revenues for public education for fiscal year 2026 and for the 2026-2028 biennium based on the Virginia Department of Taxation’s 2025 GACRE forecast.

When available, Department of Planning and Budget staff will communicate the projected impact of these updates to K-12 staff of the House Appropriations Committee and the Senate Finance and Appropriations Committee.