Fewer students, younger teachers cited for drop in state education budget
By Ryan Quinn, The Charleston Gazette
The West Virginia Department of Education’s budget decreased by $85.3 million for the 2015-16 fiscal year, which started last week, because of decreased student enrollment, continued retirements of higher-paid teachers, increased property values and lower required retirement payments.
That’s according to Joe Panetta, the department’s chief operations officer. He said that, of the department’s total budget of $2.4 billion, including state and federal funding, less than 2 percent is spent on the department’s headquarters in the Capitol Complex and the salaries and benefits for the roughly 250 employees who work there.
If one adds the 260 employees in the approximately 40 agencies under the department’s Office of Institutional Education Programs — mostly teachers and principals who work in places like adult prisons, juvenile detention centers and group homes for children and teens — the percentage rises to about 3 percent, Panetta said.
The vast majority of the department’s budget flows to the county school districts or pays for the health insurance and retirement benefits of the employees of these districts.
About $1.1 billion is going to the 55 districts through the basic state aid funding formula that mostly pays for a certain number of teachers and other positions, like cooks and custodians, for each district based on enrollment. Once the state calculates the number of positions the formula says it should fund for each county, it pays for educators’ salaries according to their years of experience and degrees obtained. Additional raises can be approved by local school boards but are funded by the counties’ local money, as are the salaries for those hired above what the formula determines each district needs.
The funding formula is providing $38.5 million less this fiscal year because of a number of factors, Panetta said.
There were about 1,100 fewer students in public schools statewide in October 2014 than in October 2013, and next year’s funding level is based on that lower enrollment — meaning the state is funding fewer teachers. And more expensive teachers — those with more experience and advanced degrees — are retiring and being replaced with less-experienced teachers. The governor and Legislature also cut bus-replacement costs by $7 million in the upcoming fiscal year.
Addtionally, assessed property values are generally increasing across the state, meaning local property tax revenue is rising. The formula automatically adjusts for this by requiring the state to pitch in less money to school districts.
It’s a process Panetta said equalizes dollars for property-rich and property-poor districts.
The funding formula first judges how much money a county needs overall, subtracts from that number the vast majority of dollars the county expects to be able to raise itself from local property taxes, and then covers the rest with state funding. So, as property values fall in a district, the state subsidizes the district more, but as they rise — as they have overall in West Virginia — the state subsidizes less.
Also included in state funding is $214.6 million to fund health insurance benefits for school district employees across the state. That’s a drop of $10.6 million from last fiscal year. Amy Willard, executive director of school finance, said the expected expense is lower because the department overestimated the cost last fiscal year and is using funds carried over in reserves from 2014-15 to fund health coverage.
There’s also a $4.4 million drop in payments into the Teachers’ Retirement System, lowering that total to $66.5 million, and a $45 million drop in the annual payment to male up for the historical underfunding of the retirement system, lowering that amount to $298.6 million.
Harry Mandel, actuary for the West Virginia Consolidated Public Retirement Board, said the department is required to pay less because returns on state investments of the retirement funds had a 17.5 percent annual return — 10 percentage points higher than the expected rate.
Mike McKown, West Virginia’s budget director, said the department is budgeted for about $2 billion in general revenue and lottery funds for the new fiscal year, down from $2.1 billion last fiscal year — the total $2.4 billion number Panetta gave includes money from the federal government and other sources, which are largely budgeted to remain the same.
McKown said the total amount spent on education in West Virginia surpasses $3 billion, if one factors in all the excess property tax levies, bonds and other funding sources for county districts that aren’t reflected in the state department’s budget.