Laura Goren and Chad Stewart: The Big Math Error in Virginia's Education Budget
Due to calculation errors, Virginia's Department of Education made a $200 million mistake in estimating basic aid for local school divisions this year--which caused schools to budget for far more than they're likely to get. The General Assembly wasn't able to agree on a budget before the regular session ended--and their compromise "skinny budget" accounts for only $16 million of the $200 million deficit.
How did the error happen, what can be done to fix it, and where does it leave Virginia's school systems? This week, Thomas and Michael are joined by Laura Goren, Director of Research and Education at the Commonwealth Institute, as well as Chad Stewart, the Policy Analyst at the Virginia Education Association, to explain.
Episode Transcript
Laura Goren
I'm Michael Pope.
Thomas Bowman
I'm Tom Bowman.
Michael Pope
And this is Pod Virginia, a podcast that is famously bad at math.
Thomas Bowman
All right, like we've made our fair share of math errors. And I even had a fifth grader correct us on the podcast.
Michael Pope
But school divisions across Virginia are now being stiffed because of bad math. And that's happening because of a series of errors at the Department of Education.
Thomas Bowman
And we know what you're thinking. Hasn't this been fixed with the skinny budget?
Michael Pope
No, no, it has not. The skinny budget was just an appetizer. And we're gonna help you digest all of this today on Pod Virginia.
Thomas Bowman
Michael, come on.
Michael Pope
It's bad. Well, let's start with the calculator. All right, what the heck is the Department of Education's calculator, and why is it such a big deal? We've got the best guests. To help us understand all of this. Today we're joined by the Director of Research and Education at the Commonwealth Institute, Laura Goren. Thanks for joining us.
Laura Goren
Great to be here today.
Thomas Bowman
We've also got the policy analyst at the Virginia Education Association. Chad Stewart, thanks for being on the show.
Chad Stewart
Nice to be with you all.
Michael Pope
So the calculator, somebody explained to me the calculator, what is this thing? And why is it such a big deal?
Laura Goren
The State Department of Education is responsible for taking what is in the law, the state budget, and translating that into what each school division gets and for what purposes, and they do this with some backend calculations in their own accounting systems. And they also do it in a spreadsheet that they provide to the school division, so they know how much money they can expect from the state each year. And also so, they can put in different assumptions about how their enrollment might be changing to see how that will impact their funding from the state. The problem is, when that's wrong, the school divisions get the wrong information, and then they can't do their planning correctly.
Thomas Bowman
Alright, so Chad, what happened here? What went wrong?
Chad Stewart
What happened was there was an error in kind of the basic formulas that should have been applied within the backend spreadsheet with the Department of Education. There was a change to sales tax law last year that, without this small fix, called a hold harmless division, would have cost school divisions additional money. So school divisions got this feature called hold harmless. And there was an issue with building that new additional amount into the overall calculations for school divisions. And as a result, because of the issue, there was an overestimation of how much school divisions should be expecting, both in the original June budget and also in the recent Governor Youngkin proposed budget in December.
Michael Pope
You mentioned December. So there was a second error that happened in December. So the first error was in June. The second was in December; Chad Stewart explained to us exactly what happened there in December.
Chad Stewart
The issues were very similar between the two budgets. So both in December and also in June, the same calculation error was made. Now there were some technical updates between June and December between the two budgets that caused the numbers to shift a little bit, but in December, the discrepancy between what the budget calculation tool said school divisions should be expecting. And then what was actually budgeted in the Governor's Younkin budget was $201 million.
Laura Goren
That exactly matches what we found also. So the error in December of $201 million was money that school divisions were expecting to get on top of the technical updates that were included in the budget proposal that Governor Youngkin put out.
Thomas Bowman
I want to make sure I have this right. So the Virginia Department of Education is distributing this by sharing a spreadsheet with all the school divisions. And it got messed up because there was they had a calculation error because of a change in tax law. And that ended up shifting what all the school divisions should expect. And, guys, I'm dumbfounded here; this is how we're writing our budgets in Virginia? This is how departments and agencies are informing over 100 school divisions of what they're gonna get.
Chad Stewart
Yeah, I mean, that's exactly right. It's surprising that such an error in the hundreds of millions of dollars range could be made just in a simple spreadsheet calculation. But that's exactly what happened. And it really has real results because planning for this school year, and even planning into the future with hires at the local school level, and staffing and fixes to different systems, when you're assuming that your budget might be millions of dollars larger over the two years, you spend differently, and it has a real effect on the day to day operations of your school.
Laura Goren
I think this problem and the fact that it took so long for it to be caught is also a symptom in some ways of Virginia's rather opaque and not very open system of doing state budgeting and state governance in general. So the State Department of Education has this backend system for how they calculate how much money each school system would get. And that's not available to the public anywhere, at least that I've been able to find. And that has the result that outside stakeholders like us, who are normally trying to dig into the budget and understand what's happening, don't have the information necessary to see and flag these problems as soon as we might otherwise be able to do.
Michael Pope
Laura Goren. I'm so glad that you mentioned Virginia's ridiculously opaque process for budgeting, which is not transparent. They do all of these meetings in secret. They're not open to the public. They're not open to the press. So thank you for bringing that up. I want to now move on to the skinny budget, this stopgap measure that was adopted right before lawmakers left town. I warned you all that you would need to make a skinny-budget joke here. So we'll start with Chad Stewart; what exactly did that conference report do?
Chad Stewart
The conference report made a handful of technical updates that needed to be made. But for K-12 schools, it didn't change very much. There was around $115 million in this school year. And I believe it was somewhere around $125 million in the next school year of technical updates that were already built into Governor Youngkin's budget when he proposed it, and also the House and Senate budgets that were proposed over the legislative session. These were updates due to changes in enrollment, and a few other factors that pretty much every school division was expecting would happen no matter what. On top of that, they kicked in nearly $17 million more to, you know, in the words of several people working on this budget, make school divisions whole for the calculation error.
Michael Pope
Laura, explain this conference report; this is totally opaque, as you pointed out. Dropped in their labs at the last minute, they're supposed to read this and digest it. And the staff has a lot of influence here because the lawmakers want to get out of town. So walk us through that conference report.
Laura Goren
Each year the House and the Senate put forward their proposed amendments to the budget, and then they go into this process. That's called the conference process, where a small number of negotiators from the House and Senate are supposed to come up with the final deal. This year, there were very significant differences between the House and Senate proposals, with the Senate proposing an additional billion dollars, that's a thousand million dollars, to put it another way, for public education. The House, meanwhile, going along with Governor Youngkins, proposed billion dollars in tax cuts, much of which would go to profitable corporations. So there were big differences between the two proposals. And legislators in the House and Senate did not come to an agreement about what to do for the big differences during the regular legislative session that finished at the end of February. So instead, they decided to put out what they call their skinny conference report, or I think stopgap might be easier to understand the term for it, where they made a few technical adjustments. They put the money they had agreed last June would go into the Virginia Retirement System and cash flow capital, they made those adjustments, and they put in this little $16.8 million towards fixing the $201 million hole created by the state's calculation error.
Michael Pope
You just went through the most important numbers of the podcast. So I want to just circle back around and make sure our listeners understand the $200 billion hole. What they put into the stopgap measure was to say that number one more time and explain its significance of it.
Laura Goren
The stopgap measure included $16.8 million towards fixing the state calculation error. But that error was a $201 million error. $16.8 million isn't a lot compared to the $201 million problem.
Thomas Bowman
Where does this leave schools right now our schools? Do they have the money that they need? Are they in the lurch? What's going on?
Laura Goren
School divisions still are not provided in the conference budget with the amount of money that they would have been expecting based on the spreadsheet that was distributed in December. And they certainly don't have as much support in the skinny conference budget as is provided in the Senate budget proposal. There are still a lot of outstanding issues. Our understanding is legislators are still working on the budget. And we look forward to seeing a final conference report that has much more for our students.
Chad Stewart
I would just add there that I think everyone's holding their breath right now at the local level. We saw an additional 2% teacher and staff pay increase from the state level out of both the House and the Senate, which are controlled by different parties. And that's a big new expenditure. I think everyone was hoping and feeling like, well, this agreement; there were probably at least get that out of this budget season. But right now that we have this stuff, gap, skinny budget, it's unclear if we're going to see another budget. At any point, lawmakers don't have to pass another budget; if they choose not to, they could just leave the current one in place that does the bare minimum. So I think a lot of local school divisions, superintendents, and school boards are hopeful that the legislature will come to some sort of compromise to Pat, you know, use the remaining $3.5 billion of available resources and pass some sort of budget and maybe in the same process, fill in and fix the rest of this $201 million math error.
Thomas Bowman
That's a lot of money. And I want to make sure that I've got this right. So the budget numbers that our school divisions were working from in December, you know, obviously, clearly, those are wrong. But they're not an official report. Right. So they hadn't officially been communicated. And they weren't necessarily official public numbers and data, but they kind of get the jump on what they think their budgets are going to be. And so, therefore, they have planned using informal numbers. Is that an accurate assessment?
Laura Goren
I would describe the December spreadsheets that are released by the Department of Education as an official transmission of what the Governor's budget would provide to the school divisions. The Governor's budget is by no means the end of the process, and we say originally saw with the House and Senate proposal some significant increases above what the Governor proposed. I think this year, school divisions, particularly after seeing the House and Senate budgets, could have reasonably expected that they would get at least what's in the Governor's budget and likely much more based on the proposals to do additional increases above that. All right, well,
Thomas Bowman
Chad Stewart, and Laura Goren, thank you so much for being with us today on pod Virginia.
Chad Stewart
Let's be with you all.
Laura Goren
Thanks for having me.
Thomas Bowman
All right. That's it for this week's episode of pod Virginia. Don't forget to check out our website and follow us on social media.
