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Behind the Budget

Funding schools is an investment in students, staff, families, the city, and entire region.

Roanoke City Public Schools’ (RCPS) projected budget for the 2024-2025 school year is $253 million. This includes $106 million in funding from the City of Roanoke, as part of a longstanding school funding policy that provides 40% of most local tax revenue to the school system.

The city has stated that its share of funding is “record level,” for which the School Board and RCPS leaders are grateful. Ultimately, it is important to note that because of inflation, the buying power of that funding has essentially stayed the same in recent years. A city proposal to alter the funding formula, if approved by City Council, would likely result in decreased funding and increased uncertainty in future years.

“We've been very fortunate in Roanoke City to have a supportive community and a supportive City Council, and to have the benefit of a stable, consistent funding structure,” Superintendent Dr. Verletta White said. “That allows us to not only make promises to our community, but to keep those promises and to make good on our promises.”

Benefitting Everyone

The current funding formula was adopted by City Council in 2011. It states that the City of Roanoke will provide annual funding to RCPS “in an amount equal to 40% of local taxes received by the city,” except for certain taxes.

The formula states that RCPS will receive 40% of actual local revenues. When the city calculates its projected revenues during the budget process each year, 40% of projected revenues are set aside for RCPS. At the end of the fiscal year when actual revenues collected are known, the city and the schools “true up.” Often, these actual funds are higher than the initial projection, of which the schools receive 40%, per the funding policy. Occasionally, the actual revenues collected are less than projected, which means RCPS refunds the city any excess received over the 40% stated in the funding policy.

The city recently proposed that the formula be revised so RCPS would only receive the initial 40% of projected funds. If there are “true-up” funds at the end of the fiscal year that exceed the projected budget, RCPS would not be guaranteed to receive these dollars. Instead, the school division would have to apply for the potential to receive up to 40% of the actual revenues that exceed projected revenues. RCPS would still be responsible for any deficit between projected and actual funding in years of hardship.

“The brilliance in the people who created this [school funding policy] was that we needed to share the wealth and we needed to share the pain, equally,” said School Board Chair Dr. Eli Jamison, speaking of the city and the school system. “If we change the formula, then we’d only consistently share the pain.”

Already, RCPS technically receives closer to an average of 32% of most local tax revenues, not 40%, because the school division is required to reimburse the city for certain services coordinated by or through the city, such as debt service and school resource officers. The reimbursement to the city for these services totaled approximately $14.5 million during the 2022-2023 school year.

Altogether, the funding RCPS receives makes up approximately 28% of the city’s entire budget, since there are additional revenue sources that don’t factor into the 40% RCPS receives.

“40% isn’t a perfect number, but it is enough to keep us innovative, to keep us competitive with our teacher salaries, to keep us doing our best, and enough so we have not ever had to ask our taxpayers for more dollars,” Dr. Jamison said.

Student holding diploma
In Roanoke City Public Schools, students graduate with a diploma and a resume
of skills and experiences that will benefit them a lifetime.

“Record Level of Needs”

Because city revenues are at record levels, RCPS funding from the city is also at a record level. This is because the school funding policy is based on a static percentage. With inflation, though, the buying power of those funds has remained relatively consistent over the years, close to approximately $101 million.

To RCPS Chief Financial Officer Kathleen Jackson, that’s proof the funding policy is working as intended. “That says this is a good formula because it’s been consistently equivalent buying power,” she said.

Dr. White noted the division’s progress, from student achievement to supporting families and staff, that is possible thanks to the city’s commitment to fully funding schools. This includes:

  • Innovations in teacher recruitment and retention, resulting in record low vacancies
  • Capital projects, including added instructional space at Morningside Elementary School and James Breckinridge Middle Schools
  • Safety additions and enhancements
  • Enhanced professional learning
  • Advancement Via Individual Determination (AVID), a college preparatory program
  • Staying Safe by Staying Connected programming, including an annual student job fair, fine arts academic, and athletic camps
  • Innovative student and family engagement, such as through the creation of a student-run food truck
  • Pay recognition in the form of salary increases for teachers and staff

“We’re making good on our promises,” Dr. White said. At the same time, as teachers and staff work to support students after the COVID-19 pandemic, there is still much to be done. “When we’re talking about record levels, it’s important for us to also think about record levels of need.”

A stable funding formula makes it easier to anticipate projected funding and build the annual budget for the school system. Throughout the year, as RCPS receives revenue projections from the city, Fiscal Services staff adjust as needed and anticipate whether the true-up at the end of the year will exceed projections or will be at a deficit.

“We don't implement flash in the pan programs,” Dr. White said. “We want to have programs that are sustainable and that can have a meaningful impact for our parents, students, and teachers.”

RCPS is also in the process of making good on its Equity in Action plan, a “three-legged stool that benefits our students, our staff, and our community,” as Dr. White puts it.

Equity in Action:

  • has established the Charles W. Day Technical Education Center (DAYTEC) adjacent to William Fleming High School, which has doubled Career & Technical Education (CTE) seat capacity and reduced the need for students to travel across town to the Roanoke Technical Education Center for classes;
  • is centralizing Central Office staff through the purchase of the former Roanoke Times building downtown;
  • and will establish the Booker T. Washington Center for Community Empowerment & Education at the current Central Office location, to support and strengthen family and community engagement.

DAYTEC opened in January, the downtown building is currently being remodeled and slated to be completed in early 2025, and planning is underway for the Community Empowerment & Education Center with an anticipated opening in summer 2025.

Before the purchase of the former Roanoke Times building, several Central Office departments worked out of the former William Ruffner Middle School. In order to establish DAYTEC, a new Central Office location was needed. The downtown building will allow most Central Office staff to work together in one location, increasing efficiency. It will also free up the current Central Office to become the Community Empowerment & Engagement Center, which will provide a welcome center, Parent & Guardian University, and space for community partnerships, which is what the community has indicated it wants.

“It’s a win-win-win, and I am proud of the fact that our city leaders, School Board members, and community were able to stand side by side with me in 2021 to see the vision and possibilities,” Dr. White said. “Now those possibilities are becoming a reality.”

Dr. Jamison noted that the city’s funding formula meant that RCPS was in a stable enough place to be strategic about “investing in our students’ future.” The school system was able to use one-time pandemic relief grants for renovations to DAYTEC and the addition at Breckinridge Middle School, as well as air quality and HVAC improvements or replacements at several other school buildings.  

The new Charles W. Day Technical Education Center (DAYTEC) opened in January 2024.

Benefitting Everyone

A well-funded education system benefits everyone. Research from Northwestern University’s Institute for Policy Research indicates that increased per-pupil spending is linked to higher graduation rates, higher adult wages, and a lower likelihood of adult poverty. Likewise, a University of Michigan Education Policy Initiative study found that students who attended better-funded schools were 15% less likely to be arrested through age 30.

Well-funded schools improve public safety, economic development, and the overall health of a community, Dr. Jamison said.

Having a set formula also likely saves taxpayers money in the long run.

In years when the true-up has provided additional funds beyond the initial projected amount, RCPS has been intentional about saving as much as possible for capital improvement projects.

For example, leaders were able to commit to construction of the new Preston Park Elementary School, with the new building set to open in 2026, because RCPS was able to save up money for several years by saving the additional dollars received when actual city revenues exceeded what was originally budgeted. The project almost doubled in cost after the pandemic due to inflation and construction costs, but RCPS can pay for a significant amount of the project out-of-pocket, so the project will begin on time. If RCPS had to rely solely on borrowing funds through the city, the project could have been put on hold, with the potential for costs to continue to increase, or the city might have had to postpone another project.

“When the funding structure is disrupted, then we can't make promises to our community, such as building a new Preston Park Elementary School by 2026,” Dr. White said.

The University of Michigan’s research also found that reductions in adult crime alone generate social savings that exceed the costs to the government of increasing school funding. “We estimate that, for every government dollar to increase public school funding, the associated reduction in crime alone generates roughly $2 in social benefits,” the study’s authors wrote.

End-of-year funds received during the true-up typically go toward one-time costs such as capital projects rather than annual core programming. However, if the formula changes and RCPS only receives 40% of projected revenues and must apply to receive up to 40% of actual funds, then core programming could still be affected. If the change is made to the school funding policy, RCPS would also be forced to use the 40% of projected funds for capital projects.

Some have referred to the positive difference between projected revenues and actual revenues as a “surplus,” but it is not extra money, Dr. White said. “This is part of the core funding that we receive and therefore it could have an impact on core programming.”

As a rule, budget projections are typically conservative to avoid overpromising funds. In the past, RCPS didn’t have to worry about the accuracy of these projections, because leaders knew the school division would ultimately see 40% of actual revenues at the end of the year no matter what.

“Under the new proposition, the schools will never again have a guarantee of receiving 40% of local tax revenue,” Dr. Jamison said. “We will not be able to predict year to year what that will be, which makes raises difficult to approve, which makes improvements hard to guess. It may not make a difference in the first few years. But if you’re suddenly getting 37%, 36%, 35% [of funding] over time, it’s going to make a difference.”

Teacher working with students
Fully funding schools has allowed RCPS to support students, families, and staff.

Being Good Stewards

The costs of running a school division aren’t just limited to textbooks, desks, and teachers. RCPS employs its own electricians, plumbers, and a variety of staff who work behind the scenes to keep schools safe and comfortable. RCPS pays for building maintenance, construction projects, and supplies, everything from pencils and computers to light bulbs and food.

The city’s funding, coupled with what is provided by the federal and state governments and smaller sources such as grants, is essential to running the Roanoke Valley’s fifth-largest employer, which provides education to nearly 14,000 students each year and was voted “Best Employer – Silver” in The Roanoker Magazine’s annual reader poll.

It’s a large undertaking, and every dollar counts.

RCPS will provide teachers and staff with an average 3.5% salary increase for the upcoming school year to keep up with inflation and remain a competitive employer of choice. Several one-time funding sources from pandemic relief funds are also expiring, and the school division is absorbing some costs to ensure programs can continue.

The division’s strategic plan maps out RCPS’ vision, mission, and goals. Every department must justify each item in their annual budget based on these goals and targets, to ensure that the division remains good stewards of taxpayer dollars and that students remain at the center of everything staff does. RCPS consistently receives clean independent audits, showcasing the division’s fiscal stewardship, and the Fiscal Services Department annually receives awards from The Association of School Business Officials International for their diligent work.

The School Board is opposed to changing the funding formula, as predictable funding is needed to ensure student and school division success. Dr. Jamison said that the Board is willing to have a year-to-year conversation if the city has certain needs for a single fiscal year, but a policy change is a long-term commitment with long-term impacts.

“We want to provide high-quality instruction, using high-quality content in high-quality learning environments so that students can graduate and then provide for their families in a way that we can be proud of and that supports our city and our community,” Dr. White said.

City Council will likely vote on the proposed School Funding Policy change and adopt the 2024-2025 budget at its May 13th meeting.