Authority: Basic Aid Payments (1750200): Article VIII, Section 2, Constitution of Virginia, and Chapter 667, Acts of Assembly, 1980, and § 22.1-97, Code of Virginia, §§ 22.1-205, 46.1-357 and 46.1-380, Code of Virginia, Pupil Transportation, § 22.1-186, Code of Virginia.

Education of the Gifted (1750500): Discretionary Inclusion. Occupational-Vocational Education Payments (1750900): §§ 22.1-228 through 22.1-236, Code of Virginia.

Special Education Payments (1750100): §§ 22.1-213 through 22.1-222, Code of Virginia.

Remedial Education Payments (1751400): Article VIII, Section 2, Constitution of Virginia.

Educational Technology Payments (17518): The Goals 2000: Educate America Act, Public Law 103-227, Federal Code.

Educational Technology Payments (17518): Public Law 103-382, Federal Code.

A. Definitions

1. "Average Daily Membership," or "ADM" - The average daily membership for grades K-12 including (1) handicapped students ages 5-21, and (2) students for whom English is a second language who entered school for the first time after reaching their twelfth birthday, and who have not reached twenty-two years of age on or before August 1 of the school year, for the first seven (7) months (or equivalent period) of the school year in which state funds are distributed from this appropriation. Preschool and post-graduate students shall not be included in ADM.

a. Except as otherwise provided herein, by statute, or by precedent, all subprograms throughout the appropriation to the Department of Education shall be calculated using ADM unadjusted for half day kindergarten programs, estimated at 1,086,450 the first year and 1,104,036 1,100,119 the second year.

b. ADM adjusted for half-day kindergarten at 85% of ADM, is estimated at 1,081,510 the first year and 1,099,180 1,095,263 the second year.

c. Students who are either (i) enrolled in a nonpublic school or (ii) receiving home instruction pursuant to § 22.1-254.1 and who are enrolled in a public school on less than a full-time basis in any mathematics, science, English, social science, or foreign language course shall be counted in the ADM of the relevant school division. Each course shall be counted as 0.25, up to a cap of 0.5 of a student. This provision is contingent upon the enactment of House Bill 1860.

2. "Standards of Quality" - Operations standards for grades kindergarten through 12 as prescribed by the Board of Education subject to revision by the General Assembly.

3. "Basic Operation Cost" - The cost per pupil, including provision for the number of instructional personnel required by the Standards of Quality for each school division with a minimum ratio of 51 professional personnel for each 1,000 pupils or proportionate number thereof, in ADM for the same fiscal year for which the costs are computed, and including provision for driver, gifted, occupational-vocational, and special education, library materials and other teaching materials, teacher sick leave, general administration, division superintendents' salaries, free textbooks (including those for free and reduced price lunch pupils), school nurses, operation and maintenance of school plant, transportation of pupils, instructional television, professional and staff improvement, remedial work, fixed charges and other costs in programs not funded by other state and/or federal aid.

4. "Composite Index of Local Ability-to-Pay" - An index figure computed for each locality. The composite index is the sum of 2/3 of the index of wealth per pupil in ADM (unadjusted for half-day kindergarten programs) reported for the first seven (7) months of the 1993-94 school year and 1/3 of the index of wealth per capita (population estimates for 1993 as determined by the Center for Public Service of the University of Virginia) times the local nominal share of the costs of the Standards of Quality of 0.45 in each year. The indices of wealth are determined by combining the following constituent index elements with the indicated weighting: (1) true values of real estate and public service corporations as reported by the State Department of Taxation for the calendar year 1993 - 50 percent; (2) adjusted gross income for the calendar year 1993 as reported by the State Department of Taxation - 40 percent; (3) the sales for the calendar year 1993 which are subject to the state general sales and use tax, as reported by the State Department of Taxation - 10 percent. Each constituent index element for a locality is its sum per ADM, or per capita, expressed as a percentage of the state average per ADM, or per capita, for the same element. A locality whose composite index exceeds 0.8000 shall be considered as having an index of 0.8000 for purposes of distributing all payments based on the composite index. Each constituent index element for a locality used to determine the composite index of local ability to pay for the current biennium shall be the latest available data for the specified official base year provided to the Department of Education by the responsible source agencies no later than December 15, 1995.

a. Each locality whose total Virginia Adjusted Gross Income is comprised of at least 3 percent or more which is accounted for by non-residents of Virginia may elect at its option to exclude such non-resident income in computing the composite index of ability-to-pay. Each locality which elects this option must have certified its intention to do so to the Department of Education on or before January 1, 1996. The Department of Education shall compute the composite index for such localities by using adjusted gross income data which exclude non-resident income, but shall not adjust the composite index of any other localities. The Department of Taxation shall furnish to the Department of Education such data as are necessary to implement this provision.

b. In the event that two or more school divisions become one school division, whether by consolidation of only the school divisions or by consolidation of the local governments, such resulting division shall be paid Standard of Quality payments for all pupils in the combined division on the basis of a composite index determined by the Board of Education, which shall not be less than the lowest nor higher than the highest composite index of any of the individual school divisions involved in such consolidation. In the event of a consolidation of local governments, this index shall remain in effect for a period of five years, unless a lower composite index is calculated through the process for computing an index figure for each locality as set forth above. The Governor shall approve the composite index determined by the Board of Education prior to disbursement of funds under such index. The Department shall annually report to the Chairmen of the House Appropriations and Senate Finance Committees the composite indices approved by the Governor and the Board under this provision.

c. When it is determined that a substantial error exists in a constituent index element, the Department of Education will make adjustments in funding for the current school year. No adjustment during the biennium will be made as a result of updating of data used in a constituent index element.

d. In the event that any school division consolidates two or more small schools during school year 1991-92 or thereafter, the division shall continue to receive Standards of Quality funding and provide for the required local expenditure for a period of five years as if the schools had not been consolidated. Small schools are defined as any elementary, middle, or high school with enrollment below 200, 300 and 400 students, respectively.

5. "Required Local Expenditure for the Standards of Quality" - The locality's share based on the composite index of the cost required by all the Standards of Quality minus its estimated revenues from the state sales and use tax returned (on the basis of school age population) in the fiscal year in which the school year begins.

6. "Planning District Eight" - The nine localities which comprise Planning District Eight are Arlington County, Fairfax County, Loudoun County, Prince William County, Alexandria City, Fairfax City, Falls Church City, Manassas City and Manassas Park City.

7. "State Share for the Standards of Quality" - The state share for a locality shall be equal to the cost for that locality less the locality's estimated revenues from the state sales and use tax returned (on the basis of school age population) in the fiscal year in which the school year begins and less the required local expenditure.

B. General Conditions

1.a. Each locality shall offer a school program for all its eligible pupils which is acceptable to the Department of Education as conforming to the Standards of Quality program requirements.

b. No changes to the Standards of Accreditation which would increase or decrease the state funding provided to local school divisions for any of the following Standards of Quality payment accounts shall be effective prior to July 1, 1998: Basic Aid, Occupational-Vocational Education, Special Education, Education of the Gifted, Enrollment Loss, Remedial Education, Maintenance Supplement, Primary Class Size, Truancy/Safe Schools, Educational Technology, and At-Risk Four-Year-Olds.

2. In the event the statewide number of pupils in ADM exceeds the number estimated as the basis for this appropriation, the locality's state share of the Basic Operation Cost and the required local share shall be reduced proportionately so that this appropriation will not be exceeded.

3. The Department of Education shall make equitable adjustments in the computation of indices of wealth and in other state-funded accounts for localities affected by annexation, unless a court of competent jurisdiction makes such adjustments. However, only the indices of wealth and other state-funded accounts of localities party to the annexation will be adjusted.

4. In the event that the actual revenues from the state sales and use tax returned (on the basis of school age population) for sales in the fiscal year in which the school year begins are different from the number estimated as the basis for this appropriation, the estimated revenues shall not be adjusted.

5. This appropriation shall be apportioned to the public schools with guidelines established by the Department of Education consistent with legislative intent as expressed in this act.

6. Appropriations of state funds in this item include for each subprogram the number of positions required by the Standards of Quality. This item includes for such subprograms as Basic Aid Payments, a minimum of 51 professional instructional positions and aide positions (C.1.); Education of the Gifted, 1.0 professional instructional position (C.3.); Occupational-Vocational Education Payments and Special Education Payments; a minimum of 6.0 professional instructional positions and aide positions (C.4. and C.5.) for each 1,000 pupils in ADM each year in support of the current Standards of Quality. Funding in support of an additional 9.0 professional instructional positions per 1,000 pupils who score in the bottom national quartile of the Virginia State Assessment Program tests or who fail the state's Literacy tests is included in Remedial Education Payments.

7. To determine if a school division has met its required local expenditure for the Standards of Quality, the following calculations will be made:

a. The total cost of operation less all capital outlays, debt service expenditures and refunds of revenue (prior periods), will be calculated; then

b. From this amount calculated in Paragraph a. will be deducted receipts from state categorical aids (other than for capital outlays), receipts from federal categorical aids other than P.L. 95-561 (formerly P.L. 81-874 and P.L. 81-815), Forest Reserve receipts, and for capital outlays, receipts for gasoline tax refunds, tuition from another county or city, other payments from another county or city, and payments from other state agencies and others, all as stipulated by the Superintendent of Public Instruction; then

c. From this amount calculated in Paragraph b. will be deducted the state share of the Standards of Quality Cost and the estimated revenues from the state sales and use tax returned (on the basis of school age population) for sales in the fiscal year in which the school year begins.

d. The amount calculated in Paragraph c. must be equal to or greater than the required local expenditure defined in Paragraph A.5.

e. A locality whose expenditure in fact exceeds the required amount from local funds may not reduce its expenditures unless it first complies with all of the Standards of Quality.

8. a. Any sum which a locality, as of the end of a school year, has not expended out of the state share and the required local expenditure for the Standards of Quality shall be paid by the locality into the general fund of the state treasury. Such payments shall be made not later than the end of the school year following that in which the under expenditure occurs.

b. Whenever the Department of Education has recovered funds as defined in the preceding Paragraph a. the Secretary of Education is authorized to repay to the locality affected by that action, seventy-five percent (75%) of those funds upon his determination that:

1) the local school board agrees to include the funds in its June 30 ending balance for the year following that in which the under expenditure occurs;

2) the local governing body agrees to reappropriate the funds as a supplemental appropriation to the approved budget for the second year following that in which the under expenditure occurs, in an appropriate category as requested by the local school board, for the direct benefit of the students;

3) the local school board agrees to expend these funds, over and above the funds required to meet the required local expenditure for the second year following that in which the under expenditure occurs, for a special project, the details of which must be furnished to the Department of Education for review and approval;

4) the local school board agrees to submit periodic reports to the Department of Education on the use of funds provided through this project award; and

5) the local governing body and the local school board agree that the project award will be cancelled and the funds withdrawn if the above conditions have not been met as of June 30 of the second year following that in which the under expenditure occurs.

c. There is hereby appropriated, for the purposes of the foregoing repayment, a sum sufficient, not to exceed 75% of the funds deposited in the general fund pursuant to the preceding Paragraph a.

9. The Superintendent of Public Instruction shall provide a report on the status of teacher salaries, by local school division, to the Chairmen of the Senate Finance and House Appropriations Committees by December 1 of each year of the biennium.

C. Apportionment

1. Subject to the conditions stated in this paragraph and in Paragraph B of this Item, each locality shall receive sums as listed above for subprograms within this program for the basic operation cost and payments in addition to that cost. The apportionment herein directed shall be inclusive of, and without further payment by reason of, state funds for library and other teaching materials.

2. Basic Aid Payments

a. A state share of the Basic Operation Cost, which cost per pupil in ADM is established individually for each local school division based on the number of instructional personnel required by the Standards of Quality and the statewide prevailing salary levels (adjusted in Planning District Eight for the cost of competing) for an estimated ADM (adjusted for half-day kindergarten programs).

The calculation of the statewide costs of the aggregate personnel standard does not include that portion of the costs from Retirement, Social Security and Group Insurance programs paid from state funds appropriated by other items of this act.

b. The state share for a locality shall be equal to the Basic Operation Cost for that locality less the locality's estimated revenues from the state sales and use tax returned (on the basis of school age population) in the fiscal year in which the school year begins and less the required local expenditure.

c. For the purpose of this paragraph, the Department of Taxation's fiscal year sales and use tax estimates are as cited in Item 141 of this act.

d. 1) In accordance with the provisions of §§ 22.1-281 and 37.1-96, Code of Virginia, the Department of Education shall deduct the locality's share for the education of handicapped pupils residing in institutions within the Department of Mental Health, Mental Retardation and Substance Abuse Services from the locality's Basic Aid appropriation.

2) The amounts deducted from Basic Aid for the education of mentally retarded persons shall be transferred to the Department of Mental Health, Mental Retardation and Substance Abuse Services in support of the cost of educating such persons; the amount deducted from Basic Aid for the education of emotionally disturbed persons shall be transferred to the Program for Special Education (Item 138) for extraordinary expenses incurred in the education of such persons. The Department of Education shall establish guidelines to implement these provisions and shall provide for the periodic transfer of sums due from each local school division to the Department of Mental Health, Mental Retardation and Substance Abuse Services and the Program for Special Education (Item 138). The amount of the actual transfers will be based on data accumulated during the prior school year.

e. 1) The apportionment to localities of all driver education revenues received during the school year shall be made as an undesignated component of the state share of the basic operation cost in accordance with the provisions of this Item. Only school divisions complying with the standardized program established by the Board of Education shall be entitled to participate in the distribution of state funds appropriated for driver education. The Department of Education will deduct a designated amount per pupil from a school division's Basic Aid payment when the school division is not in compliance with § 22.1-205.C, Code of Virginia. Such amount will be computed by dividing the current appropriation for the Driver Education Fund by actual March 31 ADM.

2) Local school boards may charge a per-pupil fee for behind-the-wheel driver education provided, however, that the fee charged plus the per pupil basic aid reimbursement for driver education shall not exceed the actual average per pupil cost. Such fees shall not be cause for a pro-rata reduction in Basic Aid payments to school divisions.

f. The one-cent state sales and use tax earmarked for education and distributed to localities on the basis of school age population shall be reflected in each locality's annual budget for educational purposes as a separate revenue source for the then current fiscal year.

g. 1) The appropriations for basic aid include $31,964,584 the first year and $32,418,218 $32,283,143 the second year from the general fund as the state's share of the cost of textbooks based on a per pupil amount of $52.36 the first year and $52.36 the second year. The state's distributions for textbooks shall be based on adjusted ADM.

2) School divisions shall provide free textbooks to all students beginning July 1, 1994.

h. The appropriations for Basic Aid include the state share of an average per pupil amount estimated at $59 the first year and $59 the second year to pay for the costs of administration.

i. 1) The appropriations for Basic Aid include an equivalent payment for the following salary increases and related fringe benefit costs for public school employees including instructional and support staff:

a) For the first year, the state share of a payment equivalent to a 1.75% salary increase effective January 1, 1997.

b) For the second year, the state share of a payment equivalent to the continuation of the 1.75% salary increase effective January 1, 1997, plus the state share of a payment equivalent to a 4.00% salary increase effective January 1, 1998.

c) The intent of the General Assembly is that the average classroom teacher salary be improved throughout the state by at least 1.75% the first year and 4.00% the second year. Sufficient funds are appropriated in this act to finance on a statewide basis, the state share of such salary increases, to school divisions which certify to the state Department of Education, no later than March 1, 1) that equivalent increases have been granted in the fiscal year in which such payments are provided; or, 2) the school division will begin paying the employee's share of contributions to the Virginia Retirement System in that fiscal year as a new benefit that had not been available to teachers in prior years.

2) These funds shall be matched by the local government, based on the composite index of local ability-to-pay.

3) This funding is not intended as a mandate to increase salaries.

j. It is the intent of the General Assembly that the caseloads for Speech Pathologists be reduced to a level equivalent to the national average by the year 1999.

k. The Department of Education is authorized to transfer, from basic aid, the state share of the total Standards of Quality cost per pupil for any disabled student (i) who has been suspended or expelled from the public schools and (ii) for whom the Department of Education has assumed the cost of continuing education services. These funds shall be transferred to the program for special education (Item 138) for extraordinary expenses incurred by the Department in the education of such students.

l. The appropriations for Basic Aid include $5,355,931 the first year from the general fund as a special July payment to local school divisions. This payment constitutes the balance of the state Basic Aid payment and Enrollment Loss payment due to local school divisions in fiscal year 1996, but not received due to litigation over the appropriations contained in House Bill No. 29 of the 1996 General Assembly Session.

m. The appropriations for basic aid include the state share of approximately $17 million or $231 per instructional position for teacher training in each year of the biennium. School divisions are encouraged to use these funds to provide teacher training in the Standards of Learning.

n. The appropriations for basic aid include $6,191,404 $6,165,613 the second year from the general fund for one-time incentive payments to school divisions to assist them in implementing the Standards of Learning. Payments to school divisions shall be based on the state share of $10 per student in adjusted average daily membership and shall be paid to any school division that certifies to the Department of Education that such funds will be used to support the implementation of the Standards of Learning. Such certification shall include a plan or description of the purposes for which the funds will be used. Localities receiving these incentive payments are required to match these funds based on the composite index of local ability-to-pay.

3. Education of the Gifted Payments.

a. An additional payment shall be disbursed by the Department of Education to local school divisions to support the state share of one full-time equivalent instructional position per 1,000 students in ADM (adjusted for half-day kindergarten).

b. Local school divisions are required to spend, as part of the required local expenditure for the Standards of Quality the established per pupil cost for gifted education (state and local share) on approved programs for the gifted.

4. No Loss Payments/Composite Index Transition/Census Loss Payments

a.1) An appropriation of $1,158,772 in the first year from the general fund is made for a No Loss Payment. In the first year of the biennium, no locality shall receive less state allocations than it received in 1995-96. For purposes of this calculation, state allocations shall include payments from Basic Aid, Salary Supplement, Textbooks, Vocational Education (SOQ), Special Education (SOQ), Gifted, Remedial, Remedial Summer School, Public School Employee Benefits (Retirement, Social Security, Group Life Insurance, Harper Account), Sales Tax, Enrollment Loss, At-Risk, Maintenance Supplement, Primary Class Size, Educational Technology, Composite Index Transition Payment and English as a Second Language.

2) Two or more school divisions operating as a single division by a combined school board shall be considered as a single school division for purposes of this calculation.

b. An additional state payment of $2,597,542 in the first year from the general fund shall be disbursed by the Department of Education to provide a one-time transitional payment to school divisions experiencing a negative state funding impact due to the recalculation of the components of the composite index of local ability-to-pay for the 1996-98 biennium. The additional payment shall be made to local school divisions requesting such payment, in an amount equal to ten percent of the difference between the funding the division would have received in HB 30, as introduced, in Direct Aid to Public Education payments in the first year under their 1996-98 composite index and the amount they would have received in HB 30, as introduced, in the first year using the 1994-96 composite index. For purposes of the calculation, state allocations shall include payments from Basic Aid, Salary Supplement, Textbooks, Vocational Education (SOQ), Special Education (SOQ), Gifted, Remedial, Remedial Summer School, Public School Employee Benefits (Retirement, Social Security, Group Life Insurance, Harper Account), Sales Tax, Enrollment Loss, At-Risk, Maintenance Supplement, Primary Class Size, Educational Technology, and English as a Second Language.

c. An additional state payment of $2,126,194 in the first year from the general fund shall be disbursed by the Department of Education to provide a one-time payment to school divisions receiving less state funding in the first year as a result of a loss in school age population between the years 1992 and 1996. The additional payment shall be made to local school divisions requesting such payment, for a percentage of the difference between the funding the division would receive using the 1992 Census in the first year and the funding that would be received from these accounts in the first year using the 1992/1996 Blended Census, as projected in HB 1600/SB 700, as introduced. Such payments shall be made as determined below:

5. Occupational-Vocational Education Payments

a. An additional payment shall be disbursed by the Department of Education to the local school divisions to support the state share of the number of Vocational Education instructors required by the Standards of Quality. These funds shall be disbursed on the same basis as the payment is calculated.

b. An amount estimated at $81,272,769 the first year and $82,289,840 the second year from the general fund included in Basic Aid Payments relates to vocational education programs in support of the Standards of Quality.

6. Special Education Payments

An additional payment shall be disbursed by the Department of Education to the local school divisions to support the state share of the number of Special Education instructors required by the Standards of Quality. These funds shall be disbursed on the same basis as the payment is calculated.

7. Enrollment Loss Payments

An additional state payment in each year equal to the state share per pupil of Basic Aid for each locality, for a percentage of the enrollment loss (as determined below) in ADM from the prior year.

8. Remedial Education Payments

a. An additional state payment shall be disbursed by the Department of Education to the local school divisions to support the state share of nine professional instructional positions per 1,000 students who score in the bottom national quartile on Virginia State Assessment Program Tests or who fail the state's Literacy tests.

b. An additional state payment estimated at $36,254,589 the first year and $36,567,879 $36,398,919 the second year from the general fund shall be disbursed based on the estimated number of federal Free Lunch participants, in support of programs for students who are educationally at-risk. The additional payment shall be based on the state share of:

1) A minimum 2 percent add-on, as a percent of the per pupil basic aid cost, for each child who qualifies for the federal Free Lunch Program; and

2) An addition to the add-on, based on the concentration of children qualifying for the federal Free Lunch Program. Based on its percentage of Free Lunch participants, each school division will receive between 2 and 12 percent in additional basic aid per Free Lunch participant. These funds shall be matched by the local government, based on the composite index of local ability-to-pay.

3a) Local school divisions are required to spend, as part of the required local expenditure for the Standards of Quality the established at-risk payment (state and local share) on approved programs for students who are educationally at-risk.

b) To receive these funds, each school division shall certify to the Department of Education that the state and local shares of the at-risk payment will be used to support approved programs for students who are educationally at-risk. These programs may include: Dropout Prevention, Advancement Via Individual Determination (AVID), homework assistance, Project Discovery, Reading Recovery, programs for students who speak English as a second language, and programs related to increasing the success of disadvantaged students in completing a high school degree and providing opportunities to encourage further education and training.

c.1) An additional state payment of $4,142,000 the first year and $3,500,000 $3,716,652 the second year from the general fund shall be disbursed for regional alternative education programs. Such programs shall be for the purpose of educating certain expelled students and, as appropriate, students who have received suspensions from public schools and students returned to the community from the Department of Juvenile Justice.

2) Each regional program shall have a small student/staff ratio. Such staff shall include, but not be limited to education, mental health, health, and law enforcement professionals, who will collaborate to provide for the academic, psychological and social needs of the students. Each program shall be designed to ensure that students make the transition back into the "mainstream" within their local school division.

3) The Board of Education shall provide assistance for the state share of the incremental cost of regional alternative education program operations based on the composite index of local ability-to-pay.

d. An additional state payment of $141,581 the first year and $141,581 the second year from the general fund shall be disbursed for the state share of the Virginia Reading Recovery Program to provide intensive individualized reading instruction to first-grade students identified as at-risk of reading failure. Funds shall be used for a Reading Recovery training site, program planning, and development support for local school divisions.

e. An additional state payment of $133,000 the second year from the general fund shall be disbursed by the Department of Education to provide $1,000 to each local school division that certifies to the Superintendent of Public Instruction by October 15, 1997, the formation of a Remediation Program Standards Committee pursuant to the provisions of House Bill 1859, 1997 Session. The Department shall survey local school boards for a determination of the specific requirements of the local programs of remediation, components included in the remediation program, and the number of students projected to be in remediation programs. The Department of Education shall report the results of the survey to the Governor and the Chairmen of the House Appropriations and Senate Finance Committees by December 1, 1997.

9. Maintenance Supplement

a. An additional state payment estimated at $7,020,490 the first year and $9,287,109 $9,248,418 the second year from the general fund shall be disbursed by the Department of Education to local school divisions to support the state share of $11.50 per pupil in the first year and $15 per pupil in the second year in adjusted daily membership for ongoing maintenance needs or debt service payments. These funds shall be matched by the local government, based on the composite index of local ability-to-pay.

b. The Virginia Beach School Board and the Virginia Beach City Council are encouraged to continue making progress in implementing the Capital Improvement Plan for the city's older schools.

10. Primary Class Size Payments

a. An additional payment estimated at $50,445,232 the first year and $56,730,696 $55,774,704 the second year from the general fund shall be disbursed by the Department of Education as an incentive payment for reducing class sizes in the primary grades.

b. The Department of Education shall calculate the payment based on the incremental cost of providing the lower class sizes based on the greater of the division average per pupil cost of all divisions or the actual division per pupil cost.

c. Localities are required to provide a match for these funds based on the composite index of local ability-to-pay.

d. By November 1 , 1996, school divisions must provide data to the Department of Education that each participating school has a September 30, 1996 pupil/teacher ratio in grades kindergarten through three that meet the following criteria:

e. By November 1, 1997, school divisions must provide data to the Department of Education that each participating school has a September 30, 1997 pupil/teacher ratio in grades kindergarten through three that meet the following criteria:

f. School divisions may elect to have eligible schools participate at a higher ratio, with a commensurate reduction of state and required local funds, if local conditions do not permit participation at the established ratio.

g. The Superintendent of Public Instruction shall provide a report on the status of the reduction in primary class sizes to the Board of Education, the Chairmen of the House Education, House Appropriations, House Finance, Senate Education and Health, and Senate Finance Committees by December 1 of each year.

h. Any funds unexpended out of the appropriations for the Primary Class Size Payments as of June 30 of each year shall not revert to the surplus of the general fund. Fifty percent of such funds shall be transferred to the Educational Technology Payments for inclusion in the educational technology fund. The remaining fifty percent shall be carried on the books of the Department of Accounts, to be budgeted for educational opportunities initiatives at the next session of the General Assembly.

11. Educational Technology Payments

a. Any unobligated amounts transferred to the educational technology fund shall be disbursed on a pro rata basis to localities. The additional funds shall be used for technology needs identified in the division's technology plan approved by the Department of Education.

b. The Board of Education shall provide $10,078,755 the first year and $10,126,355 the second year from the Literary Fund to provide debt service payments for the equipment grant program conducted through the Virginia Public School Authority in 1995.

c.1) The Board of Education shall provide the sum of $12,676,000 in the second year from the Literary Fund to provide first-year debt service payments for an education technology grant program to be conducted through the Virginia Public School Authority, in an amount estimated at $55.6 million, for the purpose of providing technology improvements to school infrastructure, networking, and for purchasing technology equipment.

2) Grant funds are based on an average grant of $26,300 per school and an additional $53,000 for each school division. For purposes of this grant program, eligible schools shall include those reporting membership as of September 30, 1996, as well as division and regional vocational centers, regional special education centers, and regular school year regional Governor's Schools.

3) For purposes of this grant program, the funds may be used to provide for the retrofitting and upgrading of existing school buildings, to provide network-ready multimedia microcomputers for classrooms, and to provide network-ready microcomputers for student use. Grant funds may be used to purchase re-engineered microcomputers and multimedia microcomputers, or to upgrade existing microcomputer systems, where such purchases or upgrades provide appropriate computing capacity on a cost-effective basis. Funds may also be used to provide other educational technologies as set forth in the local school division's approved technology plan.

4) Localities are required to provide a match for these funds equal to 20 percent of the grant amount. At least 25 percent of the local match shall be used for teacher training in the use of the technology. The Superintendent of Public Instruction is authorized to reduce the required local match for school divisions with a composite index of local ability-to-pay below 0.2000.

5) In developing the proposed 1998-2000 and 2000-2002 biennial budgets for public education, the Board of Education shall include a recommendation to the Governor to appropriate Literary Fund revenues sufficient to make the debt service payments for this program in fiscal years 1999, 2000, 2001, and 2002.

d. The Director of the Department of Planning and Budget is authorized to increase appropriations from the Literary Fund in the second year in an amount equal to the revenues received from deposits of unclaimed property remitted by TRIGON less any claims paid as a result of the supplemental co-payment refund program. These revenues shall be distributed by the Board of Education to local school divisions for the purchase of graphing calculators and scientific probe and sensing device kits. To the extent that these objectives have been met, any additional revenues from these deposits may be distributed for the purchase of other educational technologies.

e.1) An education technology grant program shall be conducted through the Virginia Public School Authority, through the issuance of equipment notes in an amount estimated at $46.2 million in the Spring of 1998. Proceeds of the notes will be used to continue implementation of the Board of Education's Six-Year Educational Technology Plan for Virginia. The program will focus on three of the major components of that plan: a) retrofitting and upgrading of existing school buildings to efficiently use educational technology, b) providing network-ready multimedia microcomputers for every classroom, and c) providing a 5 to 1 ratio of pupils to network-ready microcomputers.

2) Grant funds are based on an average grant of $25,000 per school. For purposes of this grant program, eligible schools shall include those reporting membership as of September 30, 1997, as well as division and regional vocational centers, regional special education centers, and regular school year regional Governor's Schools.

3) For purposes of this grant program, the funds may be used to provide for the retrofitting and upgrading of existing school buildings, to provide network-ready multimedia microcomputers for classrooms, and to provide network-ready microcomputers for student use. Grant funds may be used to purchase re-engineered microcomputers and multimedia microcomputers, or to upgrade existing microcomputer systems, where such purchases or upgrades provide appropriate computing capacity on a cost-effective basis. Funds may also be used to provide other educational technologies as set forth in the local school division's approved technology plan.

4) Localities are required to provide a match for these funds equal to 20 percent of the grant amount. At least 25 percent of the local match shall be used for teacher training in the use of the technology. The Superintendent of Public Instruction is authorized to reduce the required local match for school divisions with a composite index of local ability-to-pay below 0.2000.

5) It is the intent of the General Assembly to appropriate Literary Fund revenues sufficient to pay debt service on the Virginia Public School Authority bonds authorized for this program. In developing the proposed 1998-2000, 2000-2002, and 2002-2004 biennial budgets for public education, the Board of Education shall include a recommendation to the Governor to appropriate Literary Fund revenues sufficient to make the debt service payments for this program in fiscal years 1999, 2000, 2001, 2002, and 2003.

f.1) For the purposes of § 56-232, Code of Virginia, "Contracts of Telephone Companies with State Government" and for the purposes of § 56-234 "Contracts for Service Rendered by a Telephone Company for the State Government" shall be deemed to include communications lines into public schools which are used for educational technology. The rate structure for such lines shall be negotiated by the Superintendent of Public Instruction and the Director of the Council of Information Management. Further, the Superintendent and Director are authorized to encourage the development of "by-pass" infrastructure in localities where it fails to obtain competitive prices or prices consistent with the best rates obtained in other parts of the state.

2) The State Corporation Commission, in its consideration of the discount for services provided to elementary schools, secondary schools, and libraries and the universal service funding mechanisms as provided under §254 of the Telecommunications Act of 1996, is hereby encouraged to make the discounts for intrastate services provided to elementary schools, secondary schools, and libraries for educational purposes as large as is prudently possible and to fund such discounts through the universal fund as provided in §254. The Commission shall proceed as expeditiously as possible in implementing these discounts and the funding mechanism for intrastate services, consistent with the rules of the Federal Communications Commission aimed at the preservation and advancement of universal service.

g. An amount estimated at $6,200,305 the first year and $8,684,679 the second year from nongeneral funds is appropriated pursuant to the Goals 2000: Educate America Act.

h. An amount estimated at $2,851,387 the first year from nongeneral funds is appropriated from the federal Technology Literacy Challenge Fund.

12. At-Risk Four-Year-Olds Preschool Payments

a.1) It is the intent of the General Assembly that an additional state payment shall be disbursed by the Department of Education to schools and community-based organizations to provide quality preschool programs for at-risk four-year-olds unserved by another program.

2) These grants shall be used to provide programs for at-risk four-year-old children which include quality preschool education, health services, social services, parental involvement and transportation. Programs must provide full-day and, at least, school-year services.

3) The Department of Education, in cooperation with the Council on Child Day Care and Early Childhood Programs, shall establish guidelines for quality preschool education and criteria for the service components. Such guidelines shall be consistent with the findings of the November 1993 study by the Board of Education, the Department of Education, and the Council on Child Day Care and Early Childhood Programs.

4) Grants shall be distributed based on an allocation formula providing the state share of a $5,400 grant for sixty percent of the unserved at-risk four-year-olds in each locality.

b.1) Any locality which desires to participate in this grants program must submit a proposal through its chief administrator (county administrator or city manager) by May 15 of each year. The chief administrator, in conjunction with the school superintendent, shall identify a lead agency for this program within the locality. The lead agency shall be responsible for developing a local plan for the delivery of quality preschool services to at-risk children which demonstrates the coordination of resources and the combination of funding streams in an effort to serve the greatest number of at-risk four-year-old children.

2) The proposal must demonstrate coordination with all parties necessary for the successful delivery of comprehensive services, including the schools, child care providers, local social services agency, Head Start, local health department and other groups identified by the lead agency.

3) A local match, based on the composite index of local ability-to-pay shall be required. For purposes of meeting the local match, localities may use local expenditures for existing qualifying programs. Localities shall also continue to pursue and coordinate other funding sources, including child care subsidies. Funds received through this program must be used to supplement, not supplant, any funds currently provided for preschool programs within the locality. However, in the event a locality is prohibited from continuing the previous level of support to programs for at-risk four-year-olds from Title 1 of the Elementary and Secondary Education Act (ESEA), the state and local funds provided in this grants program may be used to continue services to these Title I students. Such prohibition may occur due to amendments to the allocation formula in the reauthorization of ESEA approved as a part of the Improving America's Schools Act of 1994 or due to a percentage reduction in a locality's Title I allocation in 1996-97 or 1997-98. Any locality so affected shall provide written evidence to the Superintendent of Public Instruction and request his approval to continue the services to Title I students.

c. Local plans must provide clear methods of service coordination for the purpose of reducing the per child cost for the service, increasing the number of at-risk children served and/or extending services for the entire year. Examples of these include:

1) "Wraparound Services" -- methods for combining funds such as child care subsidy dollars administered by local social service agencies with dollars for quality preschool education programs.

2) "Wrapout Services" -- methods for using grant funds to purchase quality preschool services to at-risk four-year-old children through an existing child care setting by purchasing comprehensive services within a setting which currently provides quality preschool education.

3) "Expansion of Service" -- methods for using grant funds to purchase slots within existing programs, such as Head Start, which provide comprehensive services to at-risk four-year-old children.

Local plans must indicate the number of at-risk four-year-old children to be served, and the criteria by which they will be determined to be at-risk.

d.1) The Department of Education and the Council on Child Day Care and Early Childhood Programs shall provide technical assistance for the administration of this grant program to provide assistance to localities in developing a comprehensive, coordinated, quality preschool program for serving at-risk four-year-old children.

2) A pre-application session shall be provided by the Department and the Council on Child Day Care and Early Childhood Programs prior to the proposal deadline. The Department shall provide interested localities with information on models for service delivery, methods of coordinating funding streams, such as funds to match federal IV-A child care dollars, to maximize funding without supplanting existing sources of funding for the provision of services to at-risk four-year-old children. A priority for technical assistance in the design of programs shall be given to localities where the majority of the at-risk four-year-old population is currently unserved.

13. Truancy/Safe Schools Payments

a. An additional payment of $1,945,253 the first year and $1,945,253 the second year from the general fund shall be disbursed by the Department of Education as an incentive payment for reducing truancy and supporting safe schools in elementary and middle schools.

b. The Department shall use a four-year trend analysis of elementary and middle schools' attendance rates, as reported in the Department's Outcome Accountability Project, to identify those school divisions in the lowest 13.4 percent for elementary and middle school attendance.

c. Funds are to be distributed to those identified school divisions according to the following formula, with the state contributing its share, based on the composite index of local ability-to-pay, to each identified participating school division.

d. Localities are required to provide a match for these funds based on the composite index of local ability-to-pay.

e. School divisions must notify the Department of Education of their intent to implement truancy intervention or safe school programs in all, or any portion, of the qualifying schools by August 1 of each year.

f. The Department of Education shall develop guidelines for submitting truancy intervention and safe school proposals, as well as for implementation and assessment of such programs.

g. Local truancy plans must provide clear methods for the identification of truants, the development of a plan for the local coordination of services for identified truants and their families with public and private human service agencies and local Juvenile and Domestic Relations District Courts, and the means by which they plan to evaluate the efficacy of their efforts to reduce truancy in identified elementary and middle schools.

h. Local safe school initiatives may include, but shall not be limited to, the following activities:

1) Provision of aggressive alcohol and drug education;

2) Establishment of youth violence committees comprised of local law enforcement and social services agencies and school staff that will develop suspension-intervention programs for students who have chronic discipline problems;

3) Provision of conflict resolution training for students and staff members in middle and elementary schools;

4) Establishment of community policing programs; and

5) Establishment of community/parent liaison programs.

14. Early Intervention

a. An additional incentive payment of $6,227,060 $6,107,336 the second year from the general fund shall be disbursed by the Department of Education to local school divisions for the purposes of providing early intervention services to primary grade students who demonstrate deficiencies based on their individual performance on kindergarten or first-grade diagnostic tests which have been approved by the Department of Education. The Department of Education shall review the tests of any local school board which requests authority to use a test other than the state-provided test to ensure that such local test uses criteria for the early diagnosis of reading deficiencies which are similar to those criteria used in the state-provided test.

b. These incentive payments shall be based on the state's share of the cost of providing two and one-half hours of additional instruction each week for an estimated number of students in each school division at a student to teacher ratio of five to one. The estimated number of students in each school division shall be determined by multiplying the number of first grade students reported in each school division's 1996 Fall Membership by the estimated percent of students eligible for the federal free lunch program in that school division.

c. These incentive payments are available to any school division that certifies to the Department of Education that an intervention program will be offered to such students. Such intervention programs, at the discretion of the local school division, may include, but not be limited to the use of: special reading teachers; trained aides; volunteer tutors under the supervision of a certified teacher; computer-based reading tutorial programs; aides to instruct in-class groups while the teacher provides direct instruction to the students who need extra assistance; or extended instructional time in the school day or year for these students. Localities receiving these incentive payments are required to match these funds based on the composite index of local ability-to-pay.