How much money does Loudoun County spend on public schools per pupil?

A)     $11,997
B)     $12,315
C)     $12,422
D)     $14,883

The answer depends on who you ask and what expenditures they choose to include in the computation.  Answer A, $11,997 per pupil, is the most widely reported figure, but it does not come close to accounting for the true cost of public schools.  Answer D, $14,883 per pupil, includes all the costs related to public schools in FY 2010, which are as follows:

• Operating Budget ($732,598,960)
• Bus and Vehicle Leases ($6,400,000)
• Debt Service ($111,485,143) - Capital projects, such as new schools and school renovations, are financed through the sale of bonds with 20 year maturities.  This is the amount in principle and interest for school capital projects.
• Cafeteria Fund ($23,021,430) -  This fund used to be financed entirely through cafeteria sales and federal/state subsidies, but in FY 2008, the fund started receiving local funding.
• Capital Asset Preservation Program ($1,400,000)
• Post-Retirement Employees Benefits Fund ($10,500,000) - This fund was established in FY 2009 to cover the unfunded liability of some retirement benefits.

Here is how the per-pupil costs were computed, base on an approved enrollment of 59,490 students.

Answer A ($11,997) - Per-pupil cost reported in the Washington Area Boards of Education (WABE) Guide, but WABE excludes roughly $19 million in expenditures from the base LCPS operating budget of $732,598,960.  The following note from the WABE Guide explains why:  Uniform formulas were developed by the WABE committee for consistency area-wide. These numbers are comparable; however, the cost per pupil reported here may differ from that reported in individual districts' budget documents or other reports.

Answer B ($12,315) - Includes only the base operating budget of $732,598,960.

Answer C ($12,422) - Includes the base operating budget as well as bus and vehicle leases, which together comprise the school operating fund reported in the County budget.

Answer D ($14,883) - Includes all public schools related expenditures.  This is the true cost of Loudoun County public schools.

In the latest forecast of gloom and doom, Loudoun County officials now say the FY 2011 budget shortfall has grown to $192 million and a $1.51 tax rate will be needed to close the gap.  If residential assessments decline by an estimated 5% in 2010, then that would represent a $745 property tax hike for the average homeowner!

Included in the $192 million is $96.5 million in new spending - a fiscally irresponsible proposal at a time when housing values are expected to fall for the fourth straight year and there is little indication of an economic recovery.  About another $35 million is because the unequalized tax rate of $1.245 is used in the calculation.

Not factored into the shortfall is the state revenue picture.  A lower composite index and the population gains from the 2008 school census will likely mean more money from the state for the school system, even if there are some spending reductions in the new state biennium budget.

Don’t believe for a second that this misleading “shortfall” leaves the Board of Supervisors with no other option but to raise taxes.  Remember that the Board erased the FY 2010 shortfall of $176 million and actually lowered the average homeowner tax bill a few hundred dollars by cutting spending.  They can do the same this year, if they wish, but not without strong taxpayer support.  Both the general county budget and the schools operating budget are still very well funded by historical standards (thanks to the housing bubble revenue bonanza!) and should be able to absorb more spending cuts, as well as increased demand from higher student enrollment.

The Washington Area Boards of Education FY 2010 Guide indicates that 8 out of 9 area school districts cut per-pupil spending this year – a trend that is likely to continue in FY 2011 as the economy remains weak and there is strong support for lower taxes.  Advocates for more school spending have criticized the Loudoun County Board of Supervisors for a slight decrease in school funding this year, but Loudoun is not an anomaly and other WABE Guide statistics show that Loudoun County Public Schools remains competitive with other DC area school districts.

LCPS offers teachers a very competitive compensation package.  The total compensation package (salary and benefits) for beginning teachers is $64,733, which ranks 6th out of 9.  The maximum salary of $96,195 ranks 5th and the benefits package ranks 4th.  Loudoun teachers work the 3rd lowest number of scheduled work days (194) per year and the lowest hours per day (7.0).  LCPS pays the 2nd highest amount for employee health insurance at $12,164.

Among adjacent county school districts, Loudoun is the 2nd highest in per-pupil spending.  Note that the WABE Guide does not include neighboring Fauquier and Clarke counties - both of which spend considerably less per pupil and offer much lower teacher compensation packages.

LCPS also has a low percentage of students with special needs.  The percentage of English for Speakers of Other Languages (ESOL) is by far the lowest of the 9 school districts at 5.7%.  The percentage of Special Education students is the lowest of the 7 Virginia school districts.

The WABE Guide is an excellent source of information about DC area school districts.  We do caution that there are vast differences amongst many of the school districts and some comparisons may not be relevant.  For example, a small school district like Falls Church (2,021 students) or Manassas City (6,828 students) does not have the economies of scale that a large school district like Loudoun does and will cost more per pupil to operate.  Urban school districts like Arlington and Alexandria have a higher cost of operations than a suburban county like Loudoun, mainly because the higher cost of living requires them to offer higher compensation.  They also have a large commercial tax base; thus can afford to spend more without placing a high tax burden on homeowners.  Even a school district like Fairfax has many urban areas inside the Beltway and must offer higher compensation than Loudoun.

Faced with flat tax revenues and looking for ways to trim the bloated county budget, Supervisor Lori Waters introduced a motion during the November 4th Board of Supervisors meeting which would have given the board the authority to trim a major expense – the Virginia Retirement System (VRS) contribution, which costs the county about $88 million a year.

VRS requires both the employer and the employee to contribute, but the county started paying the employee share (5% of salary) in 1983.  Ms. Waters’ motion would have made the 1983 policy revocable and given the board the option of requiring county employees to pay all or part of the VRS employee contribution.  Unfortunately, supervisors Miller, Burk, Kurtz, McGimsey and Buckley closed the door on that option by voting against the motion.

A lot has changed since 1983 when the current arrangement was agreed to, supposedly in lieu of a pay raise.  Back then, salaries were much lower than they are today and 5% represented substantially less money than it does today.  It is a cost that keeps on growing.  Every time an employee receives a raise, the contribution increases.  Defined-benefit pension plans like the VRS plan are rapidly fading away in America and are rarely offered outside of state and local governments, which have no profit motive and have been successful in passing the escalating costs on to taxpayers.  Even the VRS plan is considered very generous compared to other states.

It may come as a shock to taxpayers that Loudoun government and school employees contribute nothing towards their VRS retirement benefit.  That is indeed a rarity these days where most workers are fortunate to even have a retirement plan, let alone receive an employer contribution.  If an employer does contribute, it is often in the form of a matching contribution and is generally capped at 2-3% of salary - a stark contrast to the 14.89% LCPS automatically contributes for teachers.  In addition to the VRS plan, LCPS even offered a $20 per pay period 403b plan (the equivalent of a 401k) match in FY 2009 at a cost of $960,000.  The county also pays the employer social security contribution of 7.65%.

The VRS contribution is a major expense.  The county can no longer afford to shoulder 100% of the cost without a major tax increase.  In addition to the employee share of 5%, the county has always been required to pay the employer share, which varied from 8.22% to 9.89% in FY 2009 depending on job type.  LCPS contributed $8,938 for the average teacher.  According to the BOS meeting documents, just the county government employee (not including school employees) VRS contribution alone grew from $3.3 million in FY 2001 to $8 million in FY 2009.  Below is the total estimated VRS contribution by the county in FY 2009:

• County government employee share - $8,063,974
• County government employer share (estimated) - $13,257,173
• LCPS employee share (estimated) - $23,184,663
• LCPS employer share (estimated) - $44,050,860
• Total - $88,556,670

The cost of administering the VRS plan keeps growing.  VRS sets the contribution rate every year and members are forced to pay, no matter how high it is.  In FY 2009, VRS took in a staggering $2.1 billion in member contributions.  The VRS investment portfolio suffered heavy losses with the stock and real estate market downturns in the past few years.  It was announced that the contribution rate will have to increase to make up for the loss.  LCPS Superintendent Edgar Hatrick announced in a recent County of the Whole meeting that it could cost the school system an additional $20 million in FY 2011!  Of course, the plan is to pass that cost on to the taxpayers with a higher tax rate.

Supervisors would rather not reduce benefits for county employees, but most realize that under the current budget crunch, cuts in employee costs will have to be made.  It will be a tough choice between cutting salaries and benefits or removing employees from the county payroll.  The authority to discontinue or reduce the VRS employee payment would have been an option to avoid the latter.