P.O. BOX 2120



May 16, 2008



Division Superintendents



Billy K. Cannaday, Jr.

Superintendent of Public Instruction



State Direct Aid to Public Education Funds Permitted to be Carried Forward from Fiscal Year 2008 to Fiscal Year 2009


Section 22.1-100, Code of Virginia, requires school divisions to return unexpended state funds to the Commonwealth at the close of each fiscal year; however, Chapter 847, 2008 Acts of Assembly, permits school divisions that have met Required Local Effort and Required Local match for fiscal year 2008 to carry forward to fiscal year 2009 any remaining state fund balances that are unexpended as of June 30, 2008. This provision is considered to be a one-time carry forward option; however, any decision regarding future inclusion will be made by the General Assembly. Specifically, the appropriation act language reads as follows:


"It is the intent of the General Assembly that any locality that has met its required local effort for the Standards of Quality accounts and incentive-based programs, in which the locality elected to participate, may carry over into fiscal year 2009 any remaining state fund balances available to help minimize any revenue shortfall related adjustments that may occur in state funding to that locality."


Please note that this language also permits a school division to use such carry forward funds to address any revenue shortfall related adjustments in state funding to the locality, regardless of the original purpose of such funds. Furthermore, the state carry forward funds shall be reappropriated by the local governing body to the school board's budget for fiscal year 2009.


This provision does not alter the existing requirement that school divisions must spend the fiscal year 2008 required local effort and required local match amounts before the end of fiscal year 2008, which ends on June 30, 2008.


State funds received by school divisions in fiscal year 2008 for the School Construction Grants Program and Lottery may also be paid into escrow accounts pursuant to Sections 22.1-175.5 and 22.1-100.1, Code of Virginia, respectively, and carried forward indefinitely for the same intended purpose.


School divisions that received a Competitive Leadership Grant in fiscal year 2007 are allowed to retain any unspent balances and are permitted to spend any remaining balances for the intended purposes during the ensuing two fiscal years (during fiscal years 2008 and 2009). Similarly, if a division receives a Leadership Grant in fiscal year 2008, the funds can be carried forward and spent for the intended purposes during fiscal years 2009 and 2010. Please note that any remaining balances in fiscal year 2008 for Leadership Development Grants would also be subject to the carry forward provisions outlined above.


If you have any questions regarding this information, please contact Kent Dickey, assistant superintendent for finance, or budget office staff at (804) 225-2025.