State Budget Takes Small Steps Forward for Students, Funding Formula Overhaul Still Ahead

Every child in Virginia deserves access to high-quality, well-resourced public schools where they can learn and thrive, no matter who they are or where they were born. Making progress toward that goal has been a central focus of advocates and legislators in recent years, helping schools recover from the educational damage caused by severe underfunding in the 2010s and pandemic-related learning interruptions. And that work has paid off. The state is finally investing more per student than it did before the most severe underfunding. Yet maintaining the prior status quo isn’t good enough to provide a high-quality education in many lower-income communities where students face barriers to learning that require extra educational and student support services. This year, the General Assembly’s compromise budget makes modest progress toward improving educational opportunities, particularly for students with disabilities. Still, the biggest questions will be decided by the Joint Subcommittee to Study Elementary and Secondary Funding as it considers an overhaul of the state’s main school funding formula.

State support for public schools is decided through the state budget process. During even-numbered years like 2026, Virginia’s state policymakers write and approve a new budget for the upcoming two years, which is then amended in odd-numbered years. This year, policymakers crafted a budget for the fiscal (and school) years that began July 1, 2026, and July 1, 2027. For more information on Virginia’s state budget process, see TCI’s “policy basics” budget explainer.

For the budget discussion this year, the Fund Our Schools (FOS) Coalition, of which TCI is a part, primarily focused its advocacy on boosting the additional funding (known as add-ons) for students with disabilities, English language learners, and students from low-income families. This focus was driven by what we heard in community listening sessions across Virginia and the strong research showing that improved funding can have an outsized impact on boosting outcomes for students who are facing greater barriers to learning. FOS advocated for sufficient funding to support robust public engagement by the Joint Subcommittee as part of its study of the potential school funding formula overhaul. The coalition also pushed for resources to help schools more holistically meet the needs of students, including through community schools models, improved restorative justice practices, and better addressing student mental and physical health needs.

The compromise budget for the upcoming two years made some progress on these priorities, in part by raising additional revenue through tax policy choices. Lawmakers chose not to mimic all of the new federal tax loopholes created by last year’s federal H.R. 1 bill in our state tax code and gained some one-time revenue by creating a temporary tax on data centers’ electricity use. These investments include:

• More than doubling the state’s flexible add-on funding for students with disabilities (+$148 million). FOS successfully advocated for legislators to create this flexible add-on last year to begin to address the severe underfunding of services for Virginia students with disabilities and provide local school divisions greater flexibility than the existing staffing ratios allow. 
• Slightly boosting funding for students living in the highest-poverty communities through increasing the At-Risk Add-On (+$29 million).
• Investing in development and implementation planning grants for community schools (+$5 million), a model that has been shown to boost student outcomes through holistically addressing student and family needs.
• Supporting implementation of evidence-based restorative practices to resolve student conflicts through state guidance and evaluation.
• Addressing teacher and staff turnover and vacancies through funding the state share of 4% salary increases each year (+$770 million). If a school division’s local school board provides a  raise smaller than 4% due to a lack of local funding or other priorities, the state match will be prorated.
• Supporting the Joint Subcommittee on Elementary and Secondary Education Funding’s work through funding for a contractor to assist with developing a new school funding formula ($1.25 million).
• Allowing every local government to ask their voters whether to adopt an additional 1% local sales tax for school construction and modernization. In Northern Virginia (cities and counties in Planning District 8), local elected officials can instead propose to use the funding for transportation or some combination of schools and transportation.

While students will benefit from the additional resources in the new state budget, Virginia still invests billions of dollars less than what would be required to cover the state’s share of providing a high-quality education for every student. As policymakers consider overhauling Virginia’s school funding formula, increasing the adequacy and equity of school funding is critical. The new formula should not only be simpler and more transparent, but also provide the additional dollars that will allow concrete improvements in the classroom – everything from better-paid teachers and modern curriculum to better facilities and more wrap-around services – that will help more students learn and thrive. Doing so can be paid for by making Virginia’s tax code more adequate while protecting low- and moderate-income families, including through a new “fair share” tax on taxable income over a million dollars a year and closing unfair tax loopholes. Virginia’s children, families, and future deserve the best, and we have the chance to make real progress toward that goal.

Category:
Education