City-county school funding saga continues

City school board member Ned Michie claims that county officials were willing to accept the funding formula situation, even if it meant a potential loss in school funds for perpetuity. (Photo by Nick Strocchia) City school board member Ned Michie claims that county officials were willing to accept the funding formula situation, even if it meant a potential loss in school funds for perpetuity. (Photo by Nick Strocchia)

The spirit of compromise has died, and both sides appear ready to dig in for another battle.

After spending two years seeking a middle ground with Charlottesville officials, Albemarle County’s elected leaders have dropped the olive branch. The county board recently asked Delegate Rob Bell, whose 58th district includes part of Albemarle, to introduce legislation during this year’s General Assembly session that would adjust Virginia’s school funding formula to add about $2.5 million to Albemarle’s school coffers and subtract the same from Charlottesville’s school funds.

The silver lining to the 2010 showdown was that it galvanized a conversation between city and county leaders that centered on how the two locales could share costs amid a challenging budgetary climate and avoid another round of infighting. Those talks have stalled, and Albemarle leaders say that the window for compromise has shut.Bell introduced the same budget amendment in 2010, but it failed after city officials sent a lobbyist to Richmond to thwart the bill and a majority of state Senators refused to support it.

“[The talks] went absolutely nowhere,” said county Supervisor Dennis Rooker, who did not support Bell’s amendment in 2010 but is backing it this year. “I think we’re back to where we were two years ago.”

The city-county tension, and the impetus for Bell’s bill, is rooted in both pressing budgetary needs and a 30-year deal between locales. State funds for education have shrunk in recent years, straining school budgets and prompting districts to search for new revenue streams. In addition, city and county officials have come to interpret their 1982 revenue-sharing agreement differently, and that fundamental difference won’t be easily resolved.

2010 vs. 2012

Rooker isn’t the only official in Albemarle to have a different view of Bell’s amendment in 2012. In fact, the county’s elected leaders are unanimous in their support of the bill this time around, signaling a solidarity that didn’t exist two years ago. In 2010, county supervisors voted 4-2 to support Bell’s bill, and the school board favored it by a 4-3 margin.

Rooker opted not to back Bell’s bill in 2010 because he wanted to engage the city in talks to see if the issue could be resolved locally, without General Assembly intervention.

“I thought we should try a less polarizing way, and we did,” Rooker said. “A few years have gone by, and we held off [introducing the amendment] last year to try to achieve a solution that was mutually palatable, but that has not emerged.”

Delegate David Toscano, who represents residents in both Charlottesville and parts of Albemarle, refereed a meeting in April 2010 between city and county leaders in an attempt to find the common ground that Rooker and others were seeking.

At that meeting, several committees were asked to brainstorm how some of the $18 million that the county gives the city each year in accordance with their revenue sharing agreement could be devoted to joint projects. The committees met intermittently, and the responsibility of finding ways to share funds was eventually passed on to both school boards. These talks trailed off without much progress.

After both boards initially agreed to share the cost of virtual class offerings, the county lost interest in the idea, and in any sort of collaboration, according to Ned Michie, chairman of the Charlottesville School Board.

“I don’t know why,” Michie said. “We were holding up on our end, and they lost interest.”

Rooker tells a different version.

“The word I kept getting back was that the city school board told the county: ‘We can’t agree to anything because the City Council won’t allocate the funds for it,’” he said.

However the impasse played out, the altered political winds in Virginia have given county officials reason to think they’ll get their way with Bell’s amendment in 2012. As a result of November’s elections, the General Assembly now seats decidedly more Republicans, which seemingly helps Bell, a Republican.

“I’m hesitant to make predictions,” Bell said, “but I’m guardedly optimistic.”

Rooker shared Bell’s optimism.

“Rob will probably have more influence on the legislation,” Rooker said.

For his part, Michie felt that the amendment transcends party politics. Its fate will be determined not by a favorable political position in the General Assembly, he said, but rather by common sense.

“I think that logic will hopefully rule the day,” he said, “and [state legislators] will understand that this is terrible state policy, even if it isn’t going back on a bargain, which it is.”

Fundamental differences = permanent impasse?

Michie feels strongly that the claim inherent in Bell’s bill breaches the terms of the revenue-sharing agreement, so much so that he recently wrote a 49-page memo that lays out the city’s case.

Albemarle/Charlottesville Revenue Sharing – LCI Memo

Michie’s inspiration in writing the opus was to add historical context.

“I don’t think anyone on any of the county boards was around in 1982,” Michie said. “So to them, [Bell’s bill] looks like easy money in tough economic times.”

To Michie, it looks like county officials are defying a bargain they made 30 years ago and seeking special treatment by revising a statewide funding formula in order to benefit their coffers.

Michie is absolutely certain that county officials in 1982 accepted the fact that the revenue sharing agreement would last forever and knew how the agreement would forever impact the state’s school funding formula–two crucial claims, since county officials are claiming ignorance.

To understand why county officials agreed in 1982 to set no time limit on their deal with the city, one needs to slip into the shoes of those negotiating at the time, Michie says. Virginia’s constitution stipulates that all municipalities in the state categorized as cities are “independent cities” and are, therefore, not politically part of a county, even if they might be entirely surrounded by one, as is the case with Charlottesville and Albemarle. Furthermore, the constitution protects these landlocked independent cities by allowing them to add land through court decisions. Otherwise, the argument goes, the cities might be overly burdened with the financial stress of providing services to a growing population, without the option to add land for business and commerce that could generate needed streams of revenue.

In the 1960s, Charlottesville successfully annexed county land on two occasions, most notably in 1964, when it almost doubled in size and added what is today the Greenbrier neighborhood, the Barracks Road shopping area and Johnson Village. After a 10-year suspension of annexations imposed by the General Assembly in the ‘70s, Charlottesville sought to annex more land once the moratorium was lifted in July 1980. Wishing to avoid the prospect of losing any more land to the city, county officials signed the revenue sharing agreement in 1982. In doing so, Charlottesville officials promised not to annex county land. In return, Albemarle agreed to transfer to Charlottesville 10 cents for every dollar of real estate property tax that it collects each year. Currently, that transfer amounts to about $18 million annually, though the figure fluctuates.

This is where the current tensions with school funding begin: Virginia’s school funding formula determines how much is doled out annually to each school division based on the wealth of a locality. As it stands now, the formula counts the revenue sharing agreement’s transfer of money towards Albemarle’s wealth, even though the money goes into Charlottesville’s coffers.

Bell’s bill is asking the state to credit the agreement’s transfer as city money. It assumes that county officials in 1982 did not know that the transfer would count toward the county’s wealth in the school formula.

Michie is dubious that county officials in 1982 were that ignorant. He claims that county officials were willing to accept the funding formula situation, even if it meant a potential loss in school funds for perpetuity. After all, Michie said, the alternative—to watch the city annex more county land—would have been more financially damaging.

“I think a fundamental flaw in the county’s argument is their presumption that there is a transfer of wealth from the county to the city every year,” Michie said. “It’s just not accurate. It’s an exchange of wealth. They give us money, and for another year, they get to keep the land that the city would have annexed in 1980 and the income that comes from that land.”

For his part, Rooker asserts that Michie is making a leap of faith by implying that county officials in 1982 knew how the agreement would affect school funding and were willing to accept that the agreement would last forever.

“His argument is that everybody knew about it at the time,” Rooker said. “And because it wasn’t dealt with, the parties are obligated to stay in that position forever. I don’t know that the contract implies that.”

Rooker suggested that Michie’s memo might be cherry-picking quotes and facts that favor his point of view.

What’s next?

Should Bell’s bill pass, the school funding that the city would permanently lose—currently $2.5 million, according to the formula—would be a “crippling blow,” Michie said.

As such, the city will look to hire a lobbyist – like it did in 2010 – to educate state legislators about what city officials see as “terrible state policy” and to convince them of the county’s self-interested motives, Michie said. Other counties in the state have similar revenue sharing agreements with independent cities, he contends. Why should Albemarle receive special treatment?

As for Toscano, the unofficial legislative referee for the county and city feels that the bill has a greater chance of passing this year, and he laments the waning desire for compromise.

“Unfortunately, I think some leaders in both jurisdictions see this as a zero-sum game. City leaders think: ‘We don’t have to do it because there’s no chance [the revenue sharing agreement] will ever be changed.’ And county leaders say, ‘Why should we compromise? We’ll eventually get our way.’ That is not the way this community should operate.”

The General Assembly began its 2012 session January 11, and Bell has every intention of introducing the amendment soon, “absent some last-minute agreement.” Stay tuned.

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