Roanoke Council Eyes Moving School Finance System Back Under City Hall Oversight

For years the Roanoke City Public Schools operated with significant financial autonomy.

It had a funding formula, approved by the City Council and the School Board, which gave 40 percent of local tax money to the schools each year. And, in another key part of the equation, it used its own in-house accounting system instead of the city’s. The city uses Oracle. The school uses Keystone, investing its own money and facing little questioning by the council or the city administration.

Now, council members are considering whether to merge those two systems in a bid for more oversight over school spending. 

With a new council majority — all of whom took office this year — as well as a tight budget year, council’s laissez-faire approach toward the school system’s money is now a proactive scrutiny. To put it simply, the council is looking toward the school budget to find more money for other city needs. The city administration has told council this year that there’s a substantial backlog of facilities needing repair — $4.3 million for elevators alone — and that it has spent much more money than it budgeted on various costs, such as overtime.

The council, in approving a 2025-26 budget of over $400 million, voted to give the same amount of local money to the schools as it allocated at this time last year, about $106 million. In doing so, the council revised the school funding formula for the sixth time since it was adopted in 2011.

As they’ve delved further into the city’s fiscal problems in recent weeks, council members have said that they understand the significance of strong schools and what that means to the city overall.

However, council members are also looking at state data that shows that, per pupil, the city is spending far beyond its ability to pay, a state measurement based on a locality’s property values, income and retail sales.

Vice Mayor Terry McGuire, a city substitute teacher, said he believes city and school officials will find a way to cooperate on the current issues.

But McGuire said it is a valid question to ask if the school system is spending more money than it needs. And it’s important to remember, he said, that the money doesn’t belong to the school board or city council.

“These are taxpayer dollars we are talking about,” McGuire said.

The council this month quietly added a substantial tweak to the school funding formula. The council had made a significant change to the formula last year: the school system would get 40 percent of budgeted city revenue — not the actual. In approving the city budget last week, the council changed the formula again, adding two important words. The school system will get “up to” 40 percent of budgeted revenue.

And the council may not stop there. 

During a council retreat on Friday, Councilman Peter Volosin raised the idea of merging the city’s and school system’s finance platforms after a group meeting to discuss priorities. Part of the retreat was for members to give city administration guidance on strategy and goals.

City Manager Valmarie Turner, on the job for less than six months, said Friday such a move could create more transparency. Effectively, with a merger, city officials could review on a more frequent basis — potentially daily — what is happening with the school system’s money.

When asked if the move could also save money, Turner said more study will be needed.

McGuire in a later interview, said there could be advantages to the change.

It was unclear this week when the school system started using its own finance system. However, years ago, the school system and city used the same one.

School spokeswoman Claire Mitzel said this week that the division had no comment on the potential merger of the systems because it had not been aware that was a possibility. Also, Mitzel said school officials were unaware of the “up to” change in the funding formula until documents were posted on the city web page prior to the May 12 city budget approval meeting.

Mitzel said the school division strives to always be transparent.

This year’s budget situation took an explosive turn late last month when The Rambler published letters between Turner and school Superintendent Verletta White.

Turner, in her letter, questioned the school system’s actions, including raising the possibility of legal violations with its finances. In her response, White vehemently denied the accusations and wrote they amounted to “defamatory language” and “veiled threats.”

Since then, there has been a closed-door meeting involving Turner, White, Mayor Joe Cobb and a few others.

Not much has been said publicly about that meeting. Cobb said it was a good discussion. The school system released a statement that those at the meeting collaborated on “next steps moving forward and will continue to meet in the weeks ahead to ensure there is clarity of expectations and any new procedures that may be necessary.”

In her letter to Turner, White also referenced the city treasurer’s office and its ability to check school finances.

Treasurer Tasha Burkett in an email Tuesday wrote that her office does not have access to the school's financial system, so it cannot check anything there. However, the treasurer’s office does have access to the school system’s banking transactions and is involved on a regular basis in reviewing and approving them.

Burkett said she sees some benefits in merging the systems, but she said she does not see that happening quickly.

The school board is scheduled to approve its budget next month.

At the end of Friday’s council retreat, Turner thanked the council for its work and she expressed her determination to concentrate on a “year-round” budgeting process that will be driven by council’s priorities.

“It has been one for the books,” she said of this year’s discussions.