A change in the percentage of local tax money for Roanoke schools would be lowered to a new number, according to a draft policy still to be approved by the City Council.

Instead of getting “up to 40 percent” of budgeted city revenue per year — based on an existing agreement — the school system would receive a “minimum of 34 percent of growth or decline of local taxes” according to the Nov. 11 draft, obtained by The Roanoke Rambler through an open records request to the school system.

An estimate of what the schools could receive would be part of the city’s budget development. Then at a fiscal year’s end, officials will decide if schools get more or less, based on revenue growth or shrinkage, according to the draft. Such a change would put more responsibility on the council and city administration to review and make decisions about the school funding.

The draft policy was developed through a task force made up of several city and school system officials. The group is meeting privately to discuss future money plans after a tenuous budget cycle, during which the council froze local school funding for the first time in years at the 2024-25 level of $106.9 million.

During a school board meeting last week, member Eli Jamison gave a task force update on the potential new policy and said that “we know that the structure will be less than 40 percent.”

Counterproposals and analysis of how funding changes will impact the school system are being discussed, and the task force plans to meet through 2025, she said.

The debate over how much money the city should provide to the schools can include numbers from those who believe it’s been too much – as well as those who feel otherwise.

An example: The city paid for an independent review of its future funding outlook. That report, done by PFM Group at a cost of up to $200,000, was presented to council during a Saturday retreat on Nov. 7. It concluded that the city is contributing a high amount of funding to the schools beyond what’s considered adequate when compared to its ability to pay, based on its tax base and socioeconomics. That held true, as well, when the city of Roanoke was compared to a selected peer group in the report that included Lynchburg, Roanoke County, Hampton, Newport News and Portsmouth.  

Roanoke faces revenue challenges in the coming years, and one area where it could move resources to pay for a list of other needs is its share to schools, according to the PFM report.

During the council retreat, City Manager Valmarie Turner said the city does not have the money to address priorities.

“We need to make incremental changes every single year,” she said.

The report prompted reaction from school supporters at a Monday council meeting. They offered their take on some of the numbers.

Several members of the Roanoke City Council of PTAs questioned the PFM report, saying, for instance, that the peer grouping was unfair because it included localities in Tidewater that get higher amounts of federal funding.

Emily Casey said the Roanoke division’s increased needs — from more English learners to students with disabilities — require more investment beyond funding that’s considered adequate.

“We want our children to excel, to have the best education and tools they can possibly have to prepare them to be ready to leave the school system and contribute to our society,” she said.

Another example of the interpretation of school budget numbers: debt on capital projects.

The city provides the schools $5 million in debt capacity annually for capital projects – and that’s often described as something in addition to the yearly funding for school operations.

It’s important for the public to understand that while the city does create that capacity — typically through bond funding — the school system is required to make the debt payments, school Chief Financial Officer Kathleen Jackson wrote in an email.

The schools pay that back to the city, as well as money tied to several other services, such as stormwater fees. The school system will pay over $17 million back to the city this year, according to its 2025-26 budget.

The Roanoke division uses a portion of the funding allocated to schools annually to pay the debt service for school-related projects, Jackson wrote. The school division has approximately $13.1 million budgeted for debt service costs in 2025-26 — $11.8 million of this is due back to the city to pay debt service on bonds sold and $1.3 million is due directly to a financial institution for a lease/purchase energy performance agreement the city authorized the schools to enter into for energy upgrades back in 2019-20, she wrote.

The task force will consider the repayment of school-related bond debt. Years ago, the schools paid half, and the city paid half. Since the 40 percent funding formula was adopted in 2011, the schools have been paying the full amount.

Another significant issue that could impact the city and the schools is what will happen with money the division doesn’t spend in any given year.

Since the funding formula was approved, the schools have used that fund to pay for projects and the division was not asked to transfer that money back to the city, which the city can require and also determine how to use that surplus. The city is now asking for the surplus to be returned. And, in turn, the school system must request that funding back.

When asked about how much money will revert to the city from the previous fiscal year’s school budget, Jackson wrote the amount is not yet finalized. But she said it will include over $8 million in capital funds.

The division is asking the City Council to reappropriate those funds to help offset the cost for buying and maintaining trailers at Patrick Henry and William Fleming High Schools in response to the immediate and growing overcrowding concerns at both schools, she wrote.

What the longer-term relationship will be between the school system and City Hall once the funding issues are determined remains to be seen.

In April, Turner and school Superintendent Verletta White exchanged accusatory letters, with Turner writing that the school district had built up $22.8 million in reserves and $26.2 million for building projects that “should have been returned to the City” for appropriation by city council. The city also questioned other unspent funds and hired a lawyer to look over the school finances. Turner wrote that the practices of school officials could be defined as “malfeasance.”

White responded, writing that the allegations amounted to "defamatory language” and “veiled threats.”

Mayor Joe Cobb and School Board Chairwoman Franny Apel said in August that there was no malfeasance, and officials considered the matter closed. The task force’s formation was then announced.

Whenever city council does vote on the much-debated funding policy, two of its members will be required to abstain because they are employed by the school system — Vice Mayor Terry McGuire and Vivian Sanchez-Jones.