A BILL to amend the Code of Virginia by adding a section numbered 22.1-98.3, relating to public school funding; composite index of local ability-to-pay; calculation; exclusion of certain exempt property.
HB1167 would change how Virginia calculates the composite index of local ability-to-pay, which is the formula used to determine how much each school division is expected to contribute toward public education funding. Beginning July 1, 2026, the bill directs the Department to exclude the value of certain exempt real property from the local wealth calculation before the statewide local/state funding shares are adjusted to 45 percent local and 55 percent state.
The bill defines this excluded property as real property that was exempt from taxation in the most recent tax year under two specific Code sections, which appear to cover certain categories of tax-exempt property. By removing that value from the local ability-to-pay calculation, the bill would likely lower the measured fiscal capacity of school divisions with substantial exempt property holdings, potentially increasing their eligibility for state education aid and reducing the local share expected under the formula.
HB1167 would amend Title 22.1 of the Code of Virginia by adding a new section governing the composite index calculation for school funding. The practical effect would be to alter the data inputs used by the Department of Education when determining each school division’s relative local wealth, specifically excluding certain tax-exempt real property from the real property component of the formula. This could shift state and local funding obligations among school divisions and affect how public education dollars are distributed statewide.
The available record shows no committee debate or recorded votes, and the bill was left in the House Committee on Appropriations. Based on the bill’s subject matter, it appears to be a technical school-funding adjustment rather than a broad policy overhaul. The lack of recorded opposition or support in the provided materials means the overall sentiment cannot be measured directly, but its referral and remaining in committee suggest it did not advance during the available legislative stage.
The main point of contention would likely be whether exempt property should count toward a school division’s apparent ability to pay. Supporters would likely argue that excluding tax-exempt property produces a fairer measure of local fiscal capacity, especially in divisions with large amounts of exempt land or facilities. Opponents could argue that the change would reduce the local wealth measure in a way that increases state aid obligations and shifts funding burdens, potentially benefiting some divisions at the expense of others. Because there were no transcripts or votes provided, these concerns are inferred from the bill’s mechanics rather than from stated positions.