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The Lowdown on Your School Dollars
FY 2012-2013
Local Composite Index
Updated 3/7/12

The Commonwealth Has Determined That the City of Virginia Beach Can Afford to Pay More for Its Public Schools Than What It is Providing Now

The Commonwealth of Virginia uses a complex formula called the Local Composite Index (LCI) to determine a locality’s ability to pay for its public education services. When a city’s LCI goes up, the state reduces its share of the funding for that city’s K-12 education services. In short, the state expects more affluent city governments to step in and pay more towards the support of their schools. Since year 2006-07, the state has decreased its support of K-12 education in Virginia Beach, because it maintains that our city can afford to pick up a larger share of those costs. However, the city has not increased its support of schools in response to its higher LCI. In fact, according to the analysis of VBCPS Chief Financial Officer Farrell Hanzaker, the school system would have received the equivalent of an additional $28 million annually since FY 2006-07 if the City of Virginia Beach had lived up to its LCI obligations.

Let’s use an analogy to make this complex issue a little simpler. Think of the Commonwealth of Virginia as a grandparent, its cities and counties as the parents and the state’s school systems as the grandchildren. The grandparent (the state) has considerable resources that she wants to share with her children (the cities and counties) so they, in turn, can pay towards the educational needs of the grandchildren (the school systems). The grandparent divides up her resources among her children based on their financial conditions. In other words, her children who are financially strapped get a larger percentage and her children who are more affluent get a lesser percentage. The grandparent’s expectation is that her more affluent children will step forward and allocate more of their own household budgets toward educating the grandchildren. But when that money is disbursed, some of the children (cities and counties) can’t make peace with the fact that they have been deemed more able to dip into their household budgets for the sake of their own children (the school systems). They decide not to do so. What happens? Those grandchildren – or in this analogy, the school systems – get shortchanged. That is, in essence, what has happened in Virginia Beach.

The City of Virginia Beach’s website has pointed out – and rightly so – that the city has provided more per pupil funding at $4,891 than any other south Hampton Roads city. What the City of Virginia Beach doesn’t point out is the fact that it should have the highest level of per pupil funding, because the state has assigned it the highest LCI of the five cities. The question residents should be asking is this: Is Virginia Beach living up to its LCI? In a word, the answer is “no”. To help residents understand the total picture as it relates to education funding, a table from the state superintendent’s annual report (the latest data available, FY 2009-2010) details the per pupil expenditures for Virginia’s 132 school systems in all three categories of revenue – local, state and federal. The total per pupil expenditure figure, found in the far right-hand column, is ranked from highest to lowest. Interesting note: When taking into account all three revenue sources, Norfolk ranks first in Hampton Roads for per pupil expenditures ($11,324).

In Summary:

The Local Composite Index (LCI) Measures Cities’ ‘Ability to Pay’ For Education

  • Point 1: Virginia Beach has the highest LCI in South Hampton Roads.
  • Point 2: That means the state has judged Virginia Beach as having more ability to pay for its public schools than any other south Hampton Roads city.
  • Point 3: When a city's LCI goes up, its state funding goes down. That happens because the state expects a city with a higher LCI to pay more towards the operating costs of its public schools. Notice the relationship between State Funding Per Pupil and the LCI for each of the five south Hampton Roads cities in the chart below.

The Higher the LCI, the Lower the State Funding; the More Local Funding Required*

School System


State Funding
Per Pupil

(In South Hampton Roads)

Local Funding
Per Pupil

(In South Hampton Roads)



$ 5,211


$ 4,464




$ 5,901


$ 3,352




$ 6,201


$ 2,030




$ 5,281


$ 3,482


Virginia Beach


$ 4,659


$ 4,891


*This information was compiled from Table 15 of the Superintendent’s Annual Report for School Year 2009-10, the latest comparative data available statewide.

Last Modified on Monday, January 30, 2017