eNews Action Alert – February 18, 2025
Items related to CSA funding and BPOL taxes being considered by the General Assembly could have significant impacts to local revenues.
Tuesday, February 18, 2025/Categories: eNews
Action Alert: Financial risk of fastest growing CSA-funded service could be shifted to local governments!
If a picture is worth a thousand words, it would certainly appear from the chart below that the rising cost of CSA-funded Special Education Day Placements is an issue. The question currently being considered by the House and Senate Budget Conferees is whether the risk of continued growth for these services should be shifted onto localities. Obviously, we believe the answer is “No, the financial risk should not be shifted onto localities.”
As presented by the staff at the Senate Finance and Appropriations Committee Annual Retreat last November, it is clear that Private Day Special Education Placements as part of the Children’s Services Act (CSA) program is driving much of the growth in the program, whose cost is shared with state and local governments.
The cost of these mandatory services provided to children with intensive special education needs has more than doubled from $111 million in FY 2014 to $240 million in FY 2024. It’s not a new issue; state and local officials alike have wrestled with strategies to arrest the rising cost of these services for many years. We’ve shared the costs, and we should share the solution.
What’s not clear is how shifting the state’s share of the cost of these services to cities and counties – if rates increase by more than 2.5% annually – is going to fix the problem. However, that’s what the Governor proposed, and what the Senate endorsed in its proposed amendments to the current budget.
The House, on the other hand, removed the state funding cap language (Item 268#1), ensuring that future costs will continue to be shared by the Commonwealth and local governments. We must work together to stem the rising cost of these services without jeopardizing access to children with special educational needs.
Action Requested:
VML supports the House action on this issue and urges you to talk to the budget conferees (listed below) as soon as possible. A budget deal will likely be reached within the next 24-48 hours, so local voices must be heard now. Thank you!
Budget Conferees on HB 1600 (State Budget)
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House Budget Conferees
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Senate Budget Conferees
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Luke E. Torian (D - Prince William)
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L. Louise Lucas (D – District 18)
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Mark D. Sickles (D - Arlington)
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R. Creigh Deeds (D – District 11)
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David L. Bulova (D - Fairfax)
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Mamie E. Locke (D – District 23)
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Betsy B. Carr (D - Richmond)
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Ryan T. McDougle (R – District 26)
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Terry L. Austin (R - Botetourt)
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Todd E. Pillion (R – District 6)
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Robert S. Bloxom, Jr. (R - Accomack)
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Talking Points:
- The CSA program, begun in the early 1990s, is a shared state and local responsibility. Cities and counties administer the program on the state’s behalf.
- Individualized education plans (IEPs) that govern special education services, including private day services, must be adhered to in accordance with federal laws.
- Local CSA teams do not create and cannot change an IEP; if a child’s IEP calls for special education private day services, it must happen.
- Capping the state’s commitment to CSA would constitute a major departure from the foundation of this program by shifting part of the state’s funding responsibility onto local governments (estimated at $9.89 million in FY2026).
- This cap on state reimbursement would potentially affect every city and county in the Commonwealth.
VML Contacts: Joe Flores, jflores@vml.org; Janet Areson, jareson@vml.org
Action Alert: Bill that would affect local BPOL revenues likely headed to Conference
HB1743 (Watts), which proposes changes that will affect local BPOL revenues, is likely headed to a conference committee.
As a reminder, HB1743 proposed to expand BPOL licensing tax deductions for businesses operating in other states. Because the bill was likely to decrease BPOL tax revenues and add administrative complexities to local tax operations, the Senate narrowed the original House version of the bill by requiring the creation of a work group to examine the issue before proceeding. It’s a strategy typically used when there is uncertainty about the impact of a bill’s provisions.
The Senate version of the bill requires the Department of Taxation to convene a work group that includes VML, the Virginia Association of Counties (VACo), and the Commissioners of Revenue as well as the Chamber of Commerce and other key business representatives to review:
- The current policy and methodology of out of state deductions.
- Any concerns regarding the existing laws governing these deductions.
- The potential impact of proposed changes, including potential revenue impacts to localities, potential administrative complexities, and potential complexities to taxpayers.
- Any impact to such deductions from other existing provisions of law.
Action requested:
Because of the potential negative impact on local BPOL revenues, we urge local governments to contact members of the House Finance and Senate Finance and Appropriations Committees (below) to support the Senate’s approach to assess the impact of the proposed bill before proceeding.
Senate Finance and Appropriations Committee
House Finance Committee
VML Contact: Joe Flores, jflores@vml.org.