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March 10, 2017 - Volume 37 Issue 6

By Howard O’Cull

Although the West Virginia Legislature has no Senate/House joint rules requiring bills to be reported from committees by the 47th day of the session – which is March 26 this year – it still is an important day. Senate Assistant Clerk Lee Cassis said for bills to pass the house of origin by the 50th day, they have to be reported out of committee by the 47th day to avoid a rule suspension and an extraordinary vote – which requires more than a simple majority of members of the House of Delegates or Senate voting.

“That's where the 47th day comes in, but it is not specifically mentioned in the rules,” he said. Cassis is referring to Senate/House Joint Rule 5, which was adopted by the legislature in 1987. Then-Sen. Mike Oliverio, D-Monongalia, was one of the legislators championing rules changes to “manage” the “flow” of legislation. 

Senate/House Joint Rule 5 required the filing of governor's bills with the House and Senate clerks by the 10th day of the regular session. It also established the cutoff date to consider bills on third reading (passage stage) in their house of origin as the 50th day, which is March 29 this year.  This Rule does not apply to budget or supplementary appropriation bills (Joint Rule 5, paragraph b).

This means the bulk of committee work will occur between now and March 26. While that is no surprise – given the date – the rule effectively means legislation having double committee references needs to clear the committee of first reference within the next several days.

Application of the rule also means, for all practical purposes, the legislature has developed a mechanism emphasizing the importance of early introduction of bills – hence introduction of the governor’s bills by the 10th legislative day and agencies’ rules bills by the 20th day – February 28 this year.

I mention all this because the legislature’s “heavy-lifting” will occur within the next 16 days in terms of committee work. Indeed, the rule works to discipline the two houses so that legislation from the house of origin is not intermingled with that from the other body as was the case until the mid-1980s. (A number of years ago, in fact, there was not cutoff date for bill introductions in either chamber.)

As an example a House Education subcommittee, meeting last Friday and this morning, has finished work on at least one aspect of the legislative proposals contained in the governor’s education reform legislation. The subcommittee has determined to make a number of recommendations for full committee consideration regarding standards, curricula and testing. The subcommittee work and most of the bills considered by the full education committees thus far are less-sweeping or have second references.

One also can consider various committee legislative proposals in terms of legislation to be readied for consideration by “cross-over day,” the 50th Day of the session when legislation must clear its house of origin in order to be considered by the other house. (There are exceptions, mainly fiscal bills such as the budget bill and appropriations legislation.) 

When all is said and done, the 47th day of the session becomes the critical date for considering legislation.

For more information, please refer to the 2017 Legislative Calendar as provided by the West Virginia Legislature.

 

By Jim Wallace

As the West Virginia Legislature passes the halfway point in its 60-day regular session, Senate leaders are saying they could soon have their version of the state budget for the next fiscal year to counter the budget proposed by Gov. Jim Justice – and it will include cuts to public education.

“We’re close to an agreement,” Senate Finance Chairman Mike Hall, R-Putnam, told his colleagues in the Senate on Wednesday. “Any day that we finally agree on the numbers, one day later, we can have a budget bill on your desk.”

On Thursday, Senate President Mitch Carmichael, R-Jackson, said on the MetroNews Radio Network’s Talkline program that the Senate is working on the budget in an expedited manner “in a world-class, speed-oriented approach.” He said that budget work is being done more quickly than in any previous legislature. On the same day, Justice criticized the legislature for not coming out yet with budget proposals. He did so next to a clock outside his office that is counting down the days, hours and minutes until the end of the legislative session.

“We cannot avoid cutting those programs. We want to be an efficient and as compassionate as we can in the manner in which we cut those.” – Senate President Mitch Carmichael

Carmichael said the Senate budget bill will include cuts to public education, higher education and programs in the Department of Health and Human Resources. “We cannot avoid cutting those programs,” he said. “We want to be an efficient and as compassionate as we can in the manner in which we cut those.”

Consequently, Carmichael said, the Senate will couple cuts with flexibility to allow programs to use money much more efficiently. “Public ed., you’re talking less than 5 percent [cuts],” he said.

“I would love to do a teacher pay raise,” Carmichael said. “Our teachers do not make enough money. All of our state employees are underpaid, but we have to recognize that at this point in our history…we’re the poorest people in America. This state of West Virginia has the lowest per capita income of any place in America, and it is inappropriate for anyone to come in and shake $500 million out of the poorest people in America, so that you can prop up government expenditures. And these require difficult decisions.”

However, he said, the Senate would protect with “vigilance” funding for the Teacher Retirement System. He said, “We want to definitely protect that.” Carmichael doesn’t want to refinance the pension bonds, as some legislators and others have suggested, but the Senate might approve a plan to “smooth out” payments so that they could be spread out over more years.

Hall said that, although the West Virginia Constitution requires the governor to introduce a budget bill, he doesn’t have to present a balanced budget. “We’ve been given a $4.055 billion revenue estimate,” Hall said. “Actually, the average spending of this state has been above $4.2 billion the last three years. So we’ve been given a revenue estimate that’s underneath the actual spending by $200 million – somewhere in that range. And we’ve been given a budget of $4.5 billion.”

“The budget’s not balanced. If you’re spending more money than you say you’ve got, how’s that balanced? It’s 500 million out of balance.” – Sen. Mike Hall

Therefore, he said, “The budget’s not balanced. If you’re spending more money than you say you’ve got, how’s that balanced? It’s 500 million out of balance.”

Hall noted that the governor has given legislators two lists of proposed tax increases to help close a budget shortfall of about $500 million. In his State of the State address on February 8, Justice proposed about $450 million in tax and fee increases, but he came out last week with a new proposal. That new plan cuts back on some of his initial proposals but adds others, such as a tax of one cent per ounce on sugary soft drinks and an increase in the tobacco tax by 50 cents per pack of cigarettes.

The Senate also has been considering overhauling West Virginia’s tax system, which Hall says has affected legislators’ budget planning. “We haven’t coalesced around it,” Hall said, adding that he would like to know what the Senate wants to do to fill the revenue gap. Nevertheless, he said, the budget process is moving at a good pace.

“We’re farther ahead than we’ve ever been,” Hall said. Once the remaining issues are settled, the budget bill could be read within 48 hours, he said. Earlier in the session, he had said the budget would be ready close to the 30th day of the session, and he said Wednesday that is, in fact, the case. But he noted that the legislature doesn’t have to pass the budget bill by the end of the regular session.

“The Constitution says the governor can extend the session when, in his or her judgment, it would take [that] to complete the budget,” Hall said. “And I contend that we shouldn’t leave town until it’s done. And I think we violated the Constitution last year.”

Last year, the legislature did not reach agreement on the budget with then-Gov. Earl Ray Tomblin until mid-June, just a couple of weeks before the current fiscal year started.

 

By Jim Wallace

Republican legislative leaders intend to go forward with extensive tax reform even though the Department of Revenue has warned that it could lead to annual budget shortfalls of about $1 billion within a few years. The chairman of the Senate Select Committee on Tax Reform, Robert Karnes, R-Upshur, contends that the tax reform bill could be retooled by the end of this week to address the problems in it. He said his committee will hold a Saturday afternoon meeting. Senate President Mitch Carmichael, R-Jackson, also wants to go forward with the bill.

Senate Bill 335 is aimed at eliminating West Virginia’s income tax and replacing it with an 8 percent sales tax that would be broader based than the current 6 percent sales tax. The budget submitted by Gov. Jim Justice in the form of Senate Bill 199 and House Bill 2018 also calls for broadening of the sales tax, so it is quite likely that the final budget for fiscal year 2018 could eliminate some current exemptions to the sales tax.

Karnes and other senators remain optimistic about their tax reform bill even though the fiscal note they received this week from the Department of Revenue indicated severe problems with it.

“The proposed bill represents the most massive tax reform effort of any State in recent memory,” the fiscal note state. “Most states commit significant resources toward adequate measurement of tax reform impact on businesses and residents prior to adoption of a significant change.”

The author of that fiscal note, Mark Muchow, deputy secretary of revenue, told the committee that the bill would create a short-term windfall for the state but long-term losses in revenue. The windfall would occur because the sales tax increases would begin this coming July, but changes in income tax would not begin until six months later. Thus, Muchow said, the state would get an extra $550 million in sales tax revenue for fiscal year 2018, but then it would lose increasingly more revenue in the next few years: $370 million in fiscal year 2019, $440 million in fiscal year 2020 and $610 million in fiscal year 2021.

“Of course, that $600 million would be on top of the $300 [million] to $400 million shortfall we have this year, so it’d be about a billion dollars short,” he said.

The bill also includes triggers that would set off a reduction in the severance tax rate and a phase-out of the corporate next income tax rate, but Muchow said the revenue targets for those triggers would not be met. Therefore the corporate net tax and the severance tax would remain unchanged, he said.

Senate leaders are interested in removing the state income tax because they contend that other states that have no income taxes – including Tennessee, Texas and Florida – tend to see stronger economic growth. But Muchow said they also tend to rank low in education funding.

“In terms of education funding, those states without the income tax tend to be near the bottom 10 in terms of funding of education. I’m talking both K through 12 and higher education.” – Mark Muchow

“In terms of education funding, those states without the income tax tend to be near the bottom 10 in terms of funding of education,” he said. “I’m talking both K through 12 and higher education.”

Muchow said Senate Bill 335 represents a major change in tax policy. “We would have the highest state sales tax rate in the country after this bill is implemented,” he said. “Right now, the highest sales tax rate at the state level in the country is 7.25 percent in California. This bill would move the tax rate to 8 percent.”

 

Further, he said, “The bill shifts a significant amount of liability from individual households to business inputs, and West Virginia already has much higher than average taxation on business and must lower than average direct taxation on individuals. That particular change may have some impact on the economy. It would counter-weigh and maybe even exceed the positive impact from the eventual repeal of the personal income tax.”

Muchow encouraged senators not to rely solely on the fiscal note his department prepared on short notice. He said independent analysis in needed on the dynamics of the bill, as well as all the changes that would affect households and businesses. “That type of analysis cannot be completed in short order,” he said. “That would take significant amount of time and study to effectuate.”

Despite Muchow’s warnings, Sen. Ed Gaunch, R-Kanawha, said, “I was encouraged when I saw your fiscal note.” He said he was afraid of getting a “pie in the sky” review, but Muchow seems to have presented a realistic scenario. However, he asked whether putting another couple of billions of dollars into the economy by doing away with the income tax would have more positive effects through increased spending by consumers. Muchow did not offer much encouragement.

“It’s a question of whether it would be spent in West Virginia or spent outside West Virginia because I expect significant leakages, particularly in border communities, associated with the consumption tax increase,” he said. “Plus, keep in mind on the personal income tax, the West Virginia resident income tax, only about 7 percent of the income comes from business profits…. More than double that comes from retirement income. We are a retiree state.”

Muchow said retirees with incomes greater than $50,000 would make out great. But people with lower incomes – especially below $35,000 – would pay more in taxes because their sales tax payments would exceed their income tax savings.

“It’ll have positive impact but not enough to offset the tax decrease numbers,” Muchow said. “Plus, there’s leakages on the consumption tax side.”

Large companies might have their accounting and legal services done out of state, he said, but small companies would be stuck. Muchow offered the example of a certified public accountant in Parkersburg who would be faced with charging 9 percent state and local consumption taxes in addition to paying a local business-and-occupation tax of 1 percent and other business-related taxes. That CPA might find his or her customers going to Marietta, Ohio, for services at lower cost, he said, and then that CPA might want to move to Marietta.

Again, Muchow urged the committee to get dynamic modeling for the tax reform proposal. He said the Department of Revenue lacks resources to do that because it has only a couple of staff members who could work on it.

In addition, Muchow said, even though the income tax would go away in West Virginia, some residents might still have to pay income tax if they work in bordering states. Right now, people who work in a state other than where they live generally pay income taxes only in their home state, he said, but that protection would go away if their home state did not have an income tax.

“I would suspect that those border states are going to pick up some of that income tax from those employees.” – Mark Muchow

“I would suspect that those border states are going to pick up some of that income tax from those employees,” Muchow said.

In addition to increasing West Virginia’s sales tax from 6 percent to 8 percent, Senate Bill 335 also would increase the tax on buying or leasing automobiles from its current level of 5 percent. Muchow did not estimate the effects of that in his fiscal note. He said all that money goes into the State Road Fund, so the Division of Motor Vehicles would have to provide an estimate of the effects. However, he explained that the DMV would get additional revenues because of raising the tax from 5 percent to 8 percent on the first $10,000 and 6 percent above that.

Muchow noted that West Virginia already has a problem with residents who live near the Ohio River and register their vehicles in Ohio, where it is cheaper. “Per capita car registrations in border counties along the Ohio River are much less than anywhere else in West Virginia,” he said.

Sen. Bob Plymale, D-Wayne, said that is a big problem in the Huntington area, where he lives, because Ohio requires only a post office box for an address for car registration. He also knows many people in his area who live in West Virginia but work in Ohio or Kentucky, so he is concerned they might have to pay income tax in those states if West Virginia would drop its income tax.

“We studied these things for two years. We didn’t really come up with anything.” – Sen. Bob Plymale

“We studied these things for two years,” Plymale said in reference to work done by the legislature’s Joint Select Committee on Tax Reform during interim meetings in 2015 and 2016. “We didn’t really come up with anything.” He said legislators need to look further into the implications of the tax reform bill before making a drastic change.

Muchow said, “The committee has got a very tough assignment because West Virginia has already got a few strikes against it.” They include lower real estate taxes than other states, he said, because real estate doesn’t move, but economic activity does. Another problem is lack of an efficient local government system of finance and operation, he said.

“Almost all services are provided at the state level in West Virginia,” Muchow said. “In our surrounding states, a much greater level of services are provided by local taxation.” That can play into border differences, he said. For example, he said, communities in Virginia have much more flexibility in tax policy than those in West Virginia.

“I call West Virginia the tax reform state. No state has changed its tax laws as often as we have. That creates a lot of instability, which also makes it difficult to do business.” – Mark Muchow

Plymale added that West Virginia removed its state business-and-occupation tax because it was onerous, but some cities still must rely on it, implying that they are less competitive with cities in neighboring states. Some have been allowed to lower the B&O tax by raising the sales tax, he said, but Senate Bill 335 would complicate that. Muchow said local B&O taxes generate more than $200 million a year, which is close to double what is generated by the state corporate income tax.

Tax system changes are frequent in West Virginia.

Not only did Muchow explain what effects the tax reform bill might have, but he also provided the committee with a lesson in the state’s tax history.

“I call West Virginia the tax reform state,” he said. “No state has changed its tax laws as often as we have. That creates a lot of instability, which also makes it difficult to do business.”

The long series of changes began with a 1932 constitutional amendment, the Property Tax Limitation Amendment, which Muchow said has resulted in West Virginia having the second-lowest level of real estate taxes in the country.

“I’m not sure there was a whole lot of thought behind it,” he said. “It just happened, and then the legislature right after it scrambled and put together one of the first sales taxes in the country that includes lots of services, added a temporary income tax that then disappeared, and then we were mainly a consumption tax state from the late 40s all the way to about 1961. We started bringing in the income tax in the early 60s, but income tax has never played a major role on the business side because you got a credit for the B&O tax against the business income tax.”

Muchow said that, shortly after he moved to West Virginia in the mid-1980s, “there was a big clamor that businesses should pay based on their ability to earn income – based on profits and not based on consumption. So we moved away from that B&O tax structure, that consumption tax structure, to an income tax structure. Then, a decade ago, we were the quickest state I have ever seen to go to combined reporting. I think in a matter of two weeks it went from being introduced to [being] enacted. So we change tax laws quite frequently in West Virginia. But our biggest problem is trying to figure out the mix of consumption taxes and income taxes, whatever that might be, to fill in the gap for that lack of local real estate tax that the other states have. Our tax load has to be higher to provide the same services.”

Having relatively low property tax rates to fund government has an effect on what West Virginians expect out of government, he said. “Government services are like any other commodity: the lower the price the higher the demand,” Muchow said. “So ultimately, those states that have low tax incidence on their residents will have a higher demand for government services and vice versa.”

Another feature of West Virginia government that affects taxes is that most government services, such as public education, are provided by the state. In surrounding states, about half of education funding comes from local governments, Muchow said, but in West Virginia, two-thirds to 70 percent comes from state government.

“Those are real challenges that make it really difficult to put in a tax structure that works for economic growth.” – Mark Muchow

“Those are real challenges that make it really difficult to put in a tax structure that works for economic growth,” he said.

Sen. Craig Blair, R-Beckley, said he would like more West Virginians to understand the history and structure of West Virginia’s tax system, as explained by Muchow. He also asked how much of West Virginia’s economy is done underground with cash.

Muchow responded, “It wouldn’t surprise me if it was 10 percent.” People in the service industry tend to be very small taxpayers, he said, so it is easy for them to conceal some transactions. For example, he said, his own barber said he would have his customers pay cash if he had to charge sales tax, indicating that he might not report all the money he earns. Blair said such actions put a huge burden on people who do pay their taxes.

Sen. Glenn Jeffries, D-Putnam, asked whether Senate Bill 335 would affect county or municipal tax increment financing (TIF) districts. Muchow said that, if legislators want to protect TIF districts, they would have to amend the bill.

Karnes said not providing protection for TIF districts was an oversight in the bill that would be fixed. “It puts more money back out into the local communities,” he said.

Muchow said, “There’d be more money in local communities but less money in the state coffers. So ultimately, it depends on how the state adjusts.”

Municipalities include just a small portion of the state’s population, about 16 percent to 17 percent, he said. They collect about $66 million in local sales tax now. They could gain another $50 million or more in local revenues if sales tax rates increase, he said, but counties would get nothing extra.

Asked how many tax studies West Virginia has done in the past 30 years, Muchow recalled four of them, two of which were implemented at least in part. Almost all of the recommendations of a 1985 study were implemented, he said, and adjustments requested by industry were added later. But that reform did not work out so well, he said, because the state ran short on revenue for a few years and then implemented a significant set of tax increases in 1989.

In 1999, a tax reform commission recommended retention of the sales tax on groceries as well as broadening the sales tax. Muchow said. It also recommended a slightly different income tax, he said, and a value-added tax on businesses would have replaced much of revenue, but the recommendations never were implemented.

“If we don’t make some changes like this, are we ever going to see that number change to show that somehow West Virginia’s catching up?” – Sen. Robert Karnes

A decade ago, the state made some tax modernization changes, including the elimination of the sales tax on groceries, Muchow said. West Virginia has eliminated the tax on groceries two or three times in the last 85 years, he said, but typically, the tax has gone back on less than a decade later and always at a higher rate.

In reaction to federal tax reform in the 1980s, West Virginia broadened the personal income tax base and lowered the rates, Muchow said. At one time, the state had a very narrow tax base and high rates of about 15 percent at the top, he said. That was lowered to a maximum of 6.5 percent in 1987, and that reform is still in place today, he said.

Asked to rank types of taxes, Muchow said, “On my list of taxes that are least harmful for the economy, real estate would be number one. Consumption taxes would be in between. Income taxes would be on the other end of the spectrum.”

The former sales tax on groceries was among taxes least affected by leakage to other states, he said, because people are limited in how many groceries they can haul. By contrast, he said, cigarettes are easy to transport in large quantities.

Karnes contended that West Virginia’s tax policy has “decimated the private sector.” He said, “If we don’t make some changes like this, are we ever going to see that number change to show that somehow West Virginia’s catching up?”

Muchow replied, “Ideally, the real estate environment could change, but it takes a vote of the people. In West Virginia, residential real estate taxes are only about one-third of the national average.”

Although Karnes and other Senate leaders want West Virginia to follow in the footsteps of states that have no personal income tax, Muchow said his study of those states revealed that some of them have other types of income taxes or similar taxes:

  • Tennessee still taxes corporate income and has a franchise tax and various license taxes.
  • New Hampshire has a value-added income tax plus a business profits tax.
  • Texas has a gross margins tax.
  • Florida has a corporate income tax.
  • Washington has no income tax, but it has a B&O tax.

Muchow concluded that, not only do some of those states still have some form of income taxes, but they generally also have higher real estate taxes. In that regard, he said, the closest state to West Virginia was Tennessee, where real estate taxes were about 40 percent higher than those in West Virginia. In addition, those other states have much larger shares of services funded at the local level, he said.

Further, Muchow said, West Virginia has a constitutional requirement to provide a thorough and efficient education system. “That’s led us to provide roughly the same level of funding in Mercer County, West Virginia, per student as in Jefferson County, West Virginia, per student,” he said. “That’s unique to West Virginia. In other states, it’s more reliant on the local ability to raise revenue.”

As noted above, Muchow also told the senators that states without personal income taxes tend to rank very low in their funding for public education and higher education.

Committee chairman presses forward.

One day after the committee heard from Muchow, Karnes said on the MetroNews Radio Network’s Talkline program that the fiscal note did not dampen plans to change West Virginia’s tax system.

“It was really important to get the fiscal note,” he said, although he and other Republicans on the committee rejected a motion to require a fiscal note with Senate Bill 335 two weeks ago.

“So what we do now is we go to work to figure out how the bill needs to be adjusted in order to meet the revenue needs of the state.” – Sen. Robert Karnes

On the radio, Karnes said the fiscal note’s estimate of the effects of the bill is within the range that they expected. “So what we do now is we go to work to figure out how the bill needs to be adjusted in order to meet the revenue needs of the state,” he said.

“It’s intended to be revenue neutral based on our current economic output,” Karnes said. “So if we have growth, that’s what we call icing on the cake. The intent was never to anticipate growth.”

Guessing on growth has not worked well for other states that have reformed their tax systems, he said. “Too often they fall short, and so from day one, our intent was never to try to anticipate growth,” Karnes said. “It was to produce a model that generates the needed revenue exactly the way our state runs today. Then the growth will just be the icing on the cake.”

Asked how concerned border counties should be about losing business to other states with lower sales tax rates, he conceded that Senate Bill 335 would give West Virginia the highest statewide sales tax. “It would be far from the highest sales tax in the nation though,” Karnes said, because some states have local sales taxes. “We’ve got states like Tennessee that are nine-and-a-half percent on average. So we would be well below that.”

In Washington, the statewide average is about 9 percent, he said, and at least a dozen states have higher sales tax averages above 8 percent. West Virginia’s municipal sales taxes are not widespread enough to have that kind of effect, he said. Karnes added that one study on the food tax indicates the leakage would be only about 4 percent.

Thus, despite receiving what some people would consider to be a discouraging fiscal note, Karnes said his committee will continue to push the tax reform bill this session after retooling it to answer the questions in the fiscal note.

The third year out would have the highest revenue shortfall of $610 million, he said, but that is roughly equivalent to 1.5 percent of the current income tax. Karnes expressed optimism the state could close that gap and generate more economic growth.

“I think we’ll actually have a bill ready by the end of the week that addresses many of the concerns that were raised by Mr. Muchow,” he said.

On Thursday, Carmichael said on Talkline that a new fiscal note from Muchow based on a revised tax reform bill is much more favorable. “It will reflect a positive revenue stream,” he said.

Carmichael said the proposed tax reforms will be reflected in the Senate’s version of the state budget. “What we want to do – and I’m tying these two issues together – is fundamental overhaul of our tax system in West Virginia,” he said. “The manner in which we tax our citizens is inappropriate, and it leads to this type of discussion every year.”

 

By Jim Wallace

The Department of Education and the Arts is a primary target for budget cutting during this year’s legislative session, but leaders of agencies within the department are asking legislators to spare them. That includes the Center for Professional Development, which provides training for teachers and other educators.

Last month, the House Education Committee approved House Bill 2524 to eliminate the Department of Education and the Arts – which is separate from the Department of Education. Before the bill left the Education Committee, it was amended to move the Center for Professional Development to the Education Department. But the bill went to the House Finance Committee, which has not taken it up yet, so the fate of the center is still undetermined.

During a House Finance Committee budget hearing this week for the Department of Education and the Arts, Lorrie Smith, chief operations officer at the Center for Professional Development, told legislators that eliminating her agency would hurt many people in the education system.

“Without our agency, West Virginia’s advanced placement success will decline.” – Lorrie Smith

“Without our agency, West Virginia’s advanced placement success will decline,” she said. “Since 2010, there’s been a 32 percent increase in the number of high school graduates who have taken an AP exam. We are the only agency in West Virginia certified to provide an advanced placement summer institute. If teachers attend a summer institute that is not certified, that teacher is not endorsed to teach AP. The AP students cannot put AP classes on their college transcripts, which would impact college costs and perhaps college admissions. One West Virginia student passing one AP exam saves a West Virginia family approximately $850 in tuition.”

Smith also cited the center’s role in helping teachers get certified by the National Board for Professional Teaching Standards. She said national board certification means that a teacher has met the highest standards in the profession. In 2016, West Virginia ranked 25th in the nation in total numbers of national board-certified teachers, but per capita, it ranked third, she said. In 2015, West Virginia and North Carolina were the only states to provide statewide support for the program, she said, and her agency provides that support in West Virginia.

In West Virginia, a national board-certified teacher earns an additional $3,500 per year and even more in certain counties, Smith said. “At a time when West Virginia teacher pay is debated, our agency provides the support for teachers to earn more,” she said. About 78 percent of educators supported through the program achieve the certification, she said.

Another function of the Center for Professional Development is the training of principals. “Turnover in West Virginia schools can create weaknesses at the local level,” Smith said. “West Virginia code allows us to provide a yearlong comprehensive support for new principals. Over the past five years, West Virginia averaged 126 new principals each year.”

Principals have much to learn in the first year, she said. The center’s program provides a consistent, statewide measure to make sure they are on the path to success, she said.

Her agency also has many programs that allow educators to receive graduate credit at greatly reduced rates. Smith said that allows them to renew teaching certifications and/or increase their pay. In 2016, 458 educators received such credit, she said.

“Teacher quality is the most important factor in advancing student learning. Eliminating or not funding our agency cripples the state’s efforts to support teachers and keep them in West Virginia classrooms.” – Lorrie Smith

“Teacher quality is the most important factor in advancing student learning,” Smith said. “Eliminating or not funding our agency cripples the state’s efforts to support teachers and keep them in West Virginia classrooms.”

Delegate Larry Rowe, D-Kanawha, said he could see that the services are needed, but he wondered if West Virginia needs a separate agency to handle them. He suggested they could be folded into the Education Department. Smith, replied, “Another agency can do that, but they cannot do it without additional funding or additional staff.”

When Rowe asked if there would be savings by moving the Center for Professional Development, Smith said, “In my opinion, there would be very little savings because they will also need additional money to do the statewide support unless they restructure their funding.”

Cuts already have hurt.

The center already had its budget cut by one-third for the current fiscal year. Smith said that has hurt its operations and resulted in cutting its staff from 16 to 12. “We’ve served about 1,200 fewer people since that cut,” she said. The agency also had to increase registration fees and increase the distance people must travel for training to get reimbursed for lodging.

“We’ve essentially stopped doing anything that we’re not required in code to do,” Smith said. The agency has used a revenue account from registration fees more and cut staff positions, she said, and it plans to move its office space to save a lot on rent.

Since the cuts, Smith said, many teachers have scrambled to look for other options. Fourteen counties depend on the center for beginning teacher support, she said, and if the center can’t provide it, they will have to do it on their own. But several small counties don’t have the staff or resources to do that, she said.

Delegate Brent Boggs, D-Braxton, asked if cutting the Center for Professional Development is forcing teachers or administrators to go out of state to get training. Smith said that is possible because there is no other certified advanced placement agency in West Virginia.

At that point, Gayle Manchin, a former state school board member who now is secretary of the Department of Education and the Arts, told the committee, “Teachers come from other states to West Virginia for AP training.” She said, “We have a partnership with College Board, so our teachers are trained for that training.” She added that teachers also have come from other countries for training in West Virginia. Smith pointed out that the center charges anyone from outside the state three times as much as West Virginians to register for its courses.

The fate of the Center for Professional Development and the rest of the Department of Education and the Arts might not be determined until the legislature settles on a budget.

 

By Jim Wallace

Leaders of the School Building Authority have defended themselves against charges that their requirements for school construction projects are too strict. They made their defense this week when the House Finance Committee held a budget hearing for the SBA.

House Majority Leader Daryl Cowles, R-Morgan, said he had been receiving complaints that the SBA’s requirements for school planning and design are too hard to meet. “Do you feel like the requirements you lay out are too strict?” he asked.

Scott Raines, director of school planning and construction for the SBA, responded that his agency began in 2009 to use a construction analyst to help evaluate school construction projects and hold people more accountable. He said the SBA expanded that process in 2014.

“We have documented $22.6 million worth of savings due to our regulation changes and the things we have implemented since 2009 to today....We weren’t getting any documentation. We were getting no backup from any contractor, architect, engineer on any projects that we had. So we had to strengthen our rules.” – Scott Raines

“Our money is a finite source, so we have to make it go as far as we can make it go,” Raines said. “We have documented $22.6 million worth of savings due to our regulation changes and the things we have implemented since 2009 to today. Those are documented savings that we have saved through our school construction fund that have ultimately allowed us to fund more projects across the state. In our eyes, are they strict requirements? Yes, they are. But prior to those changes, we were very lackadaisical. We were at the mercy essentially of the architects and the engineers and the contractors as we went out into our school construction projects.”

 

Raines offered examples from McDowell County and Putnam County on why the SBA had to get stricter with its requirements.

In the McDowell County project, he said, engineers and architects confirmed to him that they had seen the site-preparation contractor install in appropriate material that was too large in the fill area of the school, but no one had documented that the material was too large. The building contractor then excavated for footings and hit large material that had to be taken out, which cost the building contractor additional time and money, he said. The SBA is currently trying to resolve a $1.6 million claim over that problem, he said.

In the other case, Raines said, an architect and engineer on the Winfield Middle School project failed to provide any documentation other than photos on why the project ran nine months behind schedule. The architect recommended giving the contractor a four-month extension, paying another $100,000 and ignoring $200,000 in liquidated damages owed to the county school board, he said.

“We weren’t getting any documentation,” Raines said. “We were getting no backup from any contractor, architect, engineer on any projects that we had. So we had to strengthen our rules.”

The legislature holds the SBA accountable for its funds, he said, so the SBA must pass that accountability down to others.

Cowles also recalled hearing a former SBA director talk about requiring any ground-level window in a newly built or renovated school to be bullet proof and smash proof. He said there seemed to be no balance between the cost and the actual likelihood that such windows would be needed.

Raines told him that, soon after that presentation was made to legislators, the SBA looked at the costs and modified its requirements. Today, not every new, ground-level window around the perimeter of buildings is required to meet the tough standards that were announced, just those at building entrances, he said.

What the SBA wants to prevent is a scenario like that in 2012 at Sandy Hook Elementary School in Connecticut in which an intruder shot a window, shattered it and then walked through it before fatally shooting 20 children and six adults. Raines said police and emergency officials are expected to have a three-to-five-minute response time at most schools, although it could be longer in some rural areas. “What we tried to do was to implement a process that would delay that entry for three to five minutes,” he said.

Raines also told the committee. “Back in 2015, the SBA started working more closely with counties up front to help them with their projects and making sure that all the questions are answered prior to coming to the authority for money.” He said districts must submit needs projects by the first Monday in October, and those projects are funded in December. Major improvement projects must be submitted by the first Monday in March and are funded in June, he said.

Frank Blackwell, executive director of the SBA, told the committee that his agency is seeking a budget that is just about identical to those it has presented for several years. He indicated that, even though the legislature is looking for places to cut the budget to avoid a $500 million shortfall, the SBA would not be a good target. He said the SBA has been responsible for $2 billion worth of improvements since 1989, and many schools still need to be replaced or renovated.

“The SBA has changed the face of schools across West Virginia.” – Frank Blackwell

“The SBA has changed the face of schools across West Virginia,” Blackwell said. That’s especially true in Wyoming County, where he served as superintendent for 34 years, he said.

“It helped Wyoming County change the face of our county,” Blackwell said. “When I first went there as superintendent, [we had] old, dilapidated buildings – a lot of them old, wooden buildings – fire traps really. And we had 26 schools. We reduced down with building two new high schools, a new elementary, a new pre-K-to-eight school to 14. And the SBA helped us accomplish that. And now, children in Wyoming County go to modern, up-to-date, safe schools.”

Blackwell encouraged legislators to allow the SBA to continue its success. The SBA’s budget line-items include:

  • $23.4 million to pay debt service on bonds issued in the 1990s that are to be paid off in 2022. That is the only line-item using general revenue fund money.
  • $19 million from excess lottery funds for debt service.
  • An operating account funded by interest earnings on debt service reserve.
  • $11.5 million of debt service and $6.4 million for construction from regular lottery funds.

 

By Jim Wallace

The House of Delegates has approved one education bill in the past week, another was scheduled to be on passage stage today, and others have been moving through House committees.

The legislation receiving House approval is House Bill 2651, which would require standardized tests to be administered to nonpublic school students between the ages of seven and seventeen. The House approved the bill on a vote of 89 to seven. It has gone to the Senate Education Committee.

Up for a final vote in the House today is House Bill 2571. It would require the state Department of Education and the Schools for the Deaf and the Blind to jointly select language developmental milestones from existing standardized norms for developing a resource for use by parents to monitor and track deaf and hard-of-hearing children’s expressive and receptive language acquisition and developmental stages toward English literacy.

The House Education Committee amended the bill to give that responsibility for children from birth to age three to the Department of Health and Human Resources because children at that age are under the jurisdiction of DHHR rather than the Department of Education.

Committees approve other bills.

Five other bills have gotten through one or more House committees.

House Bill 2704 would prohibit persons convicted of sexual offenses against children with whom they hold positions of trust from holding certifications or licenses valid in public schools. It also would prohibit them from being employed by any educational, vocational, training, day care, group home, foster care program, or rehabilitation facility in the state.

Dave Mohr, senior policy analyst for the House Education Committee, said the bill would help the Department of Education revoke the licenses of such educators without having to go through an administrative process. He said that would prevent them from getting jobs in other states based on having valid licenses in West Virginia. The committee approved the bill and sent it to the House Judiciary Committee.

House Bill 2574 would create a special pilot program to introduce middle school students to career and technical education opportunities in West Virginia and to better prepare students for post-secondary education and participation in the workforce. Mohr explained that it would be called the Middle School Technical Education Program Act. He said it is a career awareness program for seventh-grade students and would be an optional, one-semester elective. Students would be expected to come up with plans to become employable after high school graduation, he said.

The program would be implemented with existing resources, Mohr said, and the goal is to have 10 middle schools participate.

Delegate Roy Cooper, R-Summers, said he likes the bill because many young people pick their careers in the seventh grade. The House Education Committee approved the bill and sent it the House Finance Committee.

House Bill 2618 cleared two committees this week. Its purpose is to remove the requirement that students’ body mass index (BMI) should be obtained. It received approval first from the House Education Committee and then from the House Health and Human Resources Committee.

The lead sponsor, Delegate Amy Summers, R-Taylor, said she received a request for the bill from a family with a daughter who is anorexic because the requirement seemed to be hard on her. Other delegates suggested that the BMI measurements are more embarrassing for students who are overweight.

“This probably isn’t necessary as a function of government.” – Delegate Saira Blair

Another sponsor of the bill, Delegate Saira Blair, R-Berkeley, said she was in the car with Summers when the constituent called to request the bill. “Five years ago, I had to have the BMI testing done,” Blair, who will turn 21 in July, said. “I remember my number, and I remember the number of every other girl in the room.” She added, “This probably isn’t necessary as a function of government.”

Sarah Stewart, director of education policy and government relations for the Department of Education, told the committee, “Although the code does say we are to collect this information and report this information, we currently do not collect this information. Nor do we report this information.” She added that some districts have elected to collect the information.

The BMI measurement requirement was part of the Healthy Lifestyles initiative of then-Gov. Joe Manchin in 2007. Delegate Joe Statler, R-Monongalia, said the bill probably resulted from good intentions, “but it was a bad bill from the start.”

But Delegate Shawn Fluharty, D-Ohio, objected to removing the BMI requirement. “This information is important,” he said. “We’re 44th in childhood obesity in West Virginia.”

The law should be followed to provide information on how West Virginia stands in comparison with other states. “Simply cutting a law out because a few people get offended by it, I mean, we’d be passing the most nonsensical legislation on a daily basis,” he said.

The bill now goes to the full House of Delegates.

House Bill 2720 would permit the School Building Authority to transfer funds from the School Construction Fund into a special revenue account in the state Treasury. Gary Stewart, finance director at the SBA, explained that the legislation would allow his agency to refinance $72 million in bonds first issued in 1990 and save the state about $4 million. They are due to mature on June 30, 2020, and the maturity date would remain the same after refinancing them.

Stewart said he figured on February 7 that the state could save $4.3 million by refinancing the bonds, but that was before West Virginia’s bond ratings were downgraded. When he figured out this week how much the state could save, it came out to about $4 million. He said the interest on the bonds is about 5 percent, but the state could get 2.68 percent now.

The House Education Committee approved the bill and sent it to House Finance Committee.

An education bill that got through the House Finance Committee this week is House Bill 2501. It’s a supplemental appropriation bill to put another $15 million in federal funds into the school lunch and breakfast programs this fiscal year. It would reimburse county school boards for the increase in the number of breakfasts and lunches served to students.

Terry Harless, chief financial officer at the Department of Education, explained that the school breakfast and lunch programs have expanded and brought in more children. He referred to “a lot of successes in the Child Nutrition Program in recent years, especially with the community eligibility program.” If 40 percent of a school’s population qualifies for free lunch, then all students in the school can get free lunches, he said, and the school breakfast program also has been very successful. West Virginia has been recognized as number one in the nation for school breakfasts for three years, he said.

Over the past 17 years, West Virginia’s federal funding in the program has doubled from $65 million to $130 million, Harless said. He has had to ask for a supplemental appropriations bill for $15 million in each of the past two years, he said, but he would like to get that built into the budget in future years.

While the 40 percent rule from the U.S. Department of Agriculture has allowed more children to be fed, Harless said, it might not be so generous in the future. “I think there’s a trend on the federal front right now and there’s some thought about whether that might be changed from 40 [percent] to 60 [percent],” he said. “That would greatly reduce numbers that would be fed that way.”

The Finance Committee’s approval has sent House bill 2501 to the full House.

 

By Jim Wallace

The West Virginia Senate did not spend much time on education bills this week, but it did pass a bill that some senators fear could cause problems for school districts. A Senate committee also considered a proposal to put more social workers in schools.

Senate Bill 239 would make it an unfair labor practice for any labor organization to use agency shop fees paid for by nonmembers for contributions or expenditures to influence an election without the authorization of the individual. Members of unions, such as the American Federation of Teachers and the West Virginia Education Association, also would have to tell school districts each year if they want union dues withheld from their paychecks.

Senate Minority Leader Roman Prezioso, D-Marion, expressed concern that the requirement would cause problems for both school districts and their employees because employees would have to file notice annually. He said it would be better to assume that, if an employee requested to have union dues withheld once, the dues should continue to be withheld until the employee says otherwise.

The Senate passed the bill on a party-line vote with 21 Republicans in favor of it and 12 Democrats opposed to it. Opponents of the bill contend it is another means for Republicans to take power away from unions, which generally support Democrats.

Bill for social workers in schools gets interest.

The Senate Education Committee considered one public education bill this week but did not act on it. Senate Bill 312 would establish a four-year pilot program to have social workers in public schools from pre-kindergarten through elementary grades. The bill would require a minimum of one social worker per county, although proponents said they would like to have one social worker per school.

Janette Lewis, a social worker in the Monongalia County Schools, said conditions have changed in the 28 years she has been doing social work. “Time have changed,” she said. “Times are worse.”

Many young children miss school chronically, often because their parent’s abuse drugs or they move frequently or they have other problems, Lewis said. Some children exhibit “terrible behaviors” in school, she said.

Social workers can help parents improve their parenting skills, Lewis said. “Find out what’s going on at home,” she said. “Why is that child misbehaving? Try to link the parents with resources, so that child can actually come to school and learn.”

Pennsylvania and Virginia have social workers in their schools, she said.

Sen. Mike Hall, R-Putnam, expressed concern about the cost of the bill. He said a fiscal note prepared by the Department of Education estimated the cost at almost $2.4 million, which would be borne by county school boards. That’s based on the hiring of 37 social workers for those counties that don’t already have them.

“Come hell or high water, we’re going to get these kids some help.” – Sen. Kenny Mann

The committee spent most of an hour discussing the bill when it ran out of time. Senate Education Chairman Kenny Mann, R-Monroe, said he would bring the bill back another day. “Come hell or high water, we’re going to get these kids some help,” he said, although he conceded he did not know where the funding would come from.

Sen. John Unger, D-Berkeley, said the legislature should authorize a pilot project and gather data from it. “We could have the best schools, the best teachers, the best curriculum, the most modern technology, and if those children are hungry or in the situation where violence is in their household [or] drugs, they’re not going to be able to learn,” he said.

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Editor’s Note – Jim Wallace is a former government reporter for the Charleston Daily Mail, former news director of West Virginia Public Radio and former news director of WWVA/WOVK radio in Wheeling. He now works for TSG Consulting, a public relations and governmental affairs company with offices in Charleston and Beckley. He has a bachelor’s degree in journalism from The Ohio State University and a master’s degree in journalism from West Virginia University. Wallace is the author of the 2012 book,A History of the West Virginia Capitol: The House of State.