VA 15-004 September 4, 2015

When a regional school in Virginia (jointly funded by several school divisions) has leftover money at the end of the year, does the money have to be returned to the participating localities?

Short answer: No. AG Herring concluded that Va. Code § 22.1-100, which requires reversion of unspent local funds for individual school divisions, does not apply to regional schools. Each regional joint board may adopt its own bylaws on what to do with surplus funds.

Disclaimer: This is an official Virginia Attorney General opinion. AG opinions are persuasive authority but not binding precedent. This summary is for informational purposes only and is not legal advice. Consult a licensed Virginia attorney for advice on your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official AG opinion. The original opinion (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

View original AG opinion (PDF)

Plain-English summary

Lynchburg and four surrounding counties (Amherst, Appomattox, Bedford, Campbell) jointly operate several regional schools. Each participating school division contributes funds, and the regional school spends them. At year-end, some regional schools were carrying surplus funds forward, while others were crediting them pro rata back to participating divisions. The Lynchburg City Attorney asked the Attorney General whether the law actually required any particular handling.

Attorney General Herring's answer was that Virginia law doesn't require any particular treatment of surplus funds held by regional schools. The reversion statute that does require local school divisions to return unspent local funds (Va. Code § 22.1-100) doesn't mention regional or joint schools. Under the canon "the express mention of one thing excludes all others," the General Assembly's silence on regional schools means the rule doesn't reach them.

The State Board of Education has a regulation (8 VAC § 20-281-20) saying that regional school joint boards must adopt bylaws covering "the receipt, custody, and disbursement of funds . . . consistent with the state statutes and regulations of the Board of Education." But neither the statutes nor the regulations specify what to do with surplus funds. So each joint board has discretion to decide for itself, by bylaw.

Herring did note that having the surplus funds revert pro rata to participating divisions (and ultimately to the local governing bodies) would be lawful. It's just not legally required.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify the current text of Va. Code §§ 22.1-26 and 22.1-100, and any updated State Board of Education regulations on regional school finance, before relying on any specific rule mentioned here.

Common questions

What's a regional or joint school in Virginia?

A school operated by two or more local school divisions together, organized under Va. Code § 22.1-26. The school has its own joint board with members drawn from each participating local board. Each participating division contributes funds and shares in the operation.

If § 22.1-100 doesn't apply, can a joint board just carry over the surplus to the next year?

Yes. The opinion is clear that the joint board can choose. Carrying over, returning to divisions pro rata, or any other approach consistent with statute is legal, as long as the joint board has adopted a bylaw or rule of operation governing the choice.

What does the State Board of Education regulation require?

The joint board has to adopt bylaws addressing the "receipt, custody, and disbursement of funds" consistent with state statutes and regulations. The regulation doesn't dictate the substance of how surplus funds should be handled.

Are the regional schools "school divisions" under Virginia law?

No. They're separate legal entities organized under § 22.1-26. That's why the reversion rule for school divisions in § 22.1-100 doesn't reach them.

Background and statutory framework

Virginia's regional school authority is in Va. Code § 22.1-26. Two or more school boards, with State Board of Education consent, may establish joint or regional schools. The schools are managed by the participating boards jointly under State Board regulations.

Virginia Code § 22.1-100 deals with disposition of unspent funds, but only for school divisions:

"All sums derived from local funds unexpended in any year shall remain a part of the funds of the governing body appropriating the funds for use the next year, but no local funds shall be subject to redivision outside of the locality in which they were raised."

The State Board's regulation at 8 VAC § 20-281-20 requires joint boards to adopt bylaws covering financial management, but stops short of mandating any particular treatment of surplus.

Herring applied the canon of statutory construction known as expressio unius est exclusio alterius: when a statute lists who's covered, those not on the list are not covered. Because § 22.1-100 addresses school divisions and is silent on regional schools, regional schools are not bound by its rule.

Citations

Va. Code Ann. § 2.2-505 (AG advisory opinions)
Va. Code Ann. § 22.1-26 (joint or regional schools)
Va. Code Ann. § 22.1-100 (disposition of unexpended funds, school divisions)
8 Va. Admin. Code § 20-281-20(1) (joint board bylaws)
Fisher v. Tails, Inc., 289 Va. 69 (2015)

Source

Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
Original PDF: https://www.oag.state.va.us/files/Opinions/2015/15-004Erwin.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Mark R. Herring
Attorney General

900 East Main Street
Richmond, Virginia 23219
804-786-2071

September 4, 2015

Walter C. Erwin, III, Esquire
Lynchburg City Attorney
City Hall, 900 Church Street
Lynchburg, Virginia 24504

Dear Mr. Erwin:

I am responding to your request for an official advisory Opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether unexpended local funds held by a joint or regional school at the end of a fiscal year must revert to the participating local school divisions, and thus ultimately to the local governing bodies that appropriated the funds.

Background

The School Boards of the City of Lynchburg and the Counties of Amherst, Appomattox, Bedford, and Campbell have established several regional schools (the "regional schools"). Each regional school has its own joint board consisting of members from the participating local school boards. Each joint board manages and controls programs in its school. All these schools are located within the City of Lynchburg, and by agreement the Lynchburg City Treasurer serves as the fiscal agent for each school.

The governing body for each participating school division appropriates local funds to that school division, and the school division distributes a portion of the funding to the regional schools. Each regional school adopts and implements an annual budget. If there are unencumbered surplus funds remaining at the end of a budget year (herein, simply "surplus funds"), there is no uniform program for disposition of the funds. Some regional schools carry the funds over to the next school year, while other regional schools credit the funds on a pro rata basis to each participating school division's tuition payment for the following year.

Applicable Law and Discussion

All regional schools, including those which are the subject of this Opinion, are organized in accordance with § 22.1-26 of the Code of Virginia. In relevant part, § 22.1-26 provides as follows:

A. Two or more school boards may, with the consent of the State Board [of Education], establish joint or regional schools . . . for the use of their respective school divisions and may jointly purchase, take, hold, lease, convey and condemn both real and personal property for such joint, regional, or regional public charter schools. . . . [T]he schools shall be managed and controlled by the school boards jointly, in accordance with such regulations as are promulgated by the State Board.

A regional school is a separate legal entity, and it has authority to hold property in the name of its joint board.

Section 22.1-100 specifically addresses the disposition of surplus funds for local school divisions, but not for regional schools:

All sums of money derived from the Commonwealth which are unexpended in any year in any school division shall revert to the fund of the Commonwealth from which derived unless the Board of Education directs otherwise. All sums derived from local funds unexpended in any year shall remain a part of the funds of the governing body appropriating the funds for use the next year, but no local funds shall be subject to redivision outside of the locality in which they were raised.

There is no general statute making regional schools subject to all statutory requirements for local school divisions, nor is there a separate statute making § 22.1-100 applicable to regional schools. The absence of any reference to reversion of surplus funds held by regional schools in § 22.1-100 invokes the principle of statutory interpretation known as expressio unius est exclusio alterius, meaning "the express mention of one thing excludes all others."

The State Board of Education has adopted various regulations governing the operation of regional schools in Title 8 of the Virginia Administrative Code. One of these regulations allows the governing board of a regional school to adopt bylaws or rules of operation, which shall cover financial management and shall be consistent with state statutes and regulations:

The joint board shall adopt bylaws or rules of operation . . . [which] shall address the receipt, custody, and disbursement of funds . . . consistent with the state statutes and regulations of the Board of Education.

There is no regulation of the State Board addressing the disposition of surplus funds by regional schools.

In summary, § 22.1-100 sets forth the requirements for disposition of surplus funds for local school divisions, but not for joint or regional schools. There is a State Board of Education regulation authorizing the board of a joint or regional school to adopt bylaws or rules of operation for financial management that are consistent with statutes and regulations, but no regulation containing specific guidance on surplus funds held by a joint or regional school.

Conclusion

For the reasons stated, it is my opinion that there are at present no legal requirements concerning disposition of surplus funds by joint or regional schools. The governing board of each such school may adopt bylaws or rules of operation concerning such disposition, so long as the bylaws or rules are not inconsistent with applicable statutes or regulations. Having surplus funds revert pro rata to the participating local school divisions, and thence to the local governing bodies, would be consistent with law, but it is not legally required.

With kindest regards, I am

Very truly yours,

Mark R. Herring
Attorney General