Can Prince William County levy a special school tax to build new schools, and what are the procedural rules around it?

Plain-English summary

Prince William County's Board of Supervisors was considering creating a fund to build new schools and add to existing ones. The county attorney, Michelle Robl, sent the AG eight related questions. The AG worked through each:

1. Form of the tax. Because Prince William County is a single school division with no school districts inside it, any special school tax under § 22.1-102 must be levied as a special county tax (uniform on all county property), not as a special district tax.
2. Defined terms. "Capital expenditures" includes outlays for fixed assets with a useful life over one year, like school construction and additions. "Indebtedness" includes debt incurred for construction. "Rent" includes payments for leasing structures used as school facilities.
3. Annual appropriation. Imposing or collecting a tax does not by itself obligate the county to appropriate the proceeds in any particular fiscal year. Unspent revenues can roll over (absent specific debt-service or contract obligations tied to the levy).
4. Unspent appropriated funds. Once the county appropriates the special school tax revenue to the school board and the board does not spend it, § 22.1-100 sends the unspent local funds back to the county for re-appropriation. But because the tax can only be used for capital expenditures, indebtedness, or rent, that is the only category for which the funds can be re-appropriated.
5. Lump sum vs. major classification. Section 22.1-94 lets the county appropriate either way. Lump-sum gives the school board freedom to move funds between classifications. Appropriating by classification (per § 22.1-115's nine categories) gives the county more control over how the money is used, while keeping within the § 22.1-102 capital/indebtedness/rent purposes.
6. Specific projects. The county may not direct the school board to use the special school tax on specific construction projects. Under Va. Const. art. VIII, § 7 (the school-board-supervision clause) and Russell Cty. School Bd. v. Anderson, 238 Va. 372 (1989), only the school board picks which projects to fund.
7. General real-estate tax impact. A § 22.1-102 special school tax is a "special levy" under § 58.1-3321 and therefore does not count toward the 101%-of-prior-year reassessment threshold that triggers a rate-reduction or public-hearing requirement.
8. Procedure. Before levying the tax, the county must publish notice for two successive weeks (§ 15.2-1427), hold a public hearing (§ 58.1-3007), and then, if it adopts the tax, have the county treasurer segregate the proceeds under § 22.2-116 to ensure they are used only for the authorized purposes.

The AG declined to opine on whether the county should impose the tax, that is a discretionary judgment of the local governing body.

Currency note

This opinion was issued in 2021. 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 current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Section 22.1-102 authorizes a special school tax "for capital expenditures and for the payment of indebtedness or rent," in addition to the general school tax required under §§ 22.1-94 and 22.1-95. The form depends on the locality: special county, district, city, or town tax, "as the case may be." The rate is set by the governing body, capped at $2.50 per $100 of assessed value when the tax is for capital expenditures.

The Board of Education divides the Commonwealth into school divisions under § 22.1-25. Some school divisions contain districts; most do not. The request advised that the Prince William County school system is a separate school division with no school districts within it, so a special county tax is the only correct vehicle.

The terms "capital expenditures," "indebtedness," and "rent" are not defined in § 22.1-102. The AG used standard statutory-construction practice (plain meaning under Hubbard v. Henrico Ltd. P'ship, 255 Va. 335 (1998)) and Black's Law Dictionary definitions to fill the gaps.

Section 22.1-100 governs unspent funds. Local funds revert to the county governing body for use the next year, and cannot be redivided outside the locality. Combined with § 22.1-102's purpose limitation, that means the only way the county can use returned special-school-tax funds is to re-appropriate them for capital, indebtedness, or rent.

The school board's exclusive control over specific projects rests on Va. Const. art. VIII, § 7 and Russell County School Board v. Anderson. The county controls the size of the appropriation; the board controls the specific spending.

Section 58.1-3321 governs the so-called Truth-in-Taxation procedure when a reassessment would generate more than a 1% increase in real-property tax revenue. The statute exempts "special levies" from that calculation. The AG concluded that a § 22.1-102 levy is a special levy, so its imposition does not trip the rate-reduction-or-hearing trigger in § 58.1-3321 (though the separate § 58.1-3007 hearing for any new tax still applies).

Common questions

Q: I'm a county supervisor. How do we levy a special school tax for new schools?
A: Per this 2021 opinion: publish notice in a newspaper of general circulation for two successive weeks (§ 15.2-1427), hold a public hearing (§ 58.1-3007), then adopt by ordinance. The tax is a special county tax at a uniform rate. Have the treasurer keep proceeds segregated under § 22.2-116.

Q: Can the supervisors pick which school to build?
A: No. Under this opinion, only the school board picks specific projects. The supervisors can structure the appropriation by major classification to keep the money within capital uses, but cannot say "build at site X."

Q: What happens if the school board doesn't spend the money?
A: It reverts to the county under § 22.1-100. The county can re-appropriate it the next year, but only for the § 22.1-102 purposes (capital, indebtedness, rent).

Q: Will this push us over the reassessment threshold?
A: No. A § 22.1-102 levy is a "special levy" excluded from the § 58.1-3321 calculation. The general real-estate tax calculation is not affected by the special school levy.

Q: We've been advised this is a "special district tax." Is that right?
A: For a county with no school districts inside the school division (like Prince William, per the request), the correct form is a special county tax, not a special district tax. Districts exist in only a few divisions.

Q: What if we want to make sure the money goes to debt service on a school bond?
A: That works under § 22.1-102, which expressly covers "payment of indebtedness." The opinion also notes that if the county links the levy to a particular debt-service or contractual obligation, the county may need to appropriate the proceeds in the relevant fiscal year rather than rolling them over.

Citations and references

Statutes:

• Va. Code § 22.1-25 (School divisions)
• Va. Code § 22.1-92 (Estimate of money)
• Va. Code § 22.1-94 (Appropriations to school board)
• Va. Code § 22.1-95 (Local school tax)
• Va. Code § 22.1-100 (Reversion of unexpended funds)
• Va. Code § 22.1-102 (Special school tax)
• Va. Code § 22.1-115 (Major classifications)
• Va. Code § 15.2-1427 (Local ordinance procedure)
• Va. Code § 58.1-3007 (Public hearing)
• Va. Code § 58.1-3321 (Reassessment limits)

Cases (all Virginia Supreme Court):

• Hubbard v. Henrico Ltd. P'ship, 255 Va. 335 (1998) (plain-meaning rule)
• City of Va. Beach v. Flippen, 251 Va. 358 (1996)
• Marsh v. City of Richmond, 234 Va. 4 (1987)
• Russell Cty. School Bd. v. Anderson, 238 Va. 372 (1989) (school board exclusive control over specific projects)

Constitutional provision:

• Va. Const. art. VIII, § 7 (Supervision of schools by school board)

Prior AG opinions:

• The opinion relied on a prior opinion of the Office for the point that expenditures on items with a useful life of more than one year generally constitute "capital expenditures."

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2021/20-029-Robl-issued.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

May 14, 2021

Michelle R. Robl, Esquire
Attorney for Prince William County
One County Complex Court, Suite 240
Prince William, Virginia 22192

Dear Ms. Robl:

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

Issues Presented

You ask several questions about the possible assessment of a special school tax by the Prince William County Board of Supervisors under § 22.1-102 to fund certain expenditures for the Prince William County school system:

1) If the Prince William County Board of Supervisors (the "PWC Board") chooses to levy the special school tax, should the tax be levied as a special county tax or a special district tax?
2) What are "capital expenditures," "indebtedness," and "rent" under § 22.1-102?
3) If special school taxes are levied for a fiscal year, must the PWC Board appropriate the entirety of the funds within that fiscal year?
4) How are unspent special school tax levies treated from one fiscal year to the next?
5) Must the PWC Board appropriate the entire school funding by major classification instead of lump sum in order to appropriate the special school tax?
6) Can the PWC Board direct the use of the special school taxes for specific school projects?
7) Will a special school tax impact the annual general real estate tax levy?
8) If the PWC Board desires to levy the tax, what is the proper procedure to implement the special school tax?

Background

You advise that the Prince William County Board of Supervisors is considering creating a fund for the construction of new schools and/or additions to existing schools. The goal of the fund is to build cost-effective school facilities that maximize classroom capacity.

Applicable Law and Discussion

The Code of Virginia provides that a locality is required to levy a general school tax and provide sufficient appropriations to maintain an educational system that meets the standards of quality prescribed by law. In addition to these required sources of funding, a locality is permitted to levy a special school tax for certain purposes set forth in the Code. In particular, § 22.1-102 of the Code provides that:

For capital expenditures and for the payment of indebtedness or rent, a governing body may, in addition to the levy and appropriation required under the provisions of §§ 22.1-94 and 22.1-95, levy a special county tax, a special district tax, a special city tax or a special town tax, as the case may be, on all property subject to local taxation. Such levy or levies shall be at such rate or rates as the governing body levying the tax may deem necessary for the purpose or purposes for which levied, except that where the tax is for raising funds for capital expenditures the rate shall not be more than $2.50 on each $100 of the assessed value of such property in any one year.

Your questions address the potential application of this special school tax in Prince William County.

1. If the PWC Board chooses to levy a special school tax, § 22.1-102 directs that the tax be levied as a special county tax.

The Code of Virginia gives governing bodies the option to levy the special school tax as a special county tax, special district tax, special city tax, or special town tax, depending on which type is applicable. The Commonwealth is divided into school divisions by the Board of Education, which "as they existed on July 1, 1978, shall be and remain the school divisions of the Commonwealth until further action of the Board of Education." You advise that the Prince William County school system is a separate school division and has no school districts within it.

Having no school districts, I am of the opinion that the PWC Board may levy the special school tax as "special county tax," not a "special district tax." This special county tax should be levied at a uniform rate on all property within the County subject to local taxation.

2. The terms "capital expenditures," "indebtedness," and "rent" should be afforded their ordinary meaning.

As noted above, the special school tax may be levied only for "capital expenditures" and for the "payment of indebtedness or rent." These terms are not defined in the statute. "When ... a statute contains no express definition of a term, the general rule of statutory construction is to infer the legislature's intent from the plain meaning of the language used."

Black's Law Dictionary defines a "capital expenditure" as "[a]n outlay of funds to acquire or improve a fixed asset." A prior opinion of this Office concluded that expenditures for items with a useful life of more than one year would generally constitute "capital expenditures." Based on the common understanding of the term, in my opinion expenditures for school construction or additions to existing schools would constitute "capital expenditures" for purposes of § 22.1-102.

The term "indebtedness" is defined as "liability on a claim; a specific sum of money due by agreement or otherwise." Indebtedness for the construction of schools or for additions to existing schools, would, in my opinion, fall under the definition of "indebtedness" for purposes of § 22.1-102.

As you note in your request, what constitutes "rent" for purposes of § 22.1-102 appears to be fairly determinable. "Rent" is commonly defined as "[c]ompensation ... paid or given in exchange for the use and occupation of real estate." Accordingly, payments for leasing structures to be used as school facilities would constitute "rent."

3. If special school taxes are levied for a fiscal year, the PWC Board generally is not required to appropriate the entirety of the funds within that fiscal year.

Virginia law provides that the imposition or collection of taxes does not itself constitute an obligation to appropriate the funds. Therefore, absent a situation in which the county links the special school tax levy to a particular debt service obligation or contractual commitment, the county is not required to appropriate the entirety of the funds in any particular fiscal year. Any revenues that are collected but not appropriated in a fiscal year may be carried over to the succeeding fiscal years.

4. Any special school tax revenues that are appropriated to the School Board but unspent by that body during a particular fiscal year would revert to the local governing body for reappropriation the following year.

The Code of Virginia, addressing the use of unexpended school and educational funds, provides that:

[a]ll 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.

It is clear, therefore, that any special school tax revenues that are appropriated to the School Board during a given fiscal year, but are unspent by the School Board, would revert to the local governing body for use the following year. Because the special school tax only can be used to pay for capital expenditures, indebtedness or rent, it is my opinion that any unspent special school tax funds can only be reappropriated to the School Board for such purposes.

5. Proceeds from a special school tax may be appropriated to the School Board by either lump sum or by major classification.

It is the duty of a school division's superintendent to prepare estimates of the funding the school division will need for the next fiscal year and the estimates, at a minimum, must show the amount of funding needed for each of the major classifications as set forth in § 22.1-115. These classifications are (i) instruction, (ii) administration, attendance and health, (iii) pupil transportation, (iv) operation and maintenance, (v) school food services and other non-instructional operations, (vi) facilities, (vii) debt and fund transfers, (viii) technology, and (ix) contingency reserves.

Section 22.1-94 of the Code provides that a local governing body may make appropriations to a school board by either lump sum or by major classification, as long as the total level of funding is not less than cost apportioned to the locality. If a local governing body appropriates by lump sum, the school board is authorized to move funding between classifications without approval. If school funding is appropriated by major classifications, a school board can move funds within each classification without approval of the local governing body, but not between classifications.

If a local governing body levies a special school tax to fund the construction of new school facilities or additions to existing school facilities, the governing body may appropriate funding to the school board by classification in order to ensure and monitor the restricted use of the special county tax. If, however, a governing body determines to appropriate by lump sum, the legal obligation of the school board to use the special school tax only for capital projects, indebtedness, or rent will remain. I am therefore of the opinion that the PWC Board may appropriate funds from the special school tax by lump sum or by classification.

6. The PWC Board may not direct the use of the special school tax revenues by the School Board for specific school projects.

The PWC Board may not direct the use of the special school tax revenues by the School Board for specific school projects. While it may appropriate the funds to the School Board by major classification, or request that the School Board use the funds for specific purposes, the School Board alone has authority to determine which specific construction projects the funds shall be applied toward.

7. Assessment of a special school tax would not impact the County's annual general real estate tax levy for purposes of § 58.1-3321.

You advise that Prince William County assesses its real estate for taxation purposes on an annual basis. If any annual assessment or reassessment results in a real property tax levy that will exceed the previous year's real property tax levy by 1 percent or more, the locality must either reduce the rate of its levy to produce no more than 101 percent of the previous year's real property tax levies or advertise a proposed rate increase and hold a public hearing before adopting such increase.

Section 58.1-3321 provides that "[s]pecial levies shall not be included in any calculations provided for under this section." The special school tax is authorized specifically for funding to pay for capital expenditures, indebtedness, or rent. It is my opinion that the special school tax is a "special levy" for purposes of § 58.1-3321. As such, this type of levy should not affect the levy of a general real estate tax in compliance with § 58.1-3321.

8. The Code of Virginia requires notice and a public hearing before a special school tax may be levied.

If the PWC Board proposes to levy a special school tax, the public notice and hearing requirements in § 15.2-1427 and § 58.1-3007 should be followed. Specifically, notice as described in § 15.2-1427 must be published for two successive weeks in a newspaper having general circulation in the county. The notice should be specific about the proposed use of the tax, and it should also provide the citizens with "an opportunity to appear before, and be heard by," the PWC Board to express their views on the tax.

If, following notice and public hearing, the PWC Board votes to levy the special school tax, the proceeds of the tax should be managed by the county treasurer in accordance with § 22.2-116. The treasurer should properly segregate the proceeds of the tax to ensure they are set aside for the purposes of the levy.

Conclusion

It is my opinion that the Prince William County Board may levy the special school tax as a special county tax to raise funds for capital expenditures or the payment of indebtedness or rent, in accordance with the governing law set forth above.

This opinion reaches no conclusion, however, about whether such a tax should be imposed. Judgments about the imposition of taxes lie within the discretion of the local governing body.

With kindest regards, I remain,

Very truly yours,

Mark R. Herring
Attorney General