Alexandria schools face $15 million gap as city offers limited funding increase

ACPS requests $4.2 million but needs $19.3 million to maintain services, equivalent to 120 positions across system

Alexandria City Public Schools faces a $15.1 million budget shortfall for fiscal year 2027 as the city grapples with minimal revenue growth and competing demands on limited resources.

School officials told City Council on Saturday they need $19.3 million to maintain current service levels, but can expect only a $4.2 million increase from the city, a 1.5% boost that represents the most favorable budget guidance given to any partner agency.

“Just funding our future, this is just kind of if we kept status quo, what we’ve been doing, all of the things come out to be about $19.3 million, leaving about a $15.1 million gap,” said Dominic Turner, chief financial officer for Alexandria schools. “That is equivalent to about 120 FTEs across ACPS. And we have about 2,400 FTEs in ACPS.”

The shortfall is equivalent to approximately 120 positions — cuts that would directly affect classroom sizes, support services and programs for Alexandria’s 16,000 students.

The gap emerges as city officials project just $5.2 million in new revenue growth for fiscal 2027, less than 1% over current levels and a sharp decline from $25 million in growth during the current budget cycle.

Unique challenges drive higher costs

School Board Chair Michelle Rief emphasized Alexandria’s unique challenges compared with other Virginia school divisions.

“In Alexandria, our student needs are greater and our labor costs are higher than just about any school division in the Commonwealth,” Rief said, citing a 2023 state study on Virginia’s K-12 funding formula. “But as you all know, because of the local composite index, which is a part of the state’s formula for funding K to 12 education, the state only contributes 20% of the cost of public education.”

The state average for funding is 55%, with some school divisions receiving significantly more. The funding disparity places an extra burden on Alexandria taxpayers.

Turner highlighted the district’s English learner population as a key cost driver. Alexandria serves nearly 16,000 students, with 38% classified as English learners.

“When we look at Fairfax and Arlington, roughly 21%,” Turner said. “So we’re almost double the population of Fairfax and Arlington. The two highest are Manassas City and Manassas Park City. Eighty-two percent of Virginia’s school divisions have less than a 10% EL population.”

State and federal law requires school districts to provide additional supports for English learners, driving costs higher than in neighboring jurisdictions.

The district’s labor costs run 38% above the state average for Virginia school divisions, according to the state study. Personnel expenses account for 87% of the school budget, with 90% of spending directly affecting students.

“With 90% of our budget being people, we have to address that side if we’re ever going to be able to really close our gap,” Turner said, responding to questions about budget reduction strategies. “Every year we work on the nonpersonnel side, but with that being basically 10% of our budget, we’re not getting a lot of juice for that squeeze.”

Turner noted the district could eliminate the entire central office and still face a budget shortfall.

Difficult choices ahead

“We could eliminate the entire central office and then not be able to pay our bills, not be able to pay people, not have any benefits or any,” Turner said. “And we’re not going to get out of the hole.”

The budget challenges come as ACPS negotiates with unions representing 90% of staff members. Superintendent Melanie Kay-Wyatt emphasized the timing complicates budget planning.

“Ninety percent of our budget directly impacts students,” Kay-Wyatt said. “The reality is, with 90% of the budget being student-facing, the only way that we’re going to solve the issue is going to have an impact on the classroom.”

School officials outlined potential cost reduction measures, including increasing elementary class sizes, adjusting student support team ratios, and shifting health care costs to employees. The district already reduced non-personnel spending by 5% across all departments.

ACPS previously increased class sizes to 24 students in kindergarten, 26 in first and second grades, and 28 in third through fifth grades. Those changes eliminated about 20 positions worth more than $3 million annually.

“One of the reasons why our budget hasn’t exploded is because of the changes of our staffing formulas,” Turner said. “We have changed our SPED and our EL staffing formulas. We can only do so much on the sped side because we’re mandated to continue to provide that same level of service.”

The district also considers examining vacant central office positions for elimination in fiscal 2027.

City officials acknowledged the challenges but emphasized limited flexibility given overall budget constraints. City Manager James Parajon said ACPS received more favorable guidance than city departments, which must identify 1% cuts in base services.

“What we have directed all of our staff and partner agencies, with the exception of ACPS, we have asked them to utilize 1.5% growth, which is pretty much in line with the forecast,” Parajon said. “But I can’t do that for every department, so I prioritize the ACPS dollars a little higher.”

Mayor Alyia Gaskins addressed the tension between investment needs and taxpayer capacity.

“I think what I also see is the flip side, that if we can’t give the full investment, that somehow we weren’t investing in our children or we weren’t investing in our city,” Gaskins said. “And I feel like that then does set up the conversation that we’re trying to avoid of two bodies against each other.”

Gaskins noted federal workers facing job uncertainty also struggle with potential local tax increases.

Tax increases needed to close gap

“So what is the way we create a different narrative or work together that it’s not we’re choosing because we can’t or it’s not because we don’t understand the needs that are there,” Gaskins said. “But we are also trying to make sure that those who are paying for it and those who are helping sustain our community are going to be able to stay here.”

Councilman John Chapman discussed the magnitude of tax increases needed to fully fund school requests.

“I think we’re talking 3 to 4 cents on the tax rate if we’re just being honest about it,” Chapman said. “And I don’t. That’s tough for this community and tough to understand that that’s the beginning.”

The city’s real estate tax rate stands at $1.135 per $100 of assessed value. Each penny increase generates approximately $7 million annually, meaning a 3- to 4-cent increase would raise $21 million to $28 million.

Chapman emphasized the challenges are structural rather than temporary.

“As we talked about with the assessments, the assessment picture does not get better next year,” Chapman said. “This is not a one-year bump.”

Both city and school officials agreed on the need for increased state advocacy. The city’s Budget and Fiscal Affairs Advisory Committee recommended a multiyear joint strategy between City Council and the school board to pursue higher state funding.

Rief referenced findings from a 2023 state study that examined Virginia’s K-12 funding formula.

“According to the JLARC report, school divisions need sufficient funding to hire enough quality teachers because teacher quality has repeatedly been shown to affect student performance more than any other factor,” Rief said. “It also talks about how having more teachers allows smaller class sizes, which is shown to improve student comprehension and increase test scores.”

The study also found staff in school divisions without guaranteed annual pay raises face higher turnover, particularly relevant as ACPS navigates first-time contract negotiations with unions representing 90% of employees.

School officials reported competitive grant funding increased 13% year over year, representing a 156% increase from prepandemic levels. However, grant-funded positions remain temporary with no positions carried into the general fund when funding expires.

Kay-Wyatt noted that ACPS had already implemented 1% budget reductions requested by the city manager during the previous budget cycle.

School officials plan community forums to explain budget challenges and potential service impacts. The city manager will present the proposed budget in late February, beginning a three-month public engagement process through final adoption in May.

The fiscal 2027 budget takes effect July 1, 2026.