House Finance Committee Chairman Vernon Criss goes over details of the House version of the budget bill Tuesday afternoon. (Photo by Steven Allen Adams)

CHARLESTON — A skinny version of the budget bill for the next fiscal year is on the move, with a possible May special session being planned for once issues involving the possible clawback of COVID19 education funds is worked out.

The House of Delegates amended their version of the budget bill – House Bill 4025 – into Senate Bill 200, which was the Senate’s version of the budget, in a 74-16 vote Tuesday afternoon.

The House version of the general revenue budget for fiscal year 2025 beginning in July was just over $5 billion, which is nearly 5% less than the governor’s introduced budget of $5.265 billion and 1.4% more than the Senate budget bill of $4.934 billion.

But unlike past budget bills, the state has a looming possible $465 million that it might be required to spend on education due to not following federal rules regarding COVID-19 dollars for county school systems.

The state is in negotiations for the U.S. Department of Education for the second year in a row over the fiscal year 2023 maintenance of effort (MOE) waiver requirements. The state was required to maintain a certain level of annual education expenditures as a result of accepting more than $1.1 billion through three tranches of COVID-19 education funding via the U.S. Department of Education’s Elementary And Secondary School Emergency Relief Funds (ESSER).

The state was required to maintain a certain percentage of total education spending based on spending during the three fiscal years prior to the start of the pandemic. That percentage was 41.6%, but the state fell short of that percentage in fiscal years 2022 and 2023. The way the state funds county school systems made it difficult for the state to simply increase spending to meet that percentage threshold compared to how much the state collected in tax revenue those years.

While the Governor’s Office and state Department of Education officials applied for and received a waiver for falling short in fiscal year 2022, the state is still in negotiations with the U.S. Department of Education for a waiver for fiscal year 2023. If the state is unable to show to federal officials that it is closing the gap on $465 million through various existing education expenditures, the state will either have to spend money it wasn’t expecting to or risk a clawback of the federal dollars.

The Legislature plans to appropriate $150 million to the School Building Authority’s school construction fund from lottery and excess lottery funds. The bill is one of several initiatives needed to pass by the end of the session at midnight Saturday, March 9, in order to help sweeten negotiations with the U.S. Department of Education towards receiving a waiver after state education expenditures did not meet federal requirements for state receiving COVID-19.

The House passed Senate Bill 701 Tuesday, giving spending authority to the SBA to clear its list of construction project requests from county school systems. The House budget also includes the provisions of House Bill 4883 for passage. The bill provides a 5% pay raise for teachers, school service personnel, and West Virginia State Police employees. According to a fiscal note, the bill would cost $80.3 million beginning in fiscal year 2025.

“Those items are all helping towards making sure that the negotiations between the Governor’s Office and the Department of Education at the federal level are plus-positive items in that negotiation,” said House Finance Committee Chairman Vernon Criss, R-Wood.

Criss also said state officials are asking the U.S. Department of Education to consider last year’s passage of House Bill 3035, the Third Grade Success Act, towards the $465 million balance to receive the waiver. The bill allows for teacher aides and interventionists in early elementary classrooms up to third grade at an annual cost of $104 million.

As for other one-time expenditures usually placed in the back of next fiscal year’s budget to be funded by tax revenue surpluses available at the end of the fiscal year in descending order, those are on hold in the House version of the budget. The state has collected more than $428 million in surplus tax revenue fiscal year-to-date and is expected to end the fiscal year in June with nearly $800 million.

Criss told members Tuesday that if federal officials deem West Virginia’s educational expenditures as satisfactory enough to receive the waiver, lawmakers could return in May for a special session to work on the budget.

“That’s the anticipation, that May First we’ll have another couple months of revenues that we can look at,” Criss said. “We’ll pretty well know, based upon (state Department of Revenue projections) and we’ll be able to do some changes and – for the lack of a better word – amend this budget before it goes into action the First of July.”

During a debate on amendments earlier Tuesday to the House version of the budget later amended into the Senate bill, House Minority Leader Pro Tempore Kayla Young, D-Kanawha, said “This has been a very confusing budget week, and not just for me but I’m sure you guys too” to House Finance Committee Vice Chairman John Hardy, R-Berkeley.

“I will agree that this has been a very unique legislative session and it’s been a very unique budget session with frustrations at many levels for many people,” Hardy said.