Arizona Education Funding Formula Basic Essentials

For Those Who Care But Do Not Have an Accounting Degree

A Preview

• The Basic Formula- same $ for everyone... sort of• Who Pays for What• Per Pupil Funding Comparisons• Funds in the Classroom• Take Home Messages

The Basic Support Level FormulaSince the early 1970s, Arizona has had an equalization formula for public education

NO MATTER WHERE A CHILD LIVES IN OUR STATE, he receives the exact same amount of base funding as every other child in our StateThis is known as the Base Support Level (BSL)

I get what she gets, and she gets what he gets… and it doesn’t matter where we live in the whole State*

* Except for the “weights”

The “Weights”

On to the Basic Support Level (BSL) are added “weights,” or additional funds for more costly types of instruction

There are weights for– Special Ed.– High School Students– English Learners– K-3 Students *– Small/Isolated Districts

* There used to also be a weight for Kindergarten that paid for All Day Kindergarten. That was eliminated in 2010.

What Does A Weight Look Like?

The Special Education Weight for FY2010 was calculated by multiplying the BSL (base) amount by the given number for each diagnosis:

Multiple Disabilities Severe Sensory Impairment- 7.947Orthopedic Impairment (Self Contained)- 6.773Visual Impairment- 4.806Hearing Impairment- 4.771Moderate Mental Retardation- 4.421Developmental Delay, Mild Mental Retardation,Speech and Language Impairment, Other Health Impaired 0.003

The Capital Funding FormulasThere is a formula to calculate soft capital (paper, pencils, anything used in the

classroom that does not last)Unweighted student count x BSL

There is another formula to calculate Capital Outlay Revenue Limit- CORL- (textbooks, desks, chairs, computers, and other stuff that lasts a while)

Unweighted Student Count x BSL x CORL Growth Factor + High School Textbooks

Capital funds are typically NOT allowed to be

used for anything but Capital-

fund swaps are NOT OK

Construction & Facilities• Growing districts are given funds from the State to build new

buildings. Until 2010, school buildings were paid for with cash from the State general fund.

• Older districts and those with declining enrollment are legally entitled to receive renewal and upgrade funds from the State School Facilities Board (SFB). For many years, the State has not fully funded this Board.

• Any district can go to its local voters to ask for a bond for new construction. Once a bond is passed, it is audited every year and MUST ONLY BE USED as specified in the ballot.

Local Extras

School districts are allowed to increase their funding through voter approved overrides and bonds

• M&O Override* = 15% of M&O budget• Capital Override = % of M&O budget• Bonds = specified amount for specific capital

(building/bus)projects

* In 2010, the State passed a law that ended the K-3 Override possibility, and increased the maximum amount of an M&O Override from 10 to 15%

Overrides & Bonds• Any override is for a 7 year period. It is an added percentage of up to 15%

of the total M&O budget that, if passed, can be used for anything that legally falls under M&O (the bulk of this budget is staff and salaries). At the end of the 5th year, the funding begins to decrease; so districts typically ask for renewals in the 4th year.

• Bonds are for specific capital projects, primarily building renovations & transportation needs. Bonds cannot be renewed. Each new project requires a new bond that must legally specify every part of the project in detail. Funds approved through bonds can ONLY be used for the specifications in the bond language.

Local elections offer voters a chance to supplement- with their own tax dollars- the funds directed to their neighborhood public schools

Tax Credit• Arizona allows taxpayers to direct a portion of their

owed state taxes directly to a public school. $200 per single filer; $400 per married couple

• Tax credit for public schools can only be used to fund extracurricular programs and those not associated with a grade.

• Tax credit: the untapped resource?

Other Funding Pots of MoneyBesides the voter approved projects (overrides and bonds) school districts can generate revenue through property taxes for line items including:

• Adjacent ways- $ to improve public ways on land owned or leased by schools.• Desegregation• Transportation• Prevention

Districts also get some Indian Gaming money, although these funds have dwindled with the decline in the economy.

And sometimes voters approve measures, like Prop. 301, that mandate additional education funds. *A CAUTIONARY TALE- always read the WHOLE ballot measure*The district used to be able to collect for utilities since the State froze funding at 1980 levels. This ability was taken away in 2009. A new utilities funding formula has been created, but it has yet to be funded. Utilities alone costs our district about $5 million every year.

A Funding Graphic(just a picture- no ratio accuracy!)

* Add federal funds and we get about $8800 per

pupil

Feds? State? Local Community?Who Pays What?

The Arizona school system received just $8,806 per pupil in revenue from all sources.

The state gave less financial support per pupil than almost any other state at just $3,227 per student in 2011, the second-lowest amount per pupil. This accounted for just 36.6% of all funding to Arizona schools, while schools nationwide received 44.4% of their funds from their state.

As of fiscal 2011, the Arizona school system received 48.4% of its funding from local sources, higher than the 43.3% share for all schools nationwide.

Read more: States Spending the Most on Education - 24/7 Wall St. http://247wallst.com/special-report/2013/05/31/states-that-spend-the-most-on-education/#ixzz2ckIRs3SA

Calculating the State’s Portion

School District Spending Limit (BSL with weights and capital)minus

Local Contribution(QTR)equals

State Aid(Equalization Assistance)

Who Gets State Aid?Not Much for Us!

• If the equalization base funding level is greater than QTR (the tax rate) x NAV (total property values), local property taxes will not be adequate to fund the district’s budget. The remaining amount of funding is provided by the state’s general fund. This is called basic state aid.

Typically, this occurs in smaller, more rural communities with less business and property to tax.

If the equalization base is less than QTR x NAV, no basic state aid is provided and the primary property tax rate is set at the level required to generate the equalization base.

Any additional taxes collected in these communities are put back into the state general fund to be used for basic state aid.

So In A Nutshell…

• The State has an equalization formula that funds every child in the State at the same base level.

• Funding increases if the district has children with special needs by applying the special weights formula

• For some projects, local communities can vote to use their property taxes to directly support their schools.

• State aid money is given to districts that cannot raise enough taxes on their own

And With All This Funding, Where Do We Stand?

Cuts from the State have an impact

From AASBO presentation: Arizona School Funding-Past to the Future, Chuck Essigs

How the $$ Are Spent

What do those categories mean?

• InstructionSalaries and benefits for teachers, instructional aides, and coaches; costs related to instructional supplies, such

as pencils, paper, and workbooks; athletics; cocurricular activities, such as band or choir; and tuition paid to out-of-state and private institutions

• Student supportSalaries and benefits for attendance clerks, social workers, counselors, nurses, audiologists, and speech

pathologists and other costs related to these support services to students. • Instruction supportSalaries and benefits of curriculum directors, special education directors, teacher trainers, librarians, media

specialists, and instruction-related IT staff and other costs related to assisting instructional staff in the delivery of instruction.

• AdministrationSalaries and benefits for superintendents; principals; business managers; and clerical and other staff who

perform accounting, payroll, purchasing, warehousing, printing, human resource activities, and administrative technology services; and other costs related to these services and the governing board.

Take Home Messages

• There are a few ways that local voters can supplement education funding at the ballot box. Your vote matters!

• Education funding in Arizona is largely regulated at the state level based on an equalization formula- every child gets the same amount regardless of location. Local school boards and district administrations can make some decisions about how to spend those funds. But If you want to impact funding, you need to be active at the State level.

Need More Information?• Arizona Association of School Business Officials http://www.aasbo.org/ http://www.resdonline.org/filestore/azschoolfinancemanuals.pdf http://www.aasbo.org/associations/9641/files/Essigs%20-%20AZ

%20School%20Funding.pdf

• Arizona Auditor General http://www.azauditor.gov/

• U S Census Bureau http://www.census.gov/

• Arizona Business and Education Coalition http://www.azbec.org/