School Finance in ArizonaSchool Finance in Arizona

Chuck EssigsChuck EssigsAASBOAASBO

Funding of Schools

1900 - 1950 Very little state assistance Very little state control Ability to fund educational programs

based upon wealth of community1950 – Today

Gradual increase in state assistanceGradual increase in state controlHigher level of equity between school districts

How is the Budget Limit Established?Revenue Control Limit (RCL)1. Regular ADM of the District

a. Preschool Handicappedb. K-8 Studentsc. 9-12 Students

2. Special Program Add-onsa. Certain Handicapped Studentsb. Limited English Learners (ELL)c. K-3 Studentsd. All K students

3. Teacher Experience Index4. Pupil Transportation Program

2008-09 Group A Concept2008-09 Group A ConceptElementary and High SchoolElementary and High School Basic Wt. Basic Wt. Group A Wt.Group A Wt. Total*Total*Elem. 1.00Elem. 1.00 0.1580.158 1.158 1.158 $3,332 $526 $3,858$3,332 $526 $3,858

1.1631.163 0.1050.105 1.268 1.268H.S. $3,875 $350 $4,225 H.S. $3,875 $350 $4,225

Regular education - special servicesRegular education - special services::Specific learning disabilitySpecific learning disability Emotional disability Emotional disabilityMild mental retardationMild mental retardation Remedial education Remedial educationSpeech/language impairmentSpeech/language impairment Homebound HomeboundOther health impairment Other health impairment Bilingual BilingualPreschool/speech lang. delayPreschool/speech lang. delay Gifted GiftedPreschool/moderate delayPreschool/moderate delay Career Exploration Career Exploration

*Includes 1.25% for “Teacher Compensation”*Includes 1.25% for “Teacher Compensation”

Small School District Funding WeightsSmall School District Funding Weights2008-09 School Year2008-09 School Year

Elementary High SchoolElementary High SchoolDistrict Small SmallDistrict Small SmallSize Size Isolated SmallIsolated Small Isolated SmallIsolated Small

Over 600 $3,858 $3,858 $4,225 Over 600 $3,858 $3,858 $4,225 $4,225$4,225

500 500 400400 increases up to increases up to300300200200100100 $5,194$5,194 $4,560 $4,560 $5,560 $5,560

$5,194$5,194

**Isolated = no schools within 30 miles of another district or if Isolated = no schools within 30 miles of another district or if road conditions and terrain make the driving slow or road conditions and terrain make the driving slow or hazardous; 15 mileshazardous; 15 miles

Group B Add-OnGroup B Add-On

CategoryCategory WeightWeight Amount Amount KK 1.3521.352 $4,505* $4,505*K-3 K-3 0.0600.060 $200 $200English Learners English Learners 0.1150.115

$383$383Disabled StudentsDisabled Students Range from $10,502 Range from $10,502

to to $25,711 $25,711

Hearing Impaired, Multiple Disabilities, Physically Hearing Impaired, Multiple Disabilities, Physically Impaired, Moderate Mental Retardation, Severely Impaired, Moderate Mental Retardation, Severely Emotionally Disabled and Visual ImpairmentEmotionally Disabled and Visual Impairment

* at 0.50 = $2,252* at 0.50 = $2,252

Group A ConceptGroup A Concept

Extra funding forExtra funding for Expenditures Expenditures forfor

every student =every student = special needs special needs

studentsstudents

No financial incentive to put student inNo financial incentive to put student in No financial incentive not to end No financial incentive not to end

servicesservices Assumes fairly equal distribution of Assumes fairly equal distribution of

studentsstudents

Group B ConceptGroup B Concept

Extra funding forExtra funding for Expenditures forExpenditures for

specific students =specific students = specificspecific

studentsstudents

Identification criteria clearIdentification criteria clear Parents follow programsParents follow programs

Capital Outlay Revenue Limit Capital Outlay Revenue Limit (CORL) (CORL) Note: 64% transferred to M&ONote: 64% transferred to M&O

Unweighted Student Unweighted Student CountCount

times times

Support LevelSupport Level

times times

CORL growth factorCORL growth factor

plusplus

High School TextsHigh School Texts

Soft CapitalSoft Capital

Unweighted Student CountUnweighted Student Count

times times

Support LevelSupport Level

2008-09 CORL and Soft 2008-09 CORL and Soft Capital Amounts*Capital Amounts*

CORL K-8 = $225.76CORL K-8 = $225.76 CORL 9-12 = $267.94CORL 9-12 = $267.94 CORL textbooks 9-12 = $69.88CORL textbooks 9-12 = $69.88 Soft Capital = $225.00Soft Capital = $225.00

* Same amount since 1998-99 for all * Same amount since 1998-99 for all areasareas

Additional AssistanceAdditional AssistanceCharter SchoolsCharter Schools

Charter Schools / CORL, Soft Capital, Charter Schools / CORL, Soft Capital, Pupil Transportation, School Facilities Pupil Transportation, School Facilities Board (SFB)Board (SFB)

Additional Assistance 2008-09Additional Assistance 2008-09K – 8K – 8 $1,474.16$1,474.169 – 129 – 12 $1,718.10$1,718.10

District Base Level Add-onsDistrict Base Level Add-ons

Teacher compensationTeacher compensation– Increase Base Level by 1.25% in SBE Increase Base Level by 1.25% in SBE

approves “performance evaluation approves “performance evaluation system” i.e. certificationsystem” i.e. certification

Teacher experience indexTeacher experience index– 2.25% increase to BSL for each year 2.25% increase to BSL for each year

of experience above averageof experience above average Career ladderCareer ladder

– 28 districts get additional 5.5% 28 districts get additional 5.5% increase to Base Levelincrease to Base Level

Equalization ConceptEqualization Concept

School District School District Spending LimitSpending Limit

(Equalization Base)(Equalization Base)

minusminus

Local ContributionLocal Contribution(QTR)(QTR)

equalsequals

State AidState Aid(Equalization Assistance)(Equalization Assistance)

Two Hypothetical Unified Two Hypothetical Unified DistrictsDistricts

“Property Rich”

$3,226.88 x 1,000 (weighted ADM)$3,226,880 guaranteed

Local property taxes$50,000,000/$100

(district’s taxable value) x $2.9244 QTR

equals $1,462,200(45% of guaranteed amount)

State (& county)$3,226,880 minus $1,462,200equals $1,764,680(55% of guaranteed amount)

“Property Poor”

$3,226.88 x 1,000 (weighted ADM)

$3,226,880 guaranteed

Local property taxes$25,000,000/$100

(district’s taxable value) x $2.9244 QTR

equals $731,000(23% of guaranteed amount)

State (& county)$ 3,226,880 minus $731,100equals $2,496,780(77% of guaranteed amount)

Some District Budget Categories . Some District Budget Categories . . .. .

are paid from local are paid from local property taxes . . .property taxes . . .

. . . causing issues with per-. . . causing issues with per-pupil spending and taxationpupil spending and taxation

M&O OverridesM&O Overrides

M&O OverridesM&O Overrides– 10% of RCL10% of RCL

K-3 OverridesK-3 Overrides– 5% of K-8 RCL5% of K-8 RCL

Other Items Other Items Outside Equalization Base, FY Outside Equalization Base, FY 20082008

DesegregationAdjacent WaysExcess UtilitiesTransportation RCLSmall School Dist.Dropout PreventionRegistered Warrants

Inflation Funding Inflation Funding 1991-92 through 2000-011991-92 through 2000-01

Increases to Base LevelIncreases to Base Level Increase less than inflation for 9 or Increase less than inflation for 9 or

10 years10 years Inflation funding covered one-third Inflation funding covered one-third

of actual inflationof actual inflation

Prop. 301 / Implemented in Prop. 301 / Implemented in 2001-02 2001-02

School yearSchool year

For first 5 years – 2% For FY2006-07 and each year For FY2006-07 and each year

thereafter, the Legislature is thereafter, the Legislature is required to increase the Base required to increase the Base Level or other RCL components by Level or other RCL components by the lesser of 2% or the price the lesser of 2% or the price deflator.deflator.

Inflation Impact – Post Prop. Inflation Impact – Post Prop. 301 301 (continued)(continued)

Year Actual Rate * Funding Inc.** Variation

2001-02 2.2 2.0 <0.2>2002-03 2.4 2.0 <0.4>2003-04 1.7 2.0 0.32004-05 2.9 2.0 0.92005-06 2.2 3.2*** 1.02006-07 3.2 4.4**** 1.22007-08 3.2 2.98***** <0.22>2008-09 2.7 2.0 <0.7>* Percentage growth in the GNP price deflator** Percentage increase in the base level funding factor as provided in A.R.S. 15-901*** Includes an additional 1.2% for retirement/health insurance**** Includes an additional 2.4% for retirement/health insurance and

increase salary for non-administrative personnel***** Includes 0.98% for increased salary for non-admin. personnel

Education Week RankingsEducation Week Rankings

Adequacy of FundingAdequacy of Funding

Rank Rank 49th out of 49th out of

5050 Arizona $7,112 vs. national average Arizona $7,112 vs. national average

of $9.963of $9.963

Education Week RankingsEducation Week Rankings

Education Spending Per Pupil FY2006 Education Spending Per Pupil FY2006 (Operational)(Operational)

RankRank StateState AmountAmount

11 VermontVermont $15,139$15,139

22 WyomingWyoming $14,128$14,128

33 New JerseyNew Jersey $13,238$13,238

Avg.Avg. U. S. U. S. $9,963$9,963

4848 NevadaNevada $7,213$7,213

4949 ArizonaArizona $7,112$7,112

5050 UtahUtah $5,964$5,964

American Legislative American Legislative Exchange Council (ALEC)Exchange Council (ALEC)

Arizona (2005-06) (Operations)Arizona (2005-06) (Operations) Expenditure Per Pupil rank next to Expenditure Per Pupil rank next to

lastlast Pupil/Teacher Ratio = 21.3 vs. Pupil/Teacher Ratio = 21.3 vs.

national average of 15.2national average of 15.2 Pupil/Teacher Ratio rank next to Pupil/Teacher Ratio rank next to

highest (only Utah at 22.1 puts highest (only Utah at 22.1 puts more kids in each class)more kids in each class)

Move to National AverageMove to National Average

Using ALEC data, Arizona is $2,956 Using ALEC data, Arizona is $2,956 below national average below national average

46% increase to move to average46% increase to move to average Estimated cost is $3 billionEstimated cost is $3 billion 2% inflation - $100 million2% inflation - $100 million 30 years of extra 2% needed30 years of extra 2% needed

Also Part of the Spending Also Part of the Spending Per Pupil Discussion / Capital Per Pupil Discussion / Capital SpendingSpending

Arizona ranks near the top for: Arizona ranks near the top for: student growthstudent growth capital expenditures per pupilcapital expenditures per pupil student/teacher ratiostudent/teacher ratio

Other Major Revenue Sources

2008-09

Classroom Site Fund – Prop. 301

($470 per student / $390 per weighted count)Instructional Improvement Fund –

Indian Gaming ($40 per student)

Budget Limit

School District Governing Board Allocates Funds to Regular, Special and Pupil Transportation Program fromBudget Limit

Pupil Transportation

Special Ed. includes:A. Programs for the handicappedB. Gifted educationC. Programs for LEP studentsD. Remedial educationE. Vocational and technical educationF. Career education

Special Education

Regular Education

Budget Limit Increase

No

Growth Growth Decline

New students 2% 0 <3%>

Plus inc. amt./stu. + 2% + 2% + 2%

4% 2% <1%>

Hire new Salary Cuts staff + Increase salary increase

Salary and Benefits

85 – 90% of operating budget

Governing Board

Employees

More Services More Services Taxes High Quality Higher Salaries

Parentsand

CommunityTaxpayer

Budget

Not enough dollars to meet Not enough dollars to meet demandsdemands

Formula / LegislatureFormula / Legislature

Dollars not being spent effectivelyDollars not being spent effectively

Budget Allocation / School DistrictBudget Allocation / School District