ARIZONA FRAMEWORK FOR SCHOOL FINANCE Dr. Debra Bergman Assistant Superintendent & Hector M. Encinas Chief Financial Officer

Overview  Funding in the State of Arizona  Equalization Formula  Pros and Cons of the Finance Structure  Recommendations

Funding in the State of Arizona  How does Arizona compare to other states in funding education?  Arizona is 49 th in funding local school districts out of the fifty states.

Funding in the State of Arizona  Where do we get most of our school funding?  Equalization Formula Average Daily Membership (ADM) Definition of ADM - Attendance, which is actual students in seats averaged over the first 100 days.

Funding in the State of Arizona  Why does Arizona have an Equalization Formula?  “…enact such laws as shall provide for the establishment and maintenance of a general and uniform public school system.”  The Equalization Formula is used to standardize/equalize the amount of funding a school district receives to educate each student regardless of differences in property values among districts.

Funding in the State of Arizona  How is the equalization process different from funding prior to 1981?  The equalization law establishes a formula that standardizes budget limits across school districts to fund annual budgets.

Funding in the State of Arizona  What components are included in the State Equalization Formula?  Main funding components of the formula are: Base Support Level (BSL) Transportation Support Level (TSL) District Additional Assistance (DAA) (formerly known as Unrestricted Capital Outlay and Soft Capital Outlay)  Recent Legislative action has utilized reductions to DAA in order to minimize increases to School Budgets. “DAA reduction for State Budget Adjustments “

Funding in the State of Arizona Base Support Level Per pupil funding that goes into a “pot” designated as Maintenance and Operations. Transportation Support Level Money districts receive for transportation on approved daily routes for 180 days of school for eligible students. District Additional Assistance Funds for furniture, fixtures, technology and items expected to last more than one year and can also be “rolled over” to M&O for M&O expenditures.

Funding in the State of Arizona  How does the formula determine what is allocated to each district?  The state determines a count of students by district (ADM).  The Base Support Level (BRCL) and the Transportation Support Level (TRCL) are added to arrive at the District Revenue Control Limit (RCL)  District Additional Assistance (DAA)per student allocations are multiplied by the number of students in each district (ADM).  The dollars are totaled and this sum becomes the “equalization base funding level” for each school district.

Funding in the State of Arizona  Major Funding Sources:  State Equalization (State Aid)  Local Funds (Primary and Secondary Property Taxes )  Federal Grants Funds  State Grants  Federal Lunch Program Funds

Funding in the State of Arizona

 Programs that generate additional funding for districts Maintenance and Operations (M&O) and Capital outside the Equalization Formula :  Overrides  Bonds  School Facility Board  Budget Balance Carry Forward (4% limit)  Desegregation Costs  Dropout Prevention  JTED  Classroom Site Fund (Prop 301)  Instructional Improvement Fund (AKA Indian Gaming Money)  Student Success Fund  Medicaid Reimbursement Fund

Funding in the State of Arizona  Pros of School Funding  The implementation of the Equalization Formula has provided lower property value districts funding equal to higher property value districts to educate their students.  Voters of Arizona approved an increase to the State’s sale tax by six-tenths of 1% to provide an inflationary funding increase annually in future years.  The legislature can provide full funding to districts of the inflationary funding, which would be $311 million for FY 15. The total amount of unfunded inflation money is in excess of $1.2 billion.

Funding in the State of Arizona  Cons of Arizona School Funding  The state legislature hasn’t fully funded the Classroom Site Fund for education. Revenue is shared with other governmental entities.  The state legislature hasn’t been funding the inflation factor.  Class size has increased across districts due to budget cuts.  The state per student allocation is too low and needs to be increased by the legislature.  If Sunnyside were to receive inflationary monies owed:  FY10-FY14 amounts would be in excess of $19.1 million  FY15 amount would be approximately $5.2 million  FY16 amount would be $7.1 million

Funding in the State of Arizona  Recommendations:  The state legislature and Governor need to re-examine their commitment to educational funding and increase funding to move Arizona out of 49 th place in the country.  The state legislature and Governor need to fully fund the Classroom Site Fund.  The state legislature and Governor need to fully fund the inflation factor.  The state legislature and Governor need to support full funding for unfunded federal mandates such as: New State Testing (PARCC) New Evaluation System for Teachers and Principals

Funding in the State of Arizona  References:  Arizona Department of Education | The Official Website of... Arizona Department of Education | The Official Website of... Arizona Education Network Barchfield, Vanessa, “Public School Funding Key Issue Election” September 30, 2014, Public Education in Arizona. Judge: Arizona owes public schools more than $300 M Arizona School Finance Summary Manual, Arizona Association of School Business Officials, December, Fischer, Howard, “Brewer: State should pay schools what they’re owed,” Capitol Media Services, Arizona Daily Star, October 1, what-they-re-owehttp://tucson.com/news.local/education/brewer-state-should-pay-schools- what-they-re-owe