HOT TOPICS IN SCHOOL FINANCE

A limited number of districts approved by the State may increase the Base Level amount in their budgets by up to an additional 5.5%, if it participates in a teacher compensation program entitled "Career Ladder". Out of 230 districts in Arizona, 28 have Career Ladder program - however those 28 include approximately 35-40% of all Arizona teachers.

Issue: Not all districts have Career Ladder opportunity. A lawsuit has been filed by a non-qualifying district base on the general and uniform clause of the state constitution. A.R.S. §15-481 allows a district to increase its budget up to 10% of its Revenue Control Limit if the voters of the district approve by election. The voter authorization is given for up to seven years. A district can renew its authorized percentage (up to 10%) in the last two years of an existing override by passing another election

A special override election for academic achievement in grades K-3 may be held by an elementary or unified district.

Issue: Low property wealth communities can sometimes have difficulty passing an override at the ballot because of high tax rates A district may budget for utility costs that are exempt from the Revenue Control Limit, as provided in A.R.S. §15-910. Excess utilities are direct operational costs of heating, cooling, water, electricity, telephone communications and sanitation fees that exceed a base amount. A district may expend from the excess utility budget category only after it has expended the full amount budgeted in the base utility lines of the budget.

Issue: $90 million in utility costs are currently included in excess utilities. Pursuant to a statewide public vote in 2000, this provision will be eliminated after 2009. Additional budget capacity for a district to comply with or continue to implement activities relating to a court-ordered desegregation or administrative agreement with the United States Department of Education Office for Civil Rights is allowed under A.R.S. §15-910.

Issues: Money to fund desegregation expenditures comes from local property tax; not all districts have opportunity for desegregation monies. This can result in substantial disparities in per-pupil spending and taxation levels. School districts that have a student count of 125 or less students in grades K-8 or 100 or less students in grades 9-12 may adopt a budget in excess of their normal calculated budget limit. Districts that utilize this provision are allowed to add any needed dollars at the time the budget is proposed (A.R.S. §15-949).

Issue: Paid with local prop tax, without public vote. Monies in this fund can only be used for performance-based teacher compensation increases, teacher employment-related expenses, and registered warrant expenses for this fund. (Prop 301 funds)

Each district must submit a Classroom Site Fund Pay for Performance Compensation Plan to the Arizona Department of Education on or before December 31st of each year.

Issue: Multiple performance-based compensation plans; effective PBC plans In 2006-07 a kindergarten support level weight was added to the budget formula.

Issue: Funding to expand facilities to provide for additional kindergarten classrooms.

Voluntary All-Day Kindergarten Students FIRST law established this fund for the purpose of maintaining the adequacy of existing school facilities to be used for major renovations and repairs of a building, for upgrades to building systems (e.g. heating, cooling, plumbing, etc.)

Issue: Distribution of these funds has been deferred due to the impact of new school construction on the State's general fund. This fund is administered by the School Facilities Board and has been established for the purpose of constructing new schools to meet the minimum adequacy guidelines. The School Facilities Board distributes new school facilities monies to school districts based on the following formula: (number of students) x (square footage) x (cost per square foot) = allocation. Land costs are funded in addition to formula funding for new construction.

Issues: Minimum adequacy guidelines are unacceptable to some communities. The cost per square foot is no longer adequate for quality construction. There is no dedicated source of funds, dramatically impacting the general fund and the ability to fund other programs. School districts must improve streets, lighting, etc, next to newly constructed or current district schools. Improvements not paid for by SFB.

Issue: Funds come from local property taxes without vote. In 1992, Flores v. State of Arizona was filed in federal district court. The plaintiffs alleged that the civil rights of Limited English Proficient (LEP) students were violated because the state failed to provide a program of instruction that included adequate language acquisition, academic instructional programs and funding for at-risk, low-income, minority students. In May of 2001, the ADE released an "English Acquisition Program Cost Study" that identified per-pupil costs in the sampled immersion programs. However, the cost study did not contain any specific conclusions or recommendations, only an estimated price range of $0 to $4,600 per ELL student.

Issue: The state legislature argues that adequate funding exists vs. attorney Tim Hogan's argument that additional dollars are needed to provide appropriate services. While the court has ruled in Mr. Hogan's favor, the state has filed an appeal.

Resolution of Flores / ELL Issue (Second Letter) - February 15, 2006

Resolution of Flores / ELL Issue - January 31, 2006