Death by a thousand cuts

A post-Prop. 123 election poll showed 74% of Arizonans support even more funding for our public schools. This, even though I suspect most of the general public has little idea about ALL the “death by a thousand cuts” our public school districts are experiencing. One of those amounts to an estimated loss of about $33 million statewide. In effect, districts will not be paid for the 2015-2016 school year due to the transition from prior-year, to current-year funding and in many cases it basically wipes out the gains districts made from Prop. 123.

Even as the voters “giveth” again via Prop. 123, the Legislature taketh away with the move last year to change the how “student count” is determined. Prior to the law change, district budgets were calculated using the 100th day average daily membership (ADM) count from the prior year. Now, districts are forced to base their budgets on an estimated number of students for the current year before school starts. Budgets are then adjusted during the year to reflect actual student enrollment. Unfortunately these adjustments are just on paper; they don’t fix the funding problem districts must then live with. If they overestimate, they’ll overspend their budgets and have state aid reduced times two the amount overspent. If they underestimate, they won’t have sufficient funding to operate for the current year. Either way, being forced to guess on student count can mean hiring freezes, delays in discretionary expenditures, postponing payments to vendors, teacher lay offs, and ultimately, the district being placed into receivership if they fail to create a solid repayment plan.

The difference to district budgets can be substantial. Balsz Unified for example, could see a $1 million reduction in their budget for 2017/2018. For TUSD, the estimated impact is $4.5 million. In addition to the resulting operational constraints, current year funding also impacts district ability to garner override and bond funds. AZCentral.com reported that if current-year funding had been the law in 2015 when Gilbert Public Schools passed their 10% override, the amount generated would have been about $300,000 less. Another consequence of the probable deficits or surpluses in ending-year cash balances is tax rates that may fluctuate drastically from one year.” That will surely please taxpayers, especially our retirees on a fixed income. Guess what block of voters are the most consistent in voting? Anyone? Anyone?…Bueller?

It is interesting that we’ve gone down this road, since we’ve traveled it before. In 1980, districts were allowed to build budgets with current year or prior year students counts. The process was changed because districts got in trouble with estimating student counts. They overspent budget capacities and miscalculated tax rates. School business officials and administrators are asking if it was a bad idea then, why is it a good idea now?

Bottom line is, it isn’t. Arizona is experiencing a critical shortage of teachers, especially highly effective ones, with many districts having numerous unfilled positions. This means substitutes are in many classrooms, classes are combined, or class sizes are larger than ever. Where there are teachers, their inexperience or turnover can have an impact on the achievement of students, especially for those in low-income and low-performing schools as well as at-risk students. Potentially exacerbating the situation, districts may be forced to (as ARS 14-544 allows) eliminate certificated teachers “to effectuate economies in the operation of the district or to improve the efficient conduct and administration of the schools of the school district.”

The projected savings from the change to current year funding is one-time and the model increases administrative burdens at a time when school districts are being directed to reduce administrative costs. It also comes when District Additional Assistance (used for soft capital costs such as classroom materials and supplies and capital funding such as facility maintenance, busses and technology) was estimated to be reduced by over $381 million. The perfect storm conditions were then made complete with the Arizona Department of Education’s transition to a new data collection system called AzEDS.

So why did the Legislature change the law? One anonymous source told me the Arizona Tax Research Association (ATRA), represented by their former Senior Research Analyst Justin Olson, pushed the change. In a February 2008 paper, ATRA advocated for: 1) moving from the “prior year plus growth” to current year funding to ensure districts are not paid for students who are now enrolled elsewhere, 2) ensuring districts student growth reports are legitimate and 3) eliminating or reduce rapid decline funding. Unfortunately, as a Prescott Schools Current Year Funding Concerns paper points out, “Current year funding will create unpredictability in ADM (average daily membership or student count), resulting in cash deficits or significant positive cash balances.” Yes, some districts experiencing student growth may receive additional funding, but it is largely offset by unpredictability that is counter-productive to employee morale.

 If the way student counts were determined was the problem, why aren’t current year numbers used for all school funding formulas? Chuck Essigs, Executive Director of the Arizona Association of School Business Officials) writes that “only the Base Support Level for both school districts and Joint Technical Education Districts will be based upon current year count,” the largest component in determining state aid and budget capacity. Other school funding components that use student count in the formulas are the Classroom Site Fund, Instructional Improvement Fund, small school exemption, tuition calculations and more.

Color me cynical, but it would appear this move is just one more step toward education privatization by the Arizona Legislature. The narrative goes like this: 1) decrease funding to district schools to make it harder for them to succeed, 2) introduce more instability to district school funding to make it harder for them to attract and retain the best teachers and 3) refuse to hold commercial schools (for-profit charters and private) to the same level of accountability and transparency to help them look better.

Want to change the narrative to one that works for 85% of Arizona’s children? Sure you do and, you know how. Let your vote be your voice on November 8th. Vote only for pro-public DISTRICT education candidates. They, like pro-district public education advocates, won’t kill charters, we recognize they have their place. We just don’t think it should be first place. What they will do, is ensure the priority for funding and support is on our district schools…the only schools that accept all students, are governed by locally elected school board members (your neighbors), are fully transparent, and are fully accountable for the taxpayer dollar!

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