What are the details in Gov. Doug Ducey’s budget proposal for public K-12 education and higher education? And what is the economic outlook for Arizona? Find out here.

Click here for Arizona School Boards Association’s summary of the Governor’s budget proposal

Staff members of the Governor’s Office of Strategic Planning & Budgeting presented details of Gov. Doug Ducey’s Fiscal Year 2021 budget proposal during a press conference that began at 2 p.m. Friday, Jan. 17, 2020.

Gov. Doug Ducey’s FY 2021 budget proposal review

Click here for the FY 2021 Executive Budget Briefing PowerPoint Presentation

Economic outlook and summary

“Thanks to our conservative fiscal management over the past couple of years and state and federal tax reform the 2021 budget is really being built on the strongest cash and structural foundation of any budget in the post recession period,” said said Glenn Farley, budget manager and chief economist with the Governor’s Office of Strategic Planning & Budgeting.

Economic growth in Arizona has been “both remarkably consistent and resilient in the face of those national trends – specifically the core indicators of personal income and employment growth remain at or near post-recession highs of about 5 percent and 3 percent respectively,” Farley said.

“Most strikingly we remain both above the national average growth and very stable as there’s no corresponding signs of a slowdown at the state-level mirroring the slowdown at the national level,” Farley said.

“This is likely to be another strong year for the general budget,” Farley said.

“Given these trends, the executive forecasts continued growth in the 4.5 to 5 percent range for personal income and 3 percent range for employment over the next several years,” Farley said.

“This tells us that Arizona is strong, continues to be strong and should be resilient in the face of any kind of slow down nationally,” Farley said.

Arizona had general fund revenue growth of over 9 percent, “and a revised forecast contemplates about 5 percent growth in Fiscal 2020 which will create about $450 million ongoing dollars than were contemplated when we enacted the budget in May,” Farley said.

“Consistent with the national story, that growth rate slows to 2.1 percent in FY 2021 before picking up to that trend rate of 3.5% in the out years,” Farley said. “Those conservative assumptions allow us to maintain approximately $450 million in ongoing revenues throughout the forecast period, enabling us to meet the executive spending priorities without overcommitting or relying on over aggressive revenue assumptions.”

Related articles:
Gov. Ducey proposes new education investments, but no tax increase
New Invest in Ed initiative announced for 2020 ballot
Gov. Doug Ducey’s 2020 State of the State speech (Full text)

The governor intends to continue reducing taxes, Farley said.

“We do not think it is a coincidence that we have both the 14 lowest tax rate in the country and also according to Pew we’re ranked third for state economic momentum,” Farley said. “To that point the FY 2021 budget includes the Governor’s largest tax cut to date. We’re proposing to use $45 million to eliminate the state income tax on veterans’ military pensions.”

But to secure Arizona’s future and prepare for another economic slowdown, Gov. Ducey is proposing to add another $25 million in FY 20201 to the state’s rainy day fund, said Brittany Dettler, budget analyst at the Governor’s Office of Strategic Planning & Budgeting.

Statement: House Has Been Working Collaboratively with Governor and Senate on Budget; Will Release Budget Proposal at Appropriate Time. #AZleg https://t.co/XIhSiA43Os pic.twitter.com/6F1y2x6jaE

— AZ House Republicans (@AZHouseGOP) January 17, 2020

K-12 education budget details

Over half of the governor’s budget proposal is for K-12 education and higher education, said Alec Eulano, analysts and executive assistant for the Governor’s Office of Strategic Planning & Budgeting.

“The baseline anticipates cash reserve of roughly $965 million of which $776 million is dedicated to new initiative spending,” Eulano said. “Of that $776 million, nearly 2/3 of initiatives are one-time in nature.”

The Governor’s budget proposal includes supplemental funding for several programs whose expectations didn’t align with reality and that includes $35 million in supplemental funding to the School Facilities Board for building renewal grants, Dettler said.

“To date 78% of the FY20 appropriation has already been awarded to districts who have building projects and more demand is expected in the coming months,” Dettler said. “The executive wants to make sure the board has the funds to maintain our schools when they need it.”

The budget includes $6.4 million to enhance the square foot funding allotments to help fund new school construction in FY 2021, said Zachary Milne, budget analyst forecaster. Details in the slide below.

The focus on education includes $608 million in new K-12 investments, “all without raising taxes, said Sarah Giles, senior budget analyst.

Beginning with K-12, this budget includes $608 million in new investments to include $145 million for enrollment growth in inflation and other technical adjustments, Giles said.

“The Governor’s budget plan provides an additional $463 million for initiatives that address teachers, student and classroom needs,” Giles said.

The governor’s budget plan includes funds to restore district additional assistance two years in advance, Giles said.

This year’s budget proposal continue to grow the state’s investment in students with per-pupil funding up 33 percent since 2015 “to an estimated $5,410 in FY 2021,” Giles said. “We project that in FY 2022, we will see per-pupil spending increase to pre-recession levels.”

The two largest items in the K-12 budget “deliver on a promise to deliver more resources to Arizona’s K-12 public education system by finalizing the implementation of the 20 percent teacher pay increase by 2020 plan, and by fulling restoring the additional assistance portion of formula funding for schools,” Giles said.

The FY 2019 budget established a five year plan to restore $371 million suspended from the state aid formula for additional assistance, which is flexible funding that can be used for textbooks, technology and curriculum.

The governor’s budget proposal “accelerates the restoration of additional assistance by proving $204 million in initiatives and baseline funding to fully restore this portion of this state aid formula two-years ahead of schedule,” Giles said.

The budget plan also includes the final installment of the teacher 20 percent pay raise by 2020, Giles said.

The governor’s budget plan also includes $38 million in school safety grant funding to replace the costs of placing school resource officers, counselors and social workers on campus, Giles said.

“This past Fall schools submitted funding requests totaling $97 million – more than three times what was available,” Giles said.

“The $38 million would fund all remaining first-choice requests left so that every school that submitted a complete application can hire school safety personnel,” Giles said.

It will provide “an estimated 162 school counselors, 155 social workers and 144 school resource officers to schools in need,” Giles said.

The governor’s budget plan include $44 million for Project Rocket, a three year pilot program to help close the achievement gap in Arizona’s public schools, Giles said.

In 2016, a school turnaround pilot at Avondale Elementary School District resulted in a 13% increase in students passing the English/ language arts portion of the statewide assessment and an 18% increase in students passing the math portion, Giles said.

The governor’s budget plan proposes expanding this successful pilot statewide in FY 2021 by establishing a grant program which can be used to support implementation of proven turnaround strategies and an estimated 554 schools may quality for this funding, Giles said.

The details of what schools can opt into this State Board of Education administered program are on the slide above.

Results-based funding was first introduced in FY 2018 to reward schools with high academic achievement and to incentivize the expansion of and replication of high performing schools, Giles said.

The governor’s plan would include $35 million to transition to a letter grade basis which includes factors other the state’s assessment results and expand it from A schools to B schools that have 60% of students who receive free- or reduced-price lunch, Giles said.

That would expand the program to an estimated 743 schools in FY 2021, Giles said.

“The focus on education isn’t limited to K-12, but also includes workforce development at the postsecondary level to help Arizona compete in the next generation economy,” Giles said.

The budget proposal includes funds for programs that set up students for success in the classroom and beyond, said Zachary Milne, budget analyst forecaster.

“Earning college credit by passing qualifying exams helps Arizona students and families to save money on tuition and allows students to graduate sooner,” Milne said. “The College Board estimates that students save $48 million thanks to passing Advanced Placement tests in 2018.”

The proposal includes $2 million to fully fund the incentive payment for students passing exams under the CLEP and $1 million to completely waive college credit exam fees for students tho qualify for free- and reduced-price lunch, Milne said.

Attracting and retaining teachers to the classroom and giving students the tools they need to succeed is also factored into the budget, Milne said.

The budget proposal includes $500,000 to expand the alternative teacher development program and $400,000 to expand the number of students enrolled in the Jobs for Arizona Graduates program which targets youth that experience barriers to careers and education, Milne said.

Governor Ducey’s budget proposal begins to address many important funding needs, including a number of the short-term priorities outlined in the Roadmap for P-20 Education Funding, said Christine M. Thompson, president and CEO of Expect More Arizona.

“In particular, we’re pleased to see investments in student safety, career and technical education, community colleges and universities and rural broadband. These are impactful investments given the revenue the state has today,” Thompson said.

“Yet, it is important to be clear that these investments are not enough to close the achievement gaps in Arizona and support the success of all students,” Thompson said. “A strong education sector is the foundation of the state’s infrastructure and we’re not where we need to be.”

“With the broadly supported Education Progress Meter goals as our guide, we need additional sustainable investments that will significantly advance outcomes for all students and support each part of the education system,” Thompson said.

“We look forward to continued conversation with Governor Ducey, members of the legislature, education and business leaders and others about opportunities to put politics aside and put students first,” Thompson said.

Higher education budget details

The executive budget also include $102 million in new investments for higher education for Arizona’s public universities and community colleges, Giles said.

‘These investments enhance Arizona’s efforts to align higher education with critical workforce development needs,” Giles said.

The executive budget includes an investment of $80 million for Arizona public universities, which is part of Arizona Board of Regents Chair Dr. Larry Penley’s New Economy Initiative, said Yan Gao, a budget analyst.

This $80 million initiative aims to enhance the universities’ capacity to graduate more students for the critical jobs today and tomorrow in STEM fields, Gao said. Details are in the slide below.

The governor’s proposal includes $1 million for the Arizona Teachers Academy to attract more potential teachers, Gao said.

“Arizona has experience the second highest growth in new teachers enrolling in teacher preparation programs,” Gao said.

The executive budget also includes $11 million in targeted investments for community colleges to fully fund the STEM &Workforce Program Aid formula for the first time since 2018 for Maricopa, Pima and Pinal community college districts, Gao said.

The budget “also includes $6 million to expand education opportunities at 10 Arizona rural community college districts for flexible operating funding and career and technical education programs,” Gao said.

It also includes $4 million for the Arizona Commerce Authority to expand the Arizona Advanced Technology Corridor to help enhance and accelerate workforce development at community colleges, Gao said.