4:41 p.m.

Matt Gress, director of the Governor’s Office of Strategic Planning and Budgeting, kicked off the Executive Budget Public Hearing with the details of Gov. Doug Ducey’s fiscal year 2019 budget, saying that chief among the budget priorities was K-12 education.

“Let’s look at the general fund, for fiscal year 2018 we’re projecting an ending balance of about $43 million, a structural balance of $5.6 million,” Gress said. “Moving into 2019, the executive budget has projected revenues of 10.2 billion and a total spending plan of $10.1 billion leaving us with an ending cash balance of about $67 million and an ending structural balance of $5 million.”

LiveStream video: Executive Budget Hearing

Glenn Farley, the governor’s chief economist, said the first step in figuring out the revenue forecast is figuring out where the national and state economy is going in the next couple of years.

“We’re cautiously optimistic and we’re expecting slow, but sustainable growth and that’s been the post-recession trend since 2012 and to a certain extent that remains true in the current executive budget,” Farley said. “We’re beginning to see some signs that for the first time since that recession we may be on the cusp of a turnaround and a return to more traditional, robust levels of growth both nationally and in this state.”

Charlie Martin, Senior Budget & Operations Analyst who covers K-12 education, said the Governor’s budget proposal prioritizes K-12 education with over 80 percent of new discretionary spending dedicated to K-12.

“That amounts to $190 million dollars in new initiatives that are top of baseline adjustments for enrollment growth and inflation,” Martin said.

The largest single investment in the fiscal 2019 budget increases district and charter additional assistance per-pupil funding through the base state aid formula, Martin said.

“What that means is that in fiscal year 2019, schools will receive an additional $100 million in new funding and that new, ongoing and permanent funding will grow by about $68 million per year until fiscal year 2023” when the schools will receive a total of $371 million, Martin said.

The budget proposal also increases funding for Joint Technical Education Districts.

“Large Joint Technical Education Districts serving over 2,000 students have received less than 100 percent of state aid funding since fiscal year 2009,” Martin said. “This year, fiscal year 2018 large JTEDs are recieving 95.5 percent of state formula funding, this will be raised to 100 percent of funding in fiscal year 2019 and will add resources that benefit courses and industry certified programs that benefit the majority of Arizona’s JTED students.”

Also, the budget proposal completes the teacher pay increase began last year, Martin said.

“The fiscal year 2019 budget adds $34 million to complete this two percent salary increase and then takes the additional step of moving the full $68 million of ongoing funding into the base level of the state aid formula, what that means is that it will be adjusted for inflation going forward and the benefit to teachers will be permanent,” Martin said.

The budget proposal contains an additional $35.2 million for building renewal and the School Facilities Board, said Bret Cloninger, assistant director of the Governor’s Budget Office.

“This include items for major maintenance such as roofs and HVAC systems, with this $35.2 million we’re providing a total of $51.8 million for building renewal which is the highest amount since fiscal 2007,” Cloninger said. “We feel that this building renewal recommendation is being driven by increased demand. What we’ve seen is that the deficiencies correction program in the early 2000s and the late 1990s provided about $1.3 billion for new building systems. Those building systems are now aging and coming due for replacement.”

The budget proposal also recommends $88.1 million for new schools or school expansions financed by a 25-year COP with a $5.1 million annual debt service, and $1.6 million for the Schools for the Deaf and the Blind to double the number of home visits to support the families of young children with vision or hearing loss, $2.5 million for the Governor’s Partnership for K-12 computer science pilot program, $4 million for schools in the second year of expanding early literacy programs, and Cloninger said.

In higher education, the budget proposal includes $8 million for capital and operational needs to assist in the cost of educating resident students, CLoninger said.

3:31 p.m.

After reviewing Gov. Doug Ducey’s budget proposal’s effects on education funding, Expect More Arizona CEO and President Christine Thompson said the Governor’s proposal is significant as it allocates the majority of available state funds to support education in light of available revenue.

“Most important, is the Governor’s pledge to restore district and charter additional assistance,” Thompson said. “These funds can be used for a number of purposes and has the potential to free up dollars to support other priorities such as increasing teacher pay.”

“While we cannot fix the entirety of our funding issues overnight, this proposed budget is an important step forward,” Thompson said. “We look forward to being part of the conversation to extend and expand revenues to increase teacher pay and ensure that our schools, community colleges and universities have the resources needed to ensure all students receive an excellent education.”

The Arizona School Boards Association released an analysis of the education highlights from Ducey’s proposed budget to members early on Saturday.

AZ Schools Now, a coalition of business, faith and education groups, called restoring district and charter school additional assistance that the Governor and Legislature cut in fiscal year 2016 a necessary re-investment in Arizona’s K-12 public schools.

“However, this closes only a small portion of the funding gap that has persisted since the recession. Under the governor’s proposal, public school operational funding would remain $950 million below 2008 levels,” AZ Schools Now stated in a news release.

“By refusing to address the revenue imbalances in our budget, we leave our schools and the students they serve without a serious, long-term path toward meeting the shared goals of the Education Progress Meter or addressing our critical teacher shortage,” stated AZ Schools Now, which remains committed to working with the governor’s office and the Legislature to find sustainable, permanent and equitable solutions to strengthen public schools.

Arizona Superintendent of Public Instruction Diane Douglas said, “It is great to finally see a path forward to restoring recession-era cuts to Arizona’s school facilities.”

Douglas also noted that Ducey’s budget proposal also provides $7.4 million for important needs at the Arizona Department of Education, including $5.3 million to ensure the continued maintenance of the Department’s nationally recognized student data system, $1.1 million for the continued development and implementation of high-quality Arizona academic standards, as well as an additional $1 million for statewide assessments.

“I’m pleased that the proposed budget acknowledges real needs at the Department,” Douglas said. “Maintaining our IT system is vital to helping state leaders, districts and schools support Arizona’s students. It is also important that we will have the resources to continue building strong Arizona standards, especially since we have gotten rid of Common Core.”

2:40 p.m.

Arizona Gov. Doug Ducey’s education budget proposal for fiscal year 2019 provides:

• A $100 million increase in additional assistance for district and charter schools he outlined earlier this week that will grow to $371.1 million by fiscal year 2023. Funds will come from the General Fund.
• A $2.5 million increase in funding  for the computer science pilot program to provide quality training to prospective computer science teachers with a 1-to-1 private sector match requirement. Funds will come from the General Fund.
• An $2 million increase in funding that fully funds Joint Technical Education Districts with more than 2,000 students instead of the current 95.5 percent. Funds transferred from the Residential Contractor’s Recovery Fund will be used to pay for additional JTED funding in fiscal years 2019 and 2020. Funds will come from the General Fund.
• A $5.3 million increase in funding for the Arizona Education Learning Accountability System – an information technology project of the Arizona Department of Education – that collects students attendance datat that is used to determine State Aid payments. Funds will come from the General Fund.
• An $1 million increase in funding higher costs related to mandated state AzMERIT, AZELLA, and AIMS tests. Funds will come from the General Fund.
• An increase of $34 million for the second 1.06 percent of the 2.12 percent salary increase for all teachers, and the $68 million for the teacher salary increase is moved into the base level. Funds will come from the General Fund.
• An increase of $4 million for the early literacy program established in the FY 2018 budget, which provides support to schools where at least 90 percent of students are eligible for free- or reduced-price lunch. Funds will come from the General Fund.

Gov. Doug Ducey released his budget proposal on Friday. https://t.co/nhOSgvUqQJ

— KTAR News (@KTAR923) January 12, 2018

Executive budget baseline changes include:

• A $113.3 million increase in funding for a 1.79 percent inflation adjustment in the base level amount, the transportation route-mile factor and charter school additional assistance. Funds will come from the General Fund.
• An $81.8 million increase in funding for a projected increase in Average Daily Membership in fiscal year 2019: 0.4 percent for district schools and 5.6 percent for charter schools. Funds will come from the General Fund.
• An $15.6 million increase for an anticipated increase in the average cost per students in FY 2019 to account for growth in student populations that require higher per-student funding and are growing at a faster rate than the overall student population. Funds will come from the General Fund.

Increased permanent fund distributions include:

• A decrease from the General Fund and a commensurate increase from the Public Institution Permanent School Earning Fund, which is expected to increase distributions in fiscal year 2019, due to voters approval of Prop. 123 in May 2016, offsetting General Fund requirements for Basic State Aid.
• The average of the monthly market values of the Public Institution Permanent School Earnings Fund for the five‐year period that ended December 31, 2017, is projected to be greater than the average for the five‐year period that ended December 31, 2016. As a result, distributions from that fund for Basic State Aid are projected to increase by $16.5 million in FY 2019, and General Fund requirements for Basic State Aid are projected to
  decrease by an equivalent amount.
• In addition, debt service on School Facilities Board bonds that are paid for from the Public Institution Permanent School Earnings Fund will decline by ($24.9 million) in FY 2019, and the fund’s support for Basic State Aid will increase by the same amount.

The budget proposal also projects that an increase in new construction will decrease the general fund obligation by $59.4 million which will be partially offset by an expected $6 million increase in state requirements for the Homeowner’s Rebate on new construction.

The proposal also removes one-time fiscal year 2018 appropriations for geographic literacy, rural assistance and a teacher professional development pilot program for a savings of $3 million.

1:34 p.m.

Arizona Gov. Doug Ducey will release his budget proposal online today at 2 p.m., which will provide more detail on his education priorities.

Also at 2 p.m., there will be a live-stream of Matthew Gress, director of the Governor’s Office of Strategic Planning and Budgeting, briefing Arizonans about the governor’s budget proposal that people can watch from their computer or mobile device at https://azgovernor.gov/budget, and people can send in their questions during that briefing by emailing azbudget@az.gov.

During his State of the State Address on Monday, Ducey said he would increase Arizona K-12 education funding by moving money from other areas of the budget into the state’s public schools, and noted that 80 percent of his new budget priorities are for public education.

Education funding, protecting kids and seniors, and supporting job creators have always been my top priorities.

Later today we will get our first look at the #AZ state budget – I want to hear what’s most important to you:

— Kate Brophy McGee (@KateMcGeeAZ) January 12, 2018

Then a day later at a news conference, Ducey said his budget proposal would partially restore this year the cuts to additional assistance for district and charter schools that legislators made during the recession, and get to the required level over the next five years.

Additional assistance is a state revenue source that is used by district and charter schools to pay for classroom resources such as textbooks, instructional materials, curriculum, technology, as well as school buses and other capital funding for both district and charter schools. Since fiscal year 2009, the Arizona Legislature has suspended over $2.4 billion in district and charter additional assistance.

But AZ Schools Now, a coalition of business, faith and education groups, says that the Ducey’s budget proposal leaves public schools $952 million short of what they were funded in 2008.

Earlier this week, Ducey spoke with Arizona Horizon‘s Ted Simons about his fiscal year 2019 priorities, as well as answered questions about the budget from Arizona Capitol Times reporter  Rachel Leingang.

When asked about the increase in teacher pay that the governor proposed and the legislature increased and approved last year, Ducey told the Arizona Capitol Times that increase is permanent and will be added to the base formula and he has proposed more money available for increasing teachers’ salaries.

Arizona PBS’ Arizona Horizon video: Governor Ducey discusses 2018 priorities