How the budget impacts K-12 education funding
Arizonans know a teacher pay increase was included in the budget approved last week and that a bid to repeal the 2017 school voucher expansion failed.
But what else will impact K-12 education funding for the next school year?
The three main funding increases are an inflation adjustment to K-12 public schools’ per-pupil base formula funding, a teacher salary increase and a restoration of additional assistance for district and charter schools.
Infographic by Lisa Irish/AZEdNews
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For an updated Arizona School Boards Association summary of the how the proposed budget bills will affect K-12 education, please click here. Also, to view a table of the relative appropriations, click here.
Per-pupil base funding formula
The 1.8% inflation funding increase adds $66.30 per-pupil to K-12 base formula funding.
“The Legislature, because of Prop. 301, is required to do an inflation increase in the base level every year,” said Dr. Chuck Essigs, director of governmental relations for Arizona Association of School Business Officials. “The base level increase is always based upon inflation in the prior year.”
“That’s about $84 million for school districts, and you get well over $100 million when you include charters,” Essigs said. “It’s to maintain purchasing power. Just as inflation is designed as an adjustment to make sure that you don’t lose ground. You can keep doing the same things you were doing even though they cost more because of inflation.”
That, along with the 9% teacher salary increase, which totals about $210.50 per pupil, raises per-pupil base funding to $3,960.07 in Fiscal Year 2019.
Teacher salary increase
The 9 percent teacher salary increase for next school year is distributed differently from the 1.06 percent teacher salary stipend was this year, Essigs said.
This year, the stipend was based on the actual cost of providing a 1.06 percent increase that included retirement benefits and Social Security payments to specific teachers.
“If you had 20 or 30 teachers who qualified you actually submitted for each one of them what the cost would be to do that, and it wasn’t part of the base formula and therefore was not subject to inflation, was dependent on annual appropriations and was a two-year plan,” Essigs said.
“Fiscal Year 2019 is quite a bit different,” Essigs said.
Next school year, the teacher salary increase is based on the cost to the state of providing the FY 2018 teacher stipend, but is not “based upon individual teachers,” Essigs said. “It’s based upon the additional monies calculated for the state, so it’s an average amount.”
“It’s not based upon the average salary for your teachers or your class size, it’s based upon an increase in the base funding formula,” Essigs said.
When the state determined how much money to provide for the new 9 percent increase next year, they used about $30.5 million for each one percent based on the information they got from the teacher stipend this year, Essigs said.
“They multiplied it by 9 percent for the new money, and they also rolled over the existing money from the 1.06 percent increase that’s already out there,” to get that 10 percent increase for next year, Essigs said.
“The important thing is that it’s going to subject to the annual inflation increase so it’s now part of the base level,” Essigs said. “It’s not dependent on annual appropriations. The Legislature, because of the lawsuit and because of Prop. 301 is required to continue that money going forward.”
“As the Governor’s and the Legislature’s plan talks about, they want by the 2021 school year the average teacher salary in the state to increase by 20 percent” from FY 2017 levels, Essigs said.
Who is a teacher to receive this pay increase?
House Bill 2663 does not define who a teacher is, said Dr. Mark Joraanstad, executive director of Arizona Superintendents Association.
“This of course is critical to decisions the governing boards will make,” Joraanstad said. “We received some clarification just yesterday from the Auditor General’s Office and they are not specifically telling governing boards and districts what the definition of a teacher will be.”
That means there is leeway for governing boards, Joraanstad said.
“The Auditor General’s Office confirmed for us that there are three definitions of teacher, and depending on governing board choice that definition may be narrower or broader, may include less teachers or be expanded to include more teachers,” Joraanstaad said.
For FY 2018, the definition of a teacher that was used was that any person eligible to be included as a teacher on a district’s full-time equivalent count submitted with its annual financial report, whose salary was paid under function code 1000 (Instruction.)
“That caused a lot of heartburn for many personnel in districts who considered themselves teachers, but they fell outside of that specific definition,” Joraanstad said. “If you use that definition from last year, that will be a rather narrow, exclusive definition and you will leave out many of the people who were left out last year.”
Secondly, there is a statutory definition A.R.S. 15-901 (B) (5) that defines a certified teacher as a person who is certified as a teacher pursuant to the rules adopted by the State Board of Education, who renders direct and personal services to schoolchildren in the form of instruction related to the school district’s educational course of study and who is paid from the Maintenance and Operation section of the budget.
“That’s a little broader than that first definition,” Joraanstad said.
Then finally, there is the Classroom Site Fund Definition of a teacher (Attorney General Opinion 101-014 states that a teacher is not limited to traditional classroom teachers. “School districts and charter schools may use such funds for compensation increases for certified or certificated teachers and others employed to provide instruction to students related to the school’s educational mission.” An employee who receives base compensation from Prop. 301 monies would also be eligible to receive a salary increase as a teacher.
“If you use the classroom site fund definition, you essentially could give salary increases to people you have traditionally given performance pay to,” Joraanstad said. “This would generally be a more inclusive, broader category.”
Boards would likely meet the Legislature’s intent by using any of these three definitions, Joraanstad said.
“Here’s the key – the Auditor General emphasized this as well – consistency. Choose a definition, and stay with it,” Joraanstad said.
“Don’t choose one and then later decide, ‘Oh well, we couldn’t make this work, we’re going to switch to another one’” Joraanstad said. “Once a governing board has chosen a definition – all three are defensible – stay with that definition.”
“Remember the political implications when you do that. Do you want to pay a lot of people? Do you want to pay less?” Joraanstad said. “Remember you will be reporting on your website your average teacher salary and your average pay increase.”
The reduction in the additional assistance cuts
Fiscal Year 2019 begins the five-year plan to return monies that have been cut from additional assistance to district and charter schools since FY 2009.
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.
“This legislation restores some of those dollars that have been cut over a period of time,” Essigs said.
District additional assistance used to be included in two capital funding formulas for school districts – the Capital Outlay Revenue Limit and Soft Capital, Essigs said.
“CORL had been around since the 1980s, and you could move some of that money into operations if you didn’t need to use it in capital,” Essigs said.
Soft Capital came about because of the capital funding lawsuit, Essigs said.
“It used to be a capital levy and then it became soft capital and you’ve always had to use all of that in capital,” Essigs said.
When the Legislature combined those together a few years ago, they allowed district and charter schools to move any of that money into their operational budget, Essigs said.
“When you move those monies into ongoing operational costs, you’re probably not going to get them back into capital, because you’re going to continue if you’re using it to fund positions or give raises,” Essigs said.
“You want to have a long-range plan for capital funding and expenses, because you don’t want to move it one year and find out you can’t continue to do it,” Essigs said.
For FY 2019, the five year plan would give back district and charter schools $94.9 million of the $352.4 million reduction to additional assistance, Essigs said.
“For each of the next few years, it goes down $64.3 million each of the next years so by the time you get to FY 2023 the reduction in additional assistance is entirely eliminated,” Essigs said.
Next year, districts won’t know what their reduction is going to be until the Arizona Department of Education gets all the budgets in and they determine how much they have to cut individual districts to save the $257 million in state funding, Essigs said.
“There’s a little over 900,000 students in school districts and you’re going to restore about $95 million so you can get maybe $100 per pupil,” Essigs said.
But smaller school districts that have fewer than 1,100 students will have their cuts to additional assistance fully restored in FY 2019, Joraanstad said.