Restoring some of the nearly $1.5 billion cut from classroom resources for the past nine years will be a priority for some Arizona legislators when the new session starts in January, a difficult proposition given a projected deficit and a vow by the governor not to raise taxes.
“We need more resources, more funding. That funding needs to be sustained and predictable so that school districts can effectively plan from one year to the next and develop a salary compensation plan around what they know is coming instead of making cuts one year and giving a little bit back the next,” said Sen. Kate Brophy McGee, R-Phoenix (District 28). McGee was one of six Republican and Democrat legislators who spoke before a group of 300 public school leaders last month.
One way to do that would be to restore some of the cuts to additional assistance, a state revenue source that pays 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 $1.498 billion in district and charter additional assistance.
Rep. Heather Carter, R-Cave Creek (District 15). said there are plans to run a bill to restore some of the cuts in district additional assistance in the House this session and a mirror bill in the Senate.
Brophy McGee said she has “made it a top priority for this next legislative session to begin to restore the cuts to district additional assistance.”
The latest budget forecast
Richard Stavneak, director of the Joint Legislative Budget Committee, a nonpartisan group that works for the legislature, who also spoke to the group said the state faces a projected $24-million budget deficit this fiscal year and an estimated $80-million budget deficit next year. A surplus of $37 million had been initially predicted for this year and a $52-million balance originally projected for next year.
The JLBC will update the forecast again in January before the governor presents his budget proposal and legislators start working on their state budget.
“Could it be better? Sure. How could it get better? Revenues could be slightly higher than what we forecast,” Stavneak said.
“Could it be worse? It could be worse to the extent that we have removed out of the budget about $90 million worth of one-time spending in 2018 that the legislature said would not continue in 2019,” Stavneak said.
“Based on that and our preliminary look at the numbers – with the understanding that there’s still some discussion on what those final ratings are – that would add about $11 million to our baseline that we don’t have in there right now,” Stavneak said.
When the budget forecast is updated in January, “that would increase the overall base amount of results-based funding from about $37 million to $48 million,” Stavneak said.
Overall spending is projected to increase by about $226 million, which would mean about a $10 billion budget, a 2.3 percent increase above last year, Stavneak said.
For this year’s budget, spending is projected to increase about $351 million and the growth in K-12 will make up about $148 million of that, Stavneak said.
That $148 million includes an inflation factor of about 1.7 percent, student enrollment growth of 11.3 percent and some property tax laws and changes, Stavneak said.
Spending is projected to decrease by $125 million with $35 million of that coming from School Facilities Board debt service that has come to completion, Stavneak said.
It also includes one-time funding, that the legislature may decide later in the session to restore a portion of, such as the $7 million for Arizona Department of Education’s Information Technology system or the $17 million for the School Facilities Board.
Since 2012, the legislature has given annual funding to the Arizona Department of Education for the IT system.
“We called it one-time. But if we’re giving ADE $5 million for operating and $2 million for further development, that doesn’t sound like one-time,” Stavneak said.
In the same vein, for three out of the past four years, the Arizona Legislature funded School Facilities Board building repairs at over $30 million.
“Now, the way that works is about $13 to $15 million is ongoing and $17 million is one time, so again, we backed out the $17 million in our baseline numbers,” Stavneak said.
Revenue and spending
Revenue is projected to be “slightly lower than spending in fiscal years 2018 and 2019, but you then see that revenue overtakes spending and leaves you with a balance by the time you get to fiscal 2021 of $300 million,” Stavneak said.
But you shouldn’t count on that, because it does not include any discretionary spending changes in the next three years, assumes no recession through 2021 – which would be the longest post WWII expansion on record – and does not include the impact of federal tax changes and health care changes, Stavneak said.
The discussions in Washington D.C. about federal taxes “could have significant impacts on us in terms of generating additional revenue and generating additional expenses depending on whether or not we conform with those changes at the federal level,” Stavneak said.
Also, if the discussion on health care reform is revived in Washington D.C. in the upcoming year, “that will impact the state, because the last version that Congress debated in September could have cost us over $1 billion a year,” Stavneak said.