Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook - AZEdNews
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Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook


Matt Gress, Director Of The Arizona Governor’s Office Of Strategic Planning And Budgeting, Leads A Discussion Of The Details Of Gov. Doug Ducey's Fiscal Year 2023 Budget Proposal On Friday, Jan. 13, 2022. Photo Courtesy Office Of The Arizona Governor

See what Gov. Doug Ducey’s proposed K-12 education budget and the economic forecast looks like with details from Governor’s Office of Strategic Planning & Budgeting staff.

Education advocates say they appreciate summer learning camps for students and support for rural community colleges in Gov. Ducey’s budget proposal, but they also say that state funds could be better allocated to benefit students and educators.

“Ducey’s budget fails to address the mass exodus of teachers leaving AZ classrooms due to low pay and poor working conditions,” said Save our Schools Arizona in a statement released in response to Gov. Ducey’s budget proposal.

“It offers zero solutions for student support programs, such as tutoring, counseling, special education services and classroom aides,” Save our Schools Arizona said.

“Rather than increase yearly funding for school facilities to rectify decades of slashed budgets, Ducey allocated an inadequate one-time grant. What’s worse, and counter to the clear wished of Arizonans, he remains obstinately determined to pass even more revenue cuts while Arizona public schools rank last in the nation for per-pupil spending,” Save Our Schools Arizona said.

Video from Office of the Arizona Governor: Arizona Fiscal Year 2023 Executive Budget Presentation

Budget priorities

“This budget will leave our state stronger than we found it,” said Matt Gress, director of the Arizona Governor’s Office of Strategic Planning and Budgeting.

Democratic leaders in the Arizona Legislature said they support increasing kinship care stipends and the focus on the water crisis, but Gov. Ducey’s budget proposal ignores the realities of the pandemic for most Arizonans.

Making increased investments for needs like drought mitigation, water infrastructure, highways and kinship foster care “are sensible long-term priorities, and we look forward to further discussions on the details,” said House Minority Leader Rep. Reginald Bolding.

“But we’ve learned with this governor that you have to dig beyond the headlines. What looks good on the menu doesn’t always look good on the plate. For example, even the investments we support could ultimately be unsustainable if the Republicans’ excessive and reckless $2 billion tax cut for the wealthy is allowed to stand,” Rep. Bolding said.

“Arizona’s economy and state revenues are benefiting from massive but temporary federal investment in COVID-19 relief and infrastructure. When that investment is gone, Governor Ducey –  along with our ability to maintain adequate schools, healthcare, roads, prisons and other basic priorities – will be long gone as well,” Rep. Bolding said.

There is support for Gov. Ducey’s focus on the state’s water crisis and the kinship care stipend increase, but more can be done to address the effects the pandemic has had on Arizonans, Arizona Senate Minority Leader Sen. Rebecca Rios said.

“We appreciate seeing the Governor finally take Arizona’s water crisis seriously by announcing $1 billion for a desalination plant and other augmentation measures. But of course the devil is in the details, and we’ll be on the lookout that this isn’t just a gimmick,” Sen. Rios said.

“We also appreciate him addressing an issue Democrats have championed for years, which is increasing the monthly kinship care stipend from $75 to $300,” Sen. Rios said.

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“Yet this budget still fails to meet the moment we are in – which is in the third year of a pandemic that has taken the lives of 25,000 Arizonans and our schools facing a $1.2 billion funding cliff unless the legislature acts,” Sen. Rios said.

“Not to mention the fact this budget assumes Prop 208 will be dismantled and there is no solution to the compounding funding calamities our schools face,” Sen. Rios said. “In the face of this, the last thing Arizona needs is more unsustainable tax cuts. What Arizona needs is a Governor who takes the COVID-19 pandemic and our school funding crisis seriously.”

“Instead, the Governor is adding an additional $425 million to the Rainy Day Fund when those dollars could address issues Arizonans are facing now and will in the future, such as our water crisis and ongoing teacher shortage,” Sen. Rios said.

Economic outlook

 Zachary Milne, an economist and budget analyst with the Governor’s Office of Strategic Planning & Budgeting, said “2020 will be remembered as one of the most tumultuous years in history. The coronavirus pandemic and resulting policies of many states led to the largest employment and GDP declines in history.”

“While 2021 brought about much needed economic recovery, the U.S. is still suffering the effects of the pandemic,” Milne said.

“However, despite the gloomy picture just described the Arizona economy has remained strong, leading the way in personal income growth, outpacing the nation in jobs recovery and paving the way with sensible economic policies that drive growth and prosperity,” Milne said.

The U.S. faces unprecedented GDP volatility, growth is slowing, will take sustained growth well above 2.45% to reach the pre-pandemic trend.

But employment levels in Arizona have displayed resiliency, Milne said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook 1-AZ-Job-Growth
Arizona jobs chart courtesy Office of the Arizona Governor

“Total employment in Arizona suffered a loss of 11% between February and April, while the nation shed 15% of its jobs,” Milne said.

“While losses in Arizona were significant from a historical perspective, only eight other states experienced lower employment losses than Arizona,” Milne said.

Personal incomes in Arizona remained strong during this time, “with Arizona joining Montana with the largest personal income increase in 2020,” Milne said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook 2-Arizonans-incomes
Arizonans’ incomes chart courtesy Office of the Arizona Governor

While federal stimulus money can inflate personal income, “net earnings, which excludes these payments has also exhibited considerable growth during this time,” Milne said.

In addition, the U.S. has experienced “the highest inflation in over four decades,” Milne said.

“While Arizona workers have experienced a 4.7 percent growth in earnings in December, the cost of the goods that they buy has grown by 7.1 percent,” Milne said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook 3-Inflation-is-costing-Arizonans
Inflation chart courtesy the Office of the Arizona Governor.

It means a person living in Phoenix has seen their spending power decline by nearly $5,000, Milne said.

Arizona’s general fund tax revenues continue to exceed the enacted forecast, said Glenn Farley, budget manager, chief economist, and tax policy advisor for the Governor’s Office of Strategic Planning & Budgeting.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook 4-General-fund-Tax-revenues
General fund tax revenues chart courtesy of the Office of the Arizona Governor

“As of December, the general fund is up about $1.3 billion dollars relative to the 2022 enacted fiscal forecast. It has exceeded that forecast every month so far, and in some individual months that excess has been in hundreds of millions of dollars,” Farley said.

Revenue projections today are largely in line with where they’re expected be, and year to date revenues are about $215 million above “where we would project to be given the forecast,” Farley said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook 5-Revenue-to-meet-forecast

Going into tax season, the office will pay particular attention to the individual income tax portion of that revenue forecast, because “we expect over the next couple of months some policy uncertainty introduced by the combination of Proposition 208, phasing in of the 2.5% flat tax and other tax law changes,” Farley said.

Farley said Gov. Ducey believes that “the trial court will ultimately determine that the (Prop. 208) surcharge was unconstitutionally constructed and therefore is effectively repealed.”

“The expected repeal of Prop. 208 will return approximately $1.5 billion over the next four years to the state general fund,” as the cost of the policies created to mitigate it are no longer needed, Farley said.

“The executive budget anticipates the return of those funds and returns it to our baseline revenue numbers,” Farley said.

Gov. Ducey’s K-12 education proposal

This budget proposal makes key investments as the state moves to address the challenges K-12 students face this upcoming year, said Adam Ciampaglio, K-12 education budget analyst for the Governor’s Office of Strategic Planning & Budgeting.

Gov. Ducey’s budget proposal includes a 3.5% increase in per pupil state dollars in fiscal year 2023, and nearly $4 billion in federal funding has gone to schools in the state, Ciampaglio said.

Education advocates said state funds could be better allocated to benefit students and educators.

“We appreciate the funding proposed for summer camps, to support struggling schools, restore the STEM funding for Maricopa and Pima Community Colleges, fund rural community colleges, and universities,” said Rich Nickel, president and CEO for Education Forward Arizona.

“However, the Governor is leaving an unallocated $1 billion on the table and doubling the amount of incentive funds for results-based funding, which could be used to make a greater investment in initiatives that could directly benefit our students and educators at all levels,” Nickel said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook Ed-1-federal-funds

Funding for K-12 education increases by $323.3 million in Gov. Ducey’s budget proposal, Ciampaglio said.

“Of this, 96.3 million is for enrollment growth, inflation and other technical adjustments,” Ciampaglio said.

Gov. Ducey’s other budget initiatives including school capital needs, results based funding modernization, Operation Excellence and other targeted investments would bring K-12 state education funding up to $10.9 billion total, Ciampaglio said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook ed-2-Investments

Public school enrollment has seen large declines during the pandemic, Ciampaglio said.

Many of these students returned to the classrooms in some form this year, Ciampaglio said.

The Governor’s budget proposal “anticipates that public school population will exceed pre-pandemic counts in fiscal year 2023 and return fully to pre-pandemic trends for fiscal year 2024,” Ciampaglio said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook ed-3-enrollment

In addition, Gov. Ducey’s budget proposal includes $156.9 million in savings in fiscal year 2023 due to the large difference of 15,000 students enrolled in Arizona public schools as reported by the Arizona Dept. of Education and the enrollment level that current appropriations for FY 2023 and beyond can support.

“Not only is it critical to have Arizona students back in the classroom, but it is essential to address the learning gaps driven by this pandemic,” Ciampaglio said.

Gov. Ducey proposes investing $100 million in federal relief dollars for summer learning camps to provide students with accelerated instruction in math, reading and civics. Additional funding would be available based on demand, Ciampaglio said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook ed-4-summer-learning-camp

“To be able to ensure the effectiveness of the $100 million investment in summer learning, which is a short-term federally funded initiative, this budget should make additional investments in reading and math that will help sustain and build on that progress,” Nickel said.

“Recovering from the effects of the pandemic will take multiple years; making investments in math education and moving the State Board of Education’s recommendations on literacy are deserving of additional funding,” Nickel said.

Gov. Ducey’s budget proposal allocates $58 million to help close the achievement gap by investing in Operation Excellence, an evidence based approach to address chronically failing and underperforming schools.

It would “provide D- and F-rated schools multiple resources and pathways to improve with C-rated schools to participate in the program as well if over 60% of the population is eligible for the federal free- and reduced-lunch program,” Ciampaglio said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook ed-results-based-funding

“At $150 per pupil annually, the $58 million investment will cover approximately 827 schools with approximately 387,000 students,” Ciampaglio said.

After three years of participation, schools that do not make adequate profress will be subject to action by the State Board of Education.

Gov. Ducey’s budget proposal would like to re-instate results based funding which has been suspended for the past two years and “would increase the investment by $60.8 million bringing the total funding annually to $129.4 million,” Ciampaglio said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook Ed-6-More-results-based-funding

The modernization includes returning to schools receiving letter grades and would place results-based funding in the state education funding formula, Ciampaglio said.

Gov. Ducey’s budget proposal would include $20 million for a second year of school transportation modernization grants as part of his school choice program.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook ed7-school-choice

Gov. Ducey’s budget proposal increases the investment in building civics education, said Theresa Vencill, a budget analyst for the Governor’s Office of Strategic Planning & Budgeting.

The program rewards students and teachers who achieve high schools on the state civics exam required to earn an Arizona high school diploma, Vencill said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook ed-8-civics

“This $5 million investment will directly benefit classrooms that make a comittment to civics education with at least half of these bonuses being required to be given to teachers,” Vencill said.

Arizona Board of Regents Chair Lyndel Manson said, “The board commends the governor’s continued investment in civics education at all levels of public education. We share his belief that Arizona students must be grounded in the principles on which our nation was founded, as well as fully informed to participate in our constitutional democracy based on the American values of individual liberty, freedom of expression, self-reliance and equality under the law.

The Division of School Facilities, which was formerly the School Facilities Board, In Gov. Ducey’s budget proposal would receive an additional “$93.1 million in funding for fiscal year 2022 building renewal grants, bringing the total fiscal year 2022 appropriation to $200 million,” Vencill said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook Ed-9-school-facilities

Gov. Ducey’s budget proposal includes $89.4 million to complete five new schools already under construction and start construction on three new schools, Vencill said.

Video: Details of Gov. Ducey’s K-12 education budget proposal & economic outlook ed-10-school-construction

“We’d like to see additional investments in the Arizona Promise Program, the ABOR New Economy Initiative, and to address the ongoing teacher, school staff and substitute shortages in early learning and in K-12 education,” Nickel said.

“The efforts proposed to decrease some of the administrative burden with substitutes also proposed today is helpful; additionally, funds could be invested in this effort to create and incentivize a pool of substitutes who can serve,” Nickel said.