What does Gov. Doug Ducey’s proposed K-12 education budget for K-12 education look like?

Watch the video below to learn details from Governor’s Office of Strategic Planning & Budgeting staff who outlined Arizona’s economic outlook and details of Gov. Ducey’s proposed K-12 education budget and initiatives.

Click here to view Arizona School Boards Association’s analysis of Gov. Ducey’s education budget proposal

Gov. Doug Ducey’s Fiscal Year 2022 budget proposal briefing

Click here to view a summary of the budget

View the state agency budget book here

State of Arizona executive budget sources and uses of state funds

Economic outlook

Director of the Arizona Governor’s Office of Strategic Planning and Budgeting Matt Gress said Arizona “led the nation in poverty reduction with more than 175,000 Arizonans pulling themselves up out of poverty.”

“We ranked second in job growth in 2020 with more jobs than people to fill them,” Gress said. “Fourth in weekly wage growth. Sixth in export growth. And then the COVID-19 pandemic hit with its unprecedented loss and economic hardship.”

“That shock was stabilized with steady growth, and today the fiscal year 2022 Executive Budget provides immediate attention to the needs of health and education after the fallout of the COVID-19 pandemic, while looking beyond to a future of prosperity and growth that displays the compassion and innovation and resilience of the people we serve,” Gress said.

On many fronts, 2020 was a year unprecedented in nature and with the regards to the economy this was no different, said Zach Milne, budget analyst and forecaster.

“In 2020, the country witnessed the largest decline in real GDP ever recorded at just over 31 percent as people hunkered down amid the growing pandemic,” Milne said.

“Following this significant decline, real GDP made back significant gains posting a 33 percent gain in the third quarter,” Milne said. “There remains serious ground to be made up in coming years for the U.S. economy to reach pre-pandemic trends.”

After significant job losses due to COVID-19 closures in the spring, with nonfarm employment shedding a record 20.5 million jobs in April alone and employment rising to 14 percent from a prior month level of just over 4 percent, Milne said

“The Arizona economy suffered serious losses during the onset of the pandemic as well,” Milne said. “However, the losses experienced in Arizona were of significantly smaller magnitude than those experienced in the U.S. as a whole and in most other states.”

“While the U.S. suffered GDP losses of 31 percent, Arizona lost just over 25 percent of its annual economic output, placing Arizona third amongst all states in terms of the smallest GDP losses faced during the onset of the pandemic,” Milne said.

Arizona also experienced much lower employment declines than the nation as a whole, Milne said.

As of November 2020, Arizona’s employment has recovered to roughly about 97 percent of pre-COVID-19 levels, surpassing the nation’s gains by three percent and ranking Arizona an impressive sixth among all states, Milne said.

“Prior to the COVID-19 pandemic, Arizona was on a strong trajectory in terms of revenue performance,” Milne said. “Actual general fund revenues continue to surpass the previously enacted projections month after month.”

“All three major tax revenue sources for general fund revenues have contributed to the strong performance discussed so far,” Milne said.

Income tax revenues are at 24.8 percent above this time period in fiscal year 2020, Milne said.

This translates to $352 million more than was contemplated in the fiscal year 2021 budget, and part of that is due to the shifting on income tax due dates in 2020 which put some of the money into the fiscal year 2022 budget, Milne said.

The budget includes a projected 8 percent growth in general fund revenues, partly due to the shift in income tax due date, and followed by positive but more moderate growth rates in following years, Milne said.

Gov. Ducey’s proposed budget for fiscal year 2022 includes $200 million in income tax cuts to help support economic recovery from the COVID-19 pandemic, and those would increase to $600 million by fiscal year 2024., Milne said.

@dougducey seeks to cut taxes by $600M/year by third year, says there’s plenty of money for other priorities. But @Rios_Rebecca says gov playing games, using one-time federal dollars to pay for state expenses rather than for immediate COVID-related needs. https://t.co/cezRC7wvSZ

— azcapmedia (@azcapmedia) January 16, 2021

Better-than-expected revenues are giving @dougducey an opportunity to achieve a goal that has eluded him for six years: cutting Arizona’s income tax rates https://t.co/BfztCgnwP4

— Jeremy Duda (@jeremyduda) January 15, 2021

After touting the importance of education and teachers, Gov Ducey spoke about lowering taxes. This would result in cuts to education funding – as it has every other time taxes have been cut. It is also out of step with what Arizona voters actually want. https://t.co/H3XyjLaUSr

— StandforChildren AZ (@ArizonaStand) January 13, 2021

Bringing our income tax rate as close to zero as possible is something I fully support. #taxreform #savesmallbusinesses https://t.co/AY69zDB1Vp

— Rep. Leo Biasiucci 🇺🇸 (@Leo4AzHouse) January 15, 2021

“This is not the time to propose $1.2 billion in tax cuts over the next three years when Arizonans are still hurting, the pandemic is not under control and the vaccine rollout has been slower than expected.” – @reginaldbolding @AZHouseDems pic.twitter.com/0fEj5Tgt23

— Dillon Rosenblatt (@DillonReedRose) January 16, 2021

Senate and House Democrats are ready with immediate common-sense solutions to help Arizonans navigate the final months of the pandemic. Read about it here: https://t.co/6b6PjK9jmF pic.twitter.com/egB6WiMCmi

— Arizona Senate Democrats (@AZSenateDems) January 16, 2021

Budget Analyst Adam Ciampaglio outlined Gov. Ducey’s budget priorities “during this very trying time for our state” and is “the sixth consecutive structurally balanced budget.

During the pandemic, the state spent $55 million from the rainy day fund for one-time public health costs, Ciampaglio said.

Isn’t the point of a Rainy Day Fund to use for emergencies? If what we are experiencing right now (1K Arizonans dying a week, schools having millions cut, hospitals filled to capacity) doesn’t qualify as a rainy day, then please Governor, tell us what does?

— Rachael C (@ramaclaw) January 15, 2021

Constituents furious as @dougducey brags about $1 Bil rainy day fund amid pandemic with Arizonans relying on food donations and unable to pay rent as economy still recovering. https://t.co/9TgtkjWyjz

— Craig Harris (@charrisazrep) January 16, 2021

.@dougducey budget proposal is shortsighted & does tremendous damage to cities like PHX.This cut to cities will be felt profoundly. We’ll work closely w/ the legislature, urging them to disregard this budget in favor of one that appropriately addresses the needs of our community. pic.twitter.com/PUKWCxmgAv

— Mayor Kate Gallego (@MayorGallego) January 15, 2021

K-12 Education budget proposal

Most schools across the state made the difficult decision to go virtual for extended periods of time over the last year in response to the COVID-19 pandemic, said Bryce Haws, budget analyst.

“Many of our schools adapted quickly and effectively to remote learning, but unfortunately many students are still falling behind,” Haws said.

“Gov. Ducey has grave concerns about the lack of learning and the widening of our achievement gap,” Haws said.

For fiscal year 2022, Gov. Ducey’s budget proposal makes K-12 investments focused on lowering the achievement gap and targeting the state’s lowest income learners to ensure they don’t fall further behind, Haws said.

Based on current economic data the executive budget anticipates a $389 million surplus as a result of K-12 formula spending reductions in fiscal year 2021, Haws said.

“Driving these reductions is current year Average Daily Membership well below what was contemplated in the enacted budget,” Haws said.

The estimated year formula funding decreases affecting local education agencies have been offset by approximately $2.2 billion of strategic state and federal allocations shown in the graphic below, Haws said.

Of these allocations, $389 million is being reinvested in the form of remediation grants, $370 million of discretionary use Coronavirus Relief Funds were allocated directly to districts and charters through the Governor’s Enrollment Stabilization grants, $277 million of relief funds were made available through the Elementary and Secondary School Emergency Relief (ESSER) Fund, and the second round of ESSER Funds will total approximately $1,150 million, Haws said.

Gov. Ducey’s budget proposal also includes:

• $389 million to establish a grant program for high-impact intervention and programming to mitigate learning loss as a result of the COVID-19 pandemic
• $10 million to inform families about education options and support transportation innovations that expand school choice
• $6.9 million to advance early literacy learning and instruction 
• $4.4 million to scale innovative programs that serve vulnerable students
• $4.1 million for programs that set students up for success in college and other education programs
• $2 million to create two additional signature civics education programs
• $500,000 to expand the Alternative Teacher Development Program
• $400,000 to expand Jobs For Arizona Graduates, which enrolls students in innovative programs designed to keep students on track to graduate
• $119 million for school building renewal grants
• $52.6 million to complete two schools already under instruction and start construction on five new schools

My response to Governor @dougducey‘s budget: pic.twitter.com/MgwNl2bsbn

— Kathy Hoffman (@Supt_Hoffman) January 15, 2021

Gov. @dougducey budget appears to include $10 million to help charter schools, which already get more in per-pupil state funding than district schools, with transportation and a taxpayer-funded open enrollment campaign. PS. Charter owners are big Ducey campaign donors.

— Craig Harris (@charrisazrep) January 15, 2021

Gov. Ducey remains concerned about the loss of learning during the COVID-19 pandemic, and has targeted funding to help mitigate the learning loss that has occurred since the pandemic began last spring, Haws said.

“The funding provided is intended to be equal to the surplus resulting from lower than budgeted state formula funding,” Haws said.

“The initiative includes enough funding to provide $500 per student eligible for free- or reduced-price meals to each district or charter school that has to extend this remediation support for students,” Haws said., noting that would be $298 million.

“The remaining $91 million of the projected surplus will be targeted to priority grade bands where students need critical support to stay on track in their educational development,” Haws said.

In response to the Governor’s budget proposal, Save Our Schools Arizona released a statement that said Arizona still lags the national average by nearly $4 billion per year, has the worst counselor-to-student ratio in the nation, the worst teacher-retention crisis and, also remains 49th among the states in teacher pay.

“Nothing in the governor’s 2021 Executive Budget addresses these failures, and in fact he doubles down on the damage by proposing ways to further bankrupt the schools serving 95 percent of Arizona students,” Save Our Schools Arizona said.

This year Arizona’s public schools will lose an estimated $389 million in funding primarily due virtual learning being funded at 95 percent, although brick-and-mortar schools’ expenses have increased due to providing both in-person and online options. 

“While cutting funding for over 1 million school children, Ducey’s budget siphons those tax dollars away from public education and into piecemeal privatization schemes like microschool grants, for-profit charter schools, ESA vouchers and funding formulas long-proven to be discriminatory, such as results-based funding,” Save Our Schools Arizona saidt.

“While we applaud additional investments in school facilities and broadband infrastructure, this comes in the midst of a massive lawsuit against the Legislature seeking to collect billions in unpaid capital funds to fix crumbling buildings, ancient buses, and broken ACs. We urgently need our state government to step up and address the needs of the public schools that 95 percent of Arizona families choose,” Save Our Schools Arizona said. 

Mark your calendar and plan to join the ASBA Rural Alliance on Thursday, Jan. 21 from 5-6 p.m. for a Zoom meeting focused on solutions to and advocacy on the digital divide, including a presentation on the Final Mile Project, https://t.co/iGQILHz4yo pic.twitter.com/ek2IDH4PZi

— azsba (@AzSBA) January 16, 2021

Gov Ducey’s budget proposal includes $250.3 million in new K-12 investments, Haws said.

The budget also includes $9.5 million for transportation solution grants for innovations that expand access to school choice to help transport students to the school of their choice, and $500,000 for an open enrollment month marketing campaign to inform parents about options, Haws said.

“While there are some incredibly impactful initiatives in the Governor’s budget proposal – like funding for early literacy and investments to accelerate student learning for those most impacted by the pandemic – there are persistent, systemic education issues that remain unaddressed,” said Christine M. Thompson, president & CEO, Expect More Arizona.

“We still lack general fund support for early education; the formula to fund our community colleges continues to be suspended; and new investments in our universities pale in comparison to the massive cuts they took over a decade ago,” Thompson said.

” If Arizona leaders are truly committed to reaching the Arizona Education Progress Meter goals the state must adequately fund the investment priorities outlined in the Roadmap for P-20 Education Funding,” Thompson said.

“Supporting our education infrastructure is critical to Arizona’s long-term success,” Thompson said.

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What lower than expected Enrollment Stabilization Grant funding means for schools

The Governor’s budget proposal includes $6.9 million to build on literacy efforts, Haws said.

It also includes investments in education innovation to improve teaching and learning at all grade levels, including help to support Arizona Personalized Learning Network, Haws said.

“The executive budget provides more funding to scale these approaches to reach more students and communities across the state,” Haws said.

In addition, the Governor’s budget proposal includes two new signature civics education programs.

One “that invests in schools with unique and engaging ideas to educate and inspire their students on what it means to be an American and the unique rights and responsibilities Americans share,” Haws said.

Another would provide post-secondary scholarships to an initial cohort of high school juniors and seniors to complete service hour requirements, Haws said.

The budget proposal also includes investments in programs that set students up for success in the classroom and beyond, such as a fee waiver for college placement exams, and Jobs for Arizona Graduates, Haws said.

Excited @dougducey FY22 budget recommends funding to waive fees for low-income students to take exams for college credit. Eliminating barriers for students to earn college credit is incredibly important #AccessforAll

— Helios Ed Foundation (@HeliosEdFnd) January 15, 2021

“Due to aging building systems such as roofs and HVAC systems, building renewal grant spending has increased in each of the last three fiscal years,” said Will Palmissano, a budget manager.

Building renewal grant need is projected to exceed the current appropriation of $108 million, Palmissano said.

“The agency anticipates renewal costs to be $38 million more than is accounted for int he fiscal 2021 appropriation,” Palmissano said.

“The governor’s budget proposal includes $38.8 million in supplemental funding for fiscal 2021 building renewal grants,” Palmissano said.

“The budget includes $119 million in funding for fiscal 2022 building renewal grants, which includes $17 million in ongoing funding, plus an increase of $102 million in one-time funding,” Palmissano said.

“This is over the fiscal 2021 appropriation of $107.5 million,” Palmissano said.

Funding to complete two schools under construction and begin construction on five new schools is included in the budget, Palmissano said.

Higher education budget proposal

The executive budget proposal for higher education investments also includes $174 million for Arizona’s public universities and community colleges, Palmissano said.

It also includes $115 million in COVID-19 relief, provided via CARES Act funding to the state’s three public universities “in recognition of the roles they’ve played in the state’s ongoing efforts to contain the spread of COVID-19,” Palmissano said.

Gov. Ducey’s higher education budget proposal includes $35 million to support the public universities’ workforce development for the New Economy Initiative to prepare more students for high-demand jobs in Arizona, Palmissano said.

It also includes $6 million in Governor’s Emergency Education Relief (GEER) funding to support the state’s future teachers through the Arizona Teachers Academy.

“Arizona Teachers Academy continues to see sustainable growth in the participation of prospective Arizona teachers. Fiscal 2021 participation increased by over 61 percent from the prior year with 3,173 students participating in the Fall 2020 semester,” Palmissano said.