Many Arizona school districts returned to distance learning after winter break as COVID-19 cases surge, but doing so hurts their budgets, because the state funds distance learners at five percent less than in-person students.
That is just one of many considerations school leaders and governing board members weigh when deciding whether to change instruction models as Chandler and Gilbert Unified School Districts did on Monday two days after Gov. Doug Ducey declined Supt. of Public Instruction Kathy Hoffman request for him to order schools to provide distance learning for two weeks following winter break.
Arizona’s district and charter schools have $266 million less in state funding because distance learners are funded less than in-person students, the Arizona Department of Education said in its Fiscal Year 2021 Distance Learning Adjustments to the Base Support Level report released a day before most schools closed for winter break.
Reduced funding for distance learning means many Arizona school districts have thousands to millions less in state funding than they budgeted for, putting them in a difficult financial situation, said Chuck Essigs, director of governmental relations for Arizona Association of School Business Officials.
The state could have avoided this situation by funding in-person and distance learning at the same rate, Essigs said.
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The argument for lower funding for Arizona Online Instruction “is that it costs less to provide those programs, because you don’t have to provide brick and mortar space for those students, you don’t have to provide any outside services and one teacher can serve a fairly large number of students,” Essigs said.
But unlike Arizona Online Instruction students, schools must still have space, enough teachers, and provide other services for distance learning students, because they will be back on campus when COVID-19 health metrics improve, Essigs said.
Declining enrollment raises financial pressure on schools
Another factor reducing schools’ state funding is declining enrollment with 50,000 less students enrolled statewide.
“A good example is for kindergarten students, we’re down more than 10 percent,” Essigs said. “What we believe is happening is some parents are saying, ‘I’m not going to send my student to kindergarten this year, I’m going to wait until next year.’”
“If you were a district that lost five percent of your students to declining enrollment and lost another five percent in funding because of the distance learning program, you’re operating with 10 percent less dollars than you would have normally had and you’re still providing services,” Essigs said.
“Districts are having a really difficult time financially, because of the loss of students, but in addition that five percent loss of funding when students are in distance learning,” Essigs said.
Thirteen of 207 Arizona school districts were found to be at higher financial risk than others based on the analysis of 10 measures in the School District Financial Risk Analysis released in December 2020 by the Office of the Arizona Auditor General in an effort to alert school district leaders to make changes to avoid financial issues.
All these school districts had a change in their weighted student count which impacts their state funding through per-pupil base funding, and most are small districts in rural or remote areas of Arizona, with the exception of Tucson Unified, Apache Junction Unified, Isaac Elementary and Murphy Elementary.
In an effort to make up some of the five percent in state funding lost for distance learning, Gov. Ducey allocated $370 million in federal CARES Act money for Enrollment Stabilization Grants in June. At the time, Gov. Ducey said schools would not lose more than two percent of the state funding they had received the previous year, but that has not been the case for many schools.
Requests for the Enrollment Stabilization Grants were more than the funds allocated so the amounts schools received were reduced. School leaders thought that more money would be added to the grant program if needed, but that did not happen.
“Based on the allocations provided to schools last week, the state has not kept the promises made this summer,” said Superintendent of Public Instruction Kathy Hoffman in a statement. “I am ready to work with the Governor and education stakeholders, and the Legislature to ensure that we uphold our responsibility to Arizona’s schools.”
Education advocates are hoping that the Arizona Legislature will realize that school districts reduced funding due to declining enrollment and the distance learning formula has saved “the state general fund a very large amount, because they’re not funding schools for those students,” Essigs said.
“We would hope that the state would realize that the additional burden on schools is a real problem, the Enrollment Stability Grant is way underfunded in terms of what districts need, and that they will use some of the savings that the state is experiencing to help school districts with the struggles that they’re facing,” Essigs said.
Federal dollars from the CARES Act program are helping school districts with some of the additional expenses they have incurred to help prevent the spread of COVID-19, such as special cleaning, plexiglass shields, and other measures, Essigs said.
“Plus, with students doing distance learning there’s a big additional cost of providing the equipment to provide services online,” Essigs said.
The Arizona Legislature needs to recognize that these costs when combined with reduced state funding are hurting school districts’ budgets, Essigs said.
There is some assistance coming for schools in the second round of Elementary and Secondary School Emergency Relief Fund II as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 recently passed by Congress.
Arizona funding under ESSER II is estimated at $1,149,715,947, which is about four times what was received under the first round of CARES ACT funding, Essigs said yesterday.
“The new funding is available for an extended period of time and has a distribution formula very similar to the earlier program,” Essigs said.
For a detailed analysis of Arizona’s allocation from the ESSER II funding please see this breakdown on Congressional action related to COVID-19 Relief and how it will effect K-12 public schools that was prepared by Arizona School Boards Association’s Governmental Relations team.