In the last few months, I have attended several meetings as a member of the Best Public Education Foundation, which is mainly comprised of former school administrators.
In years past, newly retired school officials happily traded the workplace for the carefree living associated with retirement. But for many of us, it’s hard to walk away from our profession knowing the students and teachers we have left behind are in serious jeopardy in Arizona. This is not to mention that many of us have grand children enrolled in our public educational institutions and fully realize how they are being shortchanged by the current system.
School finance in this state is often based on a patchwork of incongruous and conflicting regulations which makes it difficult for anyone to understand. The most immediate issue confronting our public schools is the perfect example. You may have heard of the Aggregate Expenditure Limit (AEL). For a detailed explanation, you can read the entire policy brief published by the Grand Canyon Institute at their website at GCI Policy_End the Expenditure Limit_Dec_15_2022.docx (azsa.org)
Essentially, the AEL ties district school funding (state plus local) to a base level established in 1979-1980. This baseline is adjusted annually by changes in student enrollment and inflation. While increases in enrollment generate a commensurate increase in revenue, the annual inflation adjustment does not. It is pegged at a maximum of 2% even if inflation exceeds that amount. According to US Inflation Rate by Year: 1929-2023 (thebalancemoney.com), in 28 out of the past 42 years, inflation exceeded the permissible 2% adjustment. Since inflation is currently running at 7.1%, districts will have to absorb another 5.1% loss in base funding levels. In years of sub 2% inflation rates, such as 2018 when it was reported at .1%, school districts could not recover any portion of previous losses as the AEL stipulates budget growth is limited to the actual inflation rate!
If not for some help along the way, things would be much worse. In 1986-87 Arizona voters approved a permanent upward adjustment of 10% to the 1979-1980 base funding. Again in 2000, voters passed Proposition 301, which authorized a 20-year 0.6% sales tax for education.
This additional revenue inadvertently caused Arizona districts to exceed the AEL and, due to the hodgepodge nature of school finance, a 2/3 majority vote was required by the legislature to exempt it from AEL limits.
In 2018, the legislature extended the sales tax for another 20 years. However, a provision to exempt it from the AEL was omitted. As a result, in order for districts to spend the revenue, the legislature has until March 1 of each year to override the aggregate spending cap, leaving school districts in limbo.
Keep in mind, schools have to prepare budgets and offer contracts for employees and outside services months in advance of that date. The amount of money in question for this fiscal year is over $1.39 billion, or approximately 22% of the statewide K-12 educational budget.
If the legislature fails to remove the cap, massive cuts to an already fragile system will result. It’s almost unthinkable that our elected officials would allow that to happen, but considering it requires a 2/3 majority in both chambers to override the cap, failure is conceivable.
If the cap is not removed, budget reductions to local schools are projected as follows:
Sonoita Elementary – $384,043
Patagonia Elementary – $257,474
Patagonia High School – $269,953
Little Red School – $470,024
Employee furloughs and school closures are probable. The legislature and governor have the authority to address the AEL cap and end the uncertainty facing local school communities.
Since the inception of the AEL, among the 50 states, Arizona has slipped from 31st in per student expenditures to 47th. Unlike the traditionally underfunded states such as Mississippi or South Carolina, Arizona is NOT a low cost of living state, which compounds the financial problems facing our schools.
It should be noted that the AEL does not apply to charter schools, vouchers or tax dollars used to subsidize private schools.
If the legislature fails to act, school officials will likely hear the familiar directive to “cut the fat.” But after four decades of that approach, any further cuts to district schools is tantamount to performing liposuction on an anorexic.