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School spending limit may haunt districts

In World
June 10, 2024

Jun. 10—School boards across the Arizona, including Queen Creek Unified, are finalizing their 2024-25 budgets not knowing what the state Legislature plans to give them.

While the Legislature and Gov. Katie Hobbs have yet to even release a spending plan for the fiscal year beginning July 1, lawmakers also have not discussed a ticking timebomb that has twice created panic in school districts in the final months of their school year.

That timebomb is the Aggregate Expenditure Limit, a constitutional mandate that holds districts to 1980 spending levels unless the Legislature waives it.

State Sen. Mitzi Epstein, D-Tempe, raised the issue last month, warning that her Republican counterparts are not contemplating a fix in the 2024-25 state budget that would spare public school districts from “playing chicken” as they away a last-minute reprieve from the voter-approved mandate.

The AEL in the 2021-22 and 2022-23 school years pushed school districts to the brink of making massive budget cuts and layoffs even though they had the money to spend.

Passed by voters as an amendment to the Arizona Constitution in 1980, the AEL limits school spending to 1980 levels with some allowances for inflation and enrollment.

It can be waived by the Legislature or Arizona voters could vote to eliminate or change the constitutional amendment. The Legislature has not made any effort to put a measure up for people to vote on. Nor has any grassroots effort been launched to put it on a statewide ballot.

In 2021-22 and 2022-23, only a last-minute waiver by the Legislature spared districts from having to comply with the law in the last quarter of the school year by cutting millions of dollars.

When it waived the spending limit in early 2023, the Legislature also applied the waiver to the current school year.

Epstein said majority Republicans in budget discussions have shown no inclination to include a waiver for the coming school year, meaning that districts next spring could again be forced to put together a cost-cutting plan while hoping the Legislature comes to their rescue at the last minute.

“Not only have they proposed cuts to education funding, but they have also not committed to fix the AEL,” Epstein said.

“The Aggregate Expenditure Limit must be adjusted to meet the actual needs of students each year, to allow school districts to spend the money that is in the budget for them,” she continued in a formal statement.

“If the Legislature fails to do this accounting task, then schools cannot spend the money that has been approved by the Legislature. By not committing to lift the AEL, Republicans are destabilizing Arizona’s public schools.”

Hobbs and Republican legislative leaders reportedly have been exchanging proposals for dealing with a projected $1.6 billion deficit in the state budget.

That deficit, partly created by the Legislatures approval of a flat income tax rate that largely favors wealthy taxpayers, also comes amid major pressures to significantly increase spending for prisons and the state Medicaid system.

Epstein suggested Republicans plan to balance the new budget on the backs of public schools.

“Last year, Democrats put together a one-time increase of $300 million for K-12 education in the FY 2024 budget to account for growth and actual inflation,” she said. “It was above the formula because the formula in law only requires that K12 funding be increased for growth and up to 2% inflation.

“Over the years, that 2% limit has caused education purchasing power to drop badly. It means teachers’ pay is effectively less, and each student gets less. This year, because of decades of Republican revenue mismanagement, that will not be a possibility. The Republican majority is not making funding for our children a priority.”

Epstein added, “It is unconscionable that the Republican majority believes it appropriate to play games with public school money.

“They have already swung open the gates to untold amounts of fraud, waste, and abuse within their universal voucher expansion, and now in a year where we are trying to claw our state out of deficit, they have chosen to waste time on playing chicken with the AEL, and not allowing schools to spend the money they legally have in their budgets. This is not the time for games. While Republicans are proposing cuts to education.”

The deficit also is party driven by the Legislature’s expansion of Empowerment Scholarship Accounts that provide an average $7,500 to families for each child attending a parochial or private school.

While so-called school vouchers in the past were limited to certain types of households, such as those with children in special education and children of military veterans, Republicans last year opened them up to any family.

Save Our Schools, an advocacy group for public schools, last month produced a study that claims the “runaway ESA universal voucher program” has resulted in 15,168 East Valley students getting vouchers that average $9,768 each.

That figure “translates to approximately $148 million allocated to East Valley area ESA voucher recipients — the equivalent of 2,460 teacher salaries,” it said.

Save Our Schools said its analysis of quarterly voucher reports by the state Department of Education shows that 1,474 students within the Queen Creek Unified School District boundaries are receiving vouchers totaling nearly $14.4 million and that 79% of them had never been enrolled in a QCUSD school.

That showed, it said, the voucher program expansion primarily benefits families who were already sending their children to private schools and could afford to do so on their own.

Epstein said, “Everyone knows Arizona’s universal ESA vouchers are directly hurting local neighborhood schools, students, and educators by diverting nearly $1 billion from the state’s education budget to unaccountable private schools.

“But new data from the Arizona Department of Education’s Quarter 2 ESA voucher report reveals that a staggering 84% of students in the universal ESA voucher program did not switch from public schools,” she said. “This trend, as revealed by the Brookings Institution, clearly shows that the voucher program disproportionately benefits families from wealthier zip codes in Arizona, worsening inequality in our education system.”

State schools chief Tom Horne countered Save Our Schools.

“Statewide approximately 75,000 students are in the ESA program compared to 1,250,000 in public schools,” he said. “ESAs are not a threat to public schools, but the competition they provide causes public schools to perform better as opposed to being a government monopoly which SOS prefers.”

He added, “Here is an example of why SOS is absolutely wrong on this issue: We have families that have three children. The needs of two of the children are met at the neighborhood school, but the needs of one of the children are not being met.

“The parents now have the ability to choose another school that meets that students’ academic needs. No one could rationally be against that unless they are so immersed in ideology like SOS is and it has made them coldhearted with respect to students’ academic needs.”

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