Fiscal doomsday clock ticks for Chandler schools - SanTan Sun News SanTan Sun News

Fiscal doomsday clock ticks for Chandler schools

February 13th, 2022 development
Fiscal doomsday clock ticks for Chandler schools

Howard Fischer, Capitol Media Services

A financial doomsday clock is ticking for most school districts in Arizona and unless the Legislature acts to stop it by March 1, Chandler Unified faces making $54 million in immediate spending cuts before the end of the current school year.

In all, Arizona school districts face $1.2 billion in immediate cuts if the Legislature does not raise or postpone what’s called the Aggregate Expenditure Limit that dates back to the 1980s, when Arizona voters approved a spending cap for K-12 schools that the Legislature could override with a simple vote.

State Superintendent of Public Schools Kathy Hoffman last week called out Republican lawmakers for not trying to develop the two-thirds consensus of lawmakers needed to raise or postpone that cap.

“A 16% reduction in budgets will means layoffs amid the already crisis-level teacher shortage,’’ she said. “For students and their parents and guardians, these cuts will mean losing access to academic programs, extracurriculars, high-quality teachers, and even school closures.’’

And Hoffman told lawmakers their voters will notice.

“If schools close because they are not authorized to spend money already sitting in their bank accounts, the blame will lie with you, not our public schools,’’ she said.

House Speaker Rusty Bowers, R-Mesa, told Capitol Media Services the real hang-up is a fear that if lawmakers agree to ignore the cap this year, they effectively will set a precedent that could be used against them in the still-ongoing litigation over whether a 3.5% income tax surcharge on the wealthy approved by voters in 2020 would be allowed to take effect.

The Supreme Court last year rejected arguments that the estimated $827 million that Proposition 208 would raise automatically is exempt from the aggregate constitutional limit on how much the state can spend overall on education. But the justices sent the case back to Maricopa County Superior Court Judge John Hannah to determine if there still is a legal way for the funds to be used. Hannah gave no indication. of when he might rule.

Bowers said there may be some merit to getting rid of the cap, something that would solve the immediate problem.

But if that’s their view, and we do it, that just reinforces their side of the argument,’’ Bowers said. And he said there’s a big difference between the state hitting the expenditure limit – the issue immediately facing lawmakers – and whether the state’s most wealthy can be forced to pay a new tax for education.

But Roopali Desai, attorney for Invest in Arizona, the group that put Prop 208 on the ballot, said the question before Hannah is what might be raised and spent in the 2022-2023 school year. What’s facing lawmakers right now, she said, is whether schools can spend the money they already have this school year.

As the harsh prospect for major cuts moves closer to reality, more school officials in the East Valley are talking about it, though the Chandler Governing Board has not discussed it so far.

Kyrene Board member Michelle Fahy earlier this month noted the $17 million cut confronting her district, stating “We are going to experience devastating financial impact.”

CUSD spokesman Terry Locke said that if the district is forced to make the cuts, officials will have a targeted approach.

“If the Legislature doesn’t act, we would have to reduce our budget and eliminate any expenditures that don’t impact our student learning directly and also shift expenditures into other funds,” Locke said.

State Sen. Sean Bowie, whose district covers parts of northern Chandler and Mesa, Ahwatukee and parts of Tempe, said the combined cuts facing the five school districts he represents total $177 million, with Mesa Public Schools confronting a potential $73 million hit.

While legislative panels in recent weeks have heard testimony – and preliminary votes – on secondary education issues such as whether teachers should be required to tell parents if their child confides in them they are gay and banning references to homosexuality in textbooks – the fiscal crisis facing districts has received scant attention.

Democrat Jennifer Pawlik of Chandler has introduced a couple of measures, one to waive the cap for this year and another to abolish it entirely – which would require voter approval.

But Republicans have not brought the issue forward and may be angling for something in return first – such as voucher expansion or reenactment of the income tax cut that is now tentatively scheduled to be on the November ballot.

Bowie said in a message to his constituents earlier this month, “My worry is that some of my colleagues will demand policy changes in exchange for lifting the cap. I hope we will do the right thing and vote to raise the cap before March 1st, but it’s too early to tell.”

Without action by March 1, school districts across Arizona would have to cut a total of more than $1.2 billion from their 2021-22 budgets. That translates out to around $1,300 per student than what they’ve already budgeted.

Districts will be able to collect the state and local taxes as planned. They just won’t be able to spend it all.

And that has implications for districts that are unable to pay for the teachers they hired and the contracts they’ve already signed.

The only thing that could avert this fiscal train wreck would be action by the Legislature, which could approve an exemption from the voter-approved aggregate expenditure limit of about $6.6 billion. But that would take a two-thirds vote.

“It’s catastrophic and it would be devastating to our budget, especially since we’ve already committed contracts for the year,” Kyrene Chief Financial Officer Chris Hermann said last fall. He said if the district has to start altering spending plans in the spring “it doesn’t give you hardly any time to make adjustments.”

Gubernatorial press aide C.J. Karamargin last fall would not commit to Ducey supporting an exemption.

In his budget for the 2022-23 fiscal year, Ducey proposed a $14.25 billion spending plan that included $227 million in new K-12 funding above and behind what’s required to keep pace with enrollment growth and inflation and $127 million for higher education, including $46 million for “economy workforce initiatives’’ at the three universities to prepare students for careers in future job.

Karamargin last fall noted that schools got more than $4 billion in COVID relief dollars. While those dollars are not subject to the expenditure limit, they also are one-time monies.

The current problem goes back to the Aggregate Expenditure Limit that voters approved in 1980 for all K-12 spending statewide. Based on figures at that time, it is adjusted annually for inflation and student growth.

What’s happening this year is largely the convergence of two unusual factors.

First, the limit is always based on last year’s student numbers. Chuck Essigs, lobbyist for the Arizona Association of School Business Officials, estimates that the drop in students in public K-12 education last year, much of that due to COVID, will reduce the spending limit by about $300 million.

But the bigger problem is one that the Legislature created in seeking to provide financial help.

In 2000 voters approved Proposition 301 to levy a 0.6-cent sales tax to fund education, including teacher salaries, for 20 years. And voters made those revenues exempt from the aggregate expenditure limit.

With that tax expiring this year, lawmakers in 2018 agreed to a new, identical levy to pick up in July and run until 2041 to keep the money flowing without interruption.

Only thing is, they never exempted what the new levy will raise from the expenditure limit. And that alone accounts for more than $632 million of money now coming in to schools — money they formerly got to spend but, legally speaking, cannot spend this year absent a legislatively approved exemption.

Tucson projects a $58 million spending cut would be necessary in the current school year, gutting kindergarten and after-school programs and pushing class sizes to more than 40 pupils.

“If you’re a district that has a lot of special ed kids, obviously you can spend more because the formula allows you to spend more,” Essigs explained. That’s because state law provides a higher level of aid for youngsters with special needs.

But that 17% hit, he said, would come to the total spending authority, “even the part of it that includes special ed students.”

Executive Editor Paul Maryniak contirbuted to this report.