Funding/ Legislative Update/ Prop 301

1. Chuck Essigs Arizona Association of School Business Officials April 2010 Funding/ Legislative Update/ Prop 301

2. 2011 Budget Items with Sales Tax • Base Level $3267.72/ with teacher comp $3308.57 (No change from FY2010) • Transportation $2.32 inc. to $2.35 and $1.89 inc. to $1.91 (Remember 120% limit TRCL vs TSL) • Additional assistance for charters K-8 inc from $1588.46 to $1607.50 and 9-12 from $1851.30 to $1873.52 (later reduced)

3. 2011 Budget Items with Sales Tax • Reduce soft capital by $165.1 million (Est. 80%) • Districts with less than 600 cut is 50% (Est. 40%) • Eliminate Group B weight for K students ($218 million) • Reduce additional assistance for charters by $10 million (Est. $85 per student/ 116,781 charter students)

4. 2011 Budget Items with Sales Tax • Suspend building renewal formula • Suspend utility funding formula • Allows charging tuition for K students • Sets Career Ladder at 5.0% (Same as FY 2010) • Permits school districts to expend soft capital monies for any capital of operational expense • Eliminates non-formula funding programs (Exempt for Voc. Block Grant) • School Safety Program (40% General Fund Gone/ 60% Prop 301 Remains)

5. 2011 Budget Items – Sales Tax Fails • Suspend Soft Capital ($47 million) and CORL Funding ($248 million) • Reduce base level by $102.7 million (2% Reduction) • Reduce additional assistance for charters by $31 million (Est. $265 per student) • Total $428 million

6. Tax Issue - 2012 • Change calculation of homeowners rebate (additional state aid) to 40% of primary taxes or 40% of QTR amount whichever is less • Impact on homeowners property taxes • Example • $5.00 Primary Rate - $2.00 Reduction • $5.00 – (40% / $2.00) – Effective $3.00 Rate • $2.80 QTR - $1.12 Reduction • $2.80 – (40% / $1.12) – Effective $3.88 Rate

7. BH2386 – Override Elections • Provides technical corrections to override laws • Removes requirement to budget and report separately for special program overrides and eliminates ability to carry forward 50% of unspent special program override • Holds districts harmless for reductions to overrides from elimination of Group B K weight (Senate Education Amendment • Holds districts harmless for reductions to overrides from reductions to base level if sales tax election fails ($102 million)

8. HB2389/ SB1083 – ASRS Plan Changes (Impacts hires after July 1, 2011) • Change 80 points to 85 points • Retirement calculation based on 60 months, not 36 months • Member who leaves after 5 years gets member contributions plus 25% of employer contributions • Return to work still an issue • (53 yes votes in House/29 yes votes in Senate)

9. HB2725 Education Omnibus • Numerous charter school changes • Teacher certification changes • Eliminates bid requirement for Special Ed. Students placed in ADE approved private schools • Allows district board to establish multiple bank accounts to deposit miscellaneous receipts • Reduces required time in 7th and 8th grades from 1068 to 1000 hours • Requires State Board to appoint a task force by October 1, 2010 ad every 3 years to review laws and recommend the repeal of laws that are not necessary or required to provide educational services to students • Other changes.

10. Move on When Reading • HB2732 • Student cannot be promoted from 3rd grade if testing indicates that student is far below 3rd grade level • Requires State Board to develop intervention and remedial strategies that districts need to use • SBE Task Forces reports 1/15/2011/ program delayed 2012-2013

11. Counting Students • SB1323/ HB2385 • Problems with SAIS • Pick points in time instead of 100 day average – September 15, November 15, January 15 and March 15 • Funding on membership but absence data must still be reported • Delayed implementation (Effective June 30, 2011) • Example is STAR in New Mexico • 200 Day Calendar - 5% base level increase/ Must increase Instructional Hours by 10%

12. School Personnel Bills • HB2227 – Requires teacher to return contract within 15 days (55 – 2 Vote in Senate) • HB2521 – Requires superintendent contract to include at least 20% of salary as performance pay (55 – 0 Vote in House)

13. School Personnel Bills • HB2061 • Repeals Career Ladder and Optional Performance Incentive Program (OPIP) • Allows all school districts by vote of governing board to budget for teacher compensation for performance, teacher professional development programs and employment-related expenses outside RCL • Amount not eligible for additional state aid • Amendment in Ways and Means 5.5% for FY2011, 4.0% for FY 2012 and 2.5% for FY2013 • (Stalled In House Cow)

14. Revenue Estimate for Tax Rate • S1188 – County School Supt. Required to file a copy of revenue estimate to set tax rate with Property Tax Oversight Commission. The projected ending cash balance, adjusted for encumbrances and payables must be certified by district

15. Government Transparency • HB2282 – Website information on receipts and expenditures. ASBA and AASBO oppose and are trying to get an alternative put in place. • Implementation date January 1, 2013 • Available on website – all revenues and expenditures over $5,000 • Be searchable, updated at least every 3 months and retained for at least 3 years • To mirror requirements for ADOA Website (January 2, 2011)

16. How Did it Work/ What Changed? • By March 30th Joint Legislative Budget Committee shall determine a per pupil amount for the budget year………. • What Changed – New language, “Adjusted for any prior year carry forward or shortfall”

17. Budget Limit – Classroom Site Fund • Allocation from ARS 15-979 (per weighted student) • Unexpended budget balance from prior year • The net interest earned during the prior year

18. Example of Impact / Only Example • FY2011 – per weighted count $220 • Prior Year Shortfalls $195 • FY2011 – Amount = $25 per weighted student