THE State Budget Crisis

1. THE State Budget Crisis

2. Today’s Presentation • Arizona’s budget • The impact of the economic decline • Where the money comes from • Where the money is spent • What MPS needs to do to get through the current budget crisis

3. Arizona’s Revenue Sources JLBC Actual Fund Revenue, FY2007

4. Where Does Arizona Spend Its Money?

5. Arizona’s Constitution Requires A Balanced Budget

6. Arizona’s Revenue Is Declining

7. The Budget Crisis Is Hurting All Sectors and States

8. Budget Cuts or Revenue Increases? “[House Appropriations Chair John ] Kavanagh said that he and most Republicans are unwilling to consider tax hikes, even temporarily, instead of further spending cuts.     “I’m not going down the tax road until the situation is so dire that there’s no other alternative,’’ he said. “And I’m not prepared to concede that at this point.’’ ” --East Valley Tribune, February 1, 2009

9. K-12 Arizona Education Funding Has & Will Experience Cuts In 2008/09 K-12 education was cut $133 million. The estimated cuts to K-12 education in 2009/10 is estimated to be between $470 million and $1.4 billion

10. Potential State Education Budget Cuts • The following budget cuts have been proposed by state legislators: • Phase out of Career Ladder • Elimination of Young Learner and Full-Day Kindergarten • Eliminate annual increase of 2% in funding • Base Funding was decreased 2.6% this year and will be decreased even more in the next budget • Funding to offset utility bills may not be provided • Soft Capital will be eliminated or significantly cut

11. State Funding is Only One of Several Challenges Impacting MPS • MPS cut $19,800,000 in 2008/09

12. Other Challenges: Enrollment Has Declined +580 -67 +107 +162 -685 -537 -1406 -2135

13. Other Challenges: Passing The Override • 8.8% of salary is contingent on the override • Funding for 136 teachers is from the override • Security positions are funded by the override • Technology trainers are funded by the override

14. Budget Misperceptions False! • This decline can be dealt with by cutting ‘fat’ and not cutting people’s jobs or salary • Mesa puts more money in the classroom than most districts • Mesa has fewer administrators than average • Arizona Auditor General

15. Most of Our Money Goes To People

16. Most of Our M&O Money Goes To Teachers

17. Our Staff Has Helped Mesa Schools Be Very Successful • 96% of elementary parents give MPS an A+, A or B grade. • America’s Promise Alliance named the district as No. 1 in graduation rates among the nation’s 50 largest cities in 2008. • U.S. and News Report magazine recognized all six MPS comprehensive high schools in its “Best High School 2008 Search.”  • The Class of 2008 was offered over $45 million in scholarships. • The Class of 2009 includes 25 National Merit Semifinalists and five Presidential Scholar finalists. • MPS students earned state championships in academics, athletics, creative and performing arts, and career and technical education in 2007-08. • MPS captured 27% of the seats in the all state orchestra and band while having only 7% of the students in the state.

18. Budget Misperceptions False! • Existing bond funds may be used for other budget categories

19. Budget Misperceptions False! • Funding may not increase, but it won’t go down

20. So Where Will Cuts Be Made? If 91% of our operating budget goes to people, we will have to have fewer people and/or pay people less. We will also have to eliminate some programs and activities and increase efficiency.

21. How Will This Impact MPS?

22. What Is MPS’s Plan? • Educate our legislators • Inform our staff and community • Reorganize district based operations • Adjust staffing to match the decline in enrollment • Ensure district expenditures match projected (declining) revenue

23. MPS’s Plan For 2008/09 • Cut $20 million from budget in July 2008 • Froze job openings except for classroom teachers • Reduced all supply budgets • Cancelled $3 million in purchases of textbooks, software and similar items • Reduce substitute teacher costs

24. MPS’s Plan For the 2009/10 Budget • Potentially cut $30-$??? million • Reduce positions in district departments • Examine programs and offerings and reorganize to maximize efficiency • Identify non-state funding sources • Adjust teaching and support staff to reflect lower enrollment.

25. Timeline • February: Share budget status with staff; give initial teacher allocations to schools • March: Develop budget plan for possible state funding levels • March/April: State sets 2009/10 budget • Soon after: MPS announces changes based on the budget provided

26. So Now We Know • Arizona’s budget picture is grim • Proposed education cuts in the state budget will be significant • MPS budget cuts will mean fewer programs, paying fewer people and possibly paying people less if the state cuts certain funds • We need to understand the situation, we need to come together to weather the storm and we need to work to strengthen district finances where we can

27. Mesa Succeeds The Long Depression of 1872-1897 The Panic of 1893 The Stock Market Crash of 1929 The Great Depression 1929-1938 OPEC Oil Crisis & Runaway Inflation of the 1970’s The Savings & Loan Crisis and Recession of the 1980’s

28. Mesa Succeeds “It is our attitude at the beginning of a difficult undertaking which, more than anything else, will determine its successful outcome.” -- William James

29. Have A Suggestion? Do you have an idea that could be implemented that would save money? Go to www2.mpsaz.org\abetterway and submit ideas or send district mail to “A Better Way Suggestion” as soon as possible

30. THANK YOU