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Budget and Legislative Update

Dr. Chuck Essigs, AASBO Director of Governmental Relations. Budget and Legislative Update. Source of State Dollars – Fiscal Year 2011. Sales Tax $4.3 billion 52% Individual Income Tax $2.5 billion 31% Corporate Tax $0.6 billion 7% Other $0.86 billion 10%

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Budget and Legislative Update

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  1. Dr. Chuck Essigs, AASBO Director of Governmental Relations Budget and Legislative Update

  2. Source of State Dollars – Fiscal Year 2011 Sales Tax $4.3 billion 52% Individual Income Tax $2.5 billion 31% Corporate Tax $0.6 billion 7% Other $0.86 billion 10% Total $8.2 billion

  3. Budget/Future Considerations • One cent sales tax ends in FY2014 - $1 billion • K-12 rollover - $1.2 billion (estimate) • Suspended funding formulas - $1 billion • Increased cost to State from AV decline

  4. Long Range Forecast • Estimated revenue in FY2014 of $8.46 billion • Vs. actual revenue in: FY2005 of $7.72 billion FY2006 of $9.26 billion FY2007 of $9.62 billion

  5. Suspended K-12Funding Formula Items* • Soft Capital $165,120,700 • New Utilities $100,000,000 • Charter School Add’l Assistance $10,000,000 • Building Renewal $241,593,600 $516,694,300 *No estimate for New School Construction

  6. Other Issues • Full-day K $218 million • No inflation increase for Base Formula over $50 million Classroom Site Fund over $200 million

  7. Projected Budget Shortfall • FY 2011 $550 million • FY 2012 $1.0 billion • FY 2013 $600 million • FY 2014 $1.1 billion

  8. Governor’s Proposed Budget FY2011 Shortfall • First Things First Loan $330 million • Add’l K-12 Rollover $245 million* • K-12 Federal Jobs Funds $101.2 million • DES Reductions $91 million • Fund Transfers $65.6 million • Medicaid Provider Cut $17.3 million • One-time Corrections Svgs. $10 million

  9. Governor’s Proposed Budget FY2012 Major Non - K-12 Items • Medicaid (AHCCCS) Rollback $541.5 million • University Reductions $170 million • Reinstate AHCCCS Rollover $115.4 million • Fund Transfers $87.5 million • DES Reductions $91 million • Provider Cuts $89 million • Comm. College Reductions $72.9 million Almost $1.2 billion

  10. Governor’s Proposed Budget FY2012 • CORL and Add’l Assistance Reductions ($62/student) $66.6 million • Cut to Arizona Online Instruction (AOI) $11.6 million • Phase Down of Career Ladder $5.6 million

  11. Some Legislators Want More Cuts (FY2012) • $600 million more than Governor’s Proposed Budget • K-12 $200 million / More or Total?

  12. TNT Tax Rates / QTR and State Equalization • Current QTR $2.9594 Unified / $1,4797 Elementary and High School • Proposed (FY2012) $3.5364 Unified / $1.782 Elementary and High School • State Equalization Rate Current is $0.3564 proposed (FY2012) is $0.4259

  13. School Districts and Associations • HB 2002 (school district monies; associations; elections) • As amended, this bill would prohibit school districts from paying for membership in an association that attempts to influence an election.

  14. SB1263 Schools, Administrative Reduction • Reduces time frame for closing schools • Classroom Site Fund - $120 and supplanting for FY2012 • Override calculation relief continues for FY2012 – Base level and Full Day K • Changes performance pay for Superintendents – Excludes benefits and sets amount up to 20% • Flexibility on disposal of equipment, furnishings and supplies

  15. SB1263 Schools, Administrative Reduction Continued • For FY2012 and 2013 allows unrestricted capital to be used for any capital or operational expense (excludes SFB and override funds) • For FY2012 and 2013 permits carryover in excess of 4%

  16. Reporting Bills • HB 2301 (schools; instructional salaries; soft capital) • Requires school districts to spend at least 50% of their M&O budget on teacher salaries and lifts the restrictions on use of the Soft Capital Allocation • HB 2421 (school districts; budgets; financial reports) • Requires school districts to make certain fiscal documents available for viewing on their websites and makes changes to reporting requirements for budget override spending. • HB 2572 (government expenditure database; transparency; CAFR) • Requires the Arizona Department of Administration and each local government to post the comprehensive annual financial report of a budget unit on their official Internet website

  17. Big Picture Policy • SB 1451 (high schools; board examination systems) • Clean up bill for the Grand Canyon diploma • SB 1452 (schools; e-learning programs) • Establishes the Arizona Digital Learning Center and specifies program requirements • SB 1455 (AP teachers; bonus pay; weight) • Establishes a teacher performance pay system based on student performance on Advanced Placement exams

  18. Retirement • SB 1167 (ASRS; comprehensive amendments) • Requires Alternate Contribution Rate (ACR) beginning July 1, 2013 to be paid for a retired member that returns to work and performs services as an employee or contractor • HB 2726 (public retirement system; plan design) • Eliminates 85 point provision for employees starting work after July 1, 2011 and sets the normal retirement age at 62 with 10 years of service or age 65 • Requires Alternate Contribution Rate (ACR) for retired members who continue to work after July 1, 2012 • Removes Permanent Benefit Increase (PBI) • Establishes a defined contribution study committee consisting of members of the State Board of Investment

  19. Public $$/Private Schools • SB 1312/HB 2581 (STOs; credits; administration) • Expands the STO tax credit to allow credits against luxury tax and severance tax for contributions made to STOs for scholarships awarded to low-income, displaced and disabled students, in addition to the credit already afforded to income tax and premium insurance tax • SB 1553/HB 2706 (education; Arizona empowerment accounts.) • Establishes and prescribes rules and requirements for the Arizona Empowerment Accounts program (essentially a voucher) for special education students • SB 1116 (displaced pupils choice grants; continuation) • Permanently continues the displaced pupils choice grant.

  20. Administrative Reductions • HB 2670 (school districts; electronic record keeping) • Allows school districts to maintain their public records in electronic format

  21. School Boards • SB 1072 (school boards; election cancellation; certificate) • Requires the county school superintendent to issue a certificate of election to a person who is appointed to fill a school district governing board when the election was cancelled due to only the number of persons filed for the number of positions up for election. • SB 1577 (s/e: county school superintendent; powers; duties) • Removes from the powers of a county school superintendent to appoint school district governing board members to fill vacancies on a board • Allows a school district governing board to appoint members to a governing board to fill vacancies. • SB 1303 (schools; dropout recovery programs) • Establishes a dropout recovery program and specifies program requirements and funding • Voluntary for school districts • HB 2219 (s/e: study committee; unification; consolidation) • Establishes the 16-member Joint Legislative Study Committee on School District Unification and Consolidation

  22. School Facilities Board • SB 1518 (school districts; capacity; charter schools) • Suspends any School Facilities Board (SFB) New School Facilities Fund (NSFF) monies for school district requests related to actual or anticipated student capacity needs from FY 2012 through FY 2014 • Outlines addressing school capacity needs through existing or new charter school and public school arrangements • SB 1422 (school facilities board; school closures) • Would have allowed the school facilities board to determine whether a school within a school district should be closed. (Now operational under SB1263)

  23. Immigration • SB 1611 (immigration omnibus) • Makes numerous changes to immigration statues • Requires that a school or school district notify a person enrolling a student that within 30 days the person must provide one of nine stated documents • SB 1308 (interstate compact; birth certificates) • Authorizes and directs the Governor to enter into an Interstate Birth Certificate Compact with other states • SB 1309 (Arizona citizenship) • Establishes criteria for Arizona citizenship

  24. Administrative Items • HB 2234 (persistently lowest achieving schools) • Allows the State Board of Education (SBE) to assign a school a letter grade of F under AZ LEARNS if the school is among the persistently lowest-achieving schools • SB 1420(school districts; competitive bidding; filing) • Reestablishes the administrative reduction measure to require a school district to procure services by competitive bidding in order to place a student in a private school and when a party to an intergovernmental agreement. (might be withdrawn)

  25. Legal • Prop 301 Lawsuit • Charter School Lawsuit

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