Gov. Doug Ducey’s proposed $12.7-billion budget features another big tax cut, but may lock in the financial stress of the pandemic for schools that have lost students.
The governor’s proposed budget features a 7% increase in general fund spending as well as a $1.2 billion in income tax cuts over the next three years.
It also cuts education funding by $389 million, largely due to the 50,000-student enrollment decline during the pandemic.
“We are not going to fund empty seats,” said the governor of the cut in per-student enrollment funding due to the enrollment declines.
The comment set off a backlash from many educators, who have been struggling with the impact of the pandemic.
Superintendent of Public Instruction Kathy Hoffman praised elements of the governor’s school plan — including more money for literacy coaches in elementary school and $10 million to improve broadband access for schools — especially in rural areas.
However, she said “public schools need sustainable, predictable operational funding to recruit and retain highly qualified educators and staff, support their students’ mental health and bridge the opportunity gap for every student in our state.”
The pandemic has made the state’s ongoing teacher shortage much worse, nearly doubling the retirement rate. In December, districts found the districts didn’t have a qualified teacher to cover one in four classrooms, an increase of 10% since the fall. The Arizona School Personnel Administrator’s Association survey found that 609 teachers had resigned in September, compared to 373 at the same time a year ago.
Among the 1,360 teachers who retired or resigned this year, 37% cited the pandemic as a reason.
The governor’s office said the state might make that $389 million available to help make up the learning losses during the months of distance learning during the pandemic. That could include extra money for schools with lots of low-income students, who proved much more likely to fall behind during the abrupt shift to distance learning. The money might also help districts provide summer sessions to help students catch up.
Most of the districts in the state have suffered big enrollment declines during the pandemic. School officials don’t know whether those students will return, but the state’s shift to current-year school funding to benefit charter schools with their fluctuating enrollment have made district budgeting processes chaotic.
The budget compounds the financial losses many districts suffered this year as a result of the pandemic. The state backed away from its promise to cover the financial cost of the enrollment decline this year when the extent of the decline became clear.
The state’s budget this year did better than expected, thanks to billions of dollars in federal assistance and a lower-than-projected drop in sales tax collections.
The proposed $12.6-billion budget features a 7% increase in general fund spending, a $1 billion rainy day reserve fund and a $200-million income tax cut this year. The cost of the income tax rate reduction would rise to $600 million in the third year.
The tax cuts will partially offset the increase in the income tax rate for people making more than $250,000 annually approved last year by voters to increase education funding by about $900 million annually.
Arizona has among the worst-funding public school systems in the nation, with among the lowest teacher salaries and largest class sizes. The state has in the past three years provided enough extra money to provide for a 20% increase in average teacher pay, but hasn’t yet made up the education funding cuts made during the last recession on a per-student, inflation adjusted basis.
However, Ducey in his state of the state speech last week touted the extra money that has gone to schools in his six-year term.
“In total, we’ve pumped $4.5 billion in new investments into Arizona schools. With our latest budget, that figure will rise to $6.6 billion. And we’ve done all of this, without raising taxes.
“In addition, an even larger investment in school counselors, cops on campus, and school safety. A stronger focus on CTE and the trades. More money for the Arizona Teachers Academy, and Teach for America. And a full, complete and accelerated restoration of flexible funding — two years ahead of schedule.
“(And) by the start of the new school year, teacher pay will be up 20 percent,” he concluded.
The governor’s budget also includes more financial incentives for the state’s fast-growing network of public charter schools, with additional payments for high test scores and low-cost loans to build more schools. The state’s charter school system is dominated by a few for-profit chains, mostly catering to white students in high-income neighborhoods of larger districts. The extra money for charters includes $10 million to transport students.
Many of the charter school networks actually picked up students during the recession, although the numbers aren’t yet clear. Many of the charter school chains continued offering in-person classes during the pandemic. Most of those charter schools currently operate in high-income neighborhoods in urban areas, with far fewer charters operating in rural districts. Those charter schools in affluent neighborhoods have reaped most of the benefits from the state’s system of paying extra for students with high test scores and students who complete Advanced Placement classes.