How Arizona computes basic school funding levels

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Compared to other states, the Arizona mechanism for funding public education is a regular Rube Goldberg contraption.

Approved by the state legislature in 1980, the mechanism was designed to replace an unfair system based solely on property taxes with in which the state provided basic funds to ensure all school districts were provided funding to allow “general and uniform” education, as required by the state Constitution. But in computing the per student funding level, school district with special needs and circumstances get extra percentage points that can shift funding to their districts. And when the resulting “equalized” funding from the state doesn’t cover all costs, school districts must go to the voters to get extra funding through local property tax assessments through overrides and bond elections.

Here is how it works:

The Arizona legislature enacts an education budget using revenues collected equally throughout the state. These funds are divided for allocation into three categories: Maintenance and Operations, Soft Capital (items students use that have a short life like paper and pencils) and Unrestricted Capital (items with long-term use like textbooks, desks and chairs). The first two categories, funding is equal for all Kindergarten through 12th Grade students; but Unrestricted Capital funds are allocated about 50% more for high school students than for elementary school students. Additional calculations skew extra funding to special education students (those with physical disabilities, visual or hearing impairments, and mental retardation), those who need to learn English, and students in small or isolated districts that might incur extra expenses for student transportation.

Once all the calculating is completed, school districts receive their funding based on the number of students enrolled in their district. In 2011, they received $3,267.72 per student for Maintenance and Operations, and an additional $225 per student for Soft Capital items. For Unrestricted Capital items, additional funding is $225.76 for elementary students and $337.62 for high schoolers.

Where this funding doesn’t cover all expenses, school districts can go to the voters to seek an override of up to 15% more on Maintenance and Operations funding and up to 5% more for Capital funding. Once enacted, the additional revenues are secured through a raise in property taxes on residents within district boundaries.

When an override is approved, it runs for seven years, but only authorizes the full override percentage for the first five years, with the permitted extra funding dropping by one-third during each of the next two years before ending completely. As a result, school districts that need the extra funding to meet payroll and other expenses generally propose a referendum to continue extend the override in the fourth year. These initiatives are often misunderstood by voters, who see them as a request for a property tax increase rather than the extensive of an existing levy that won’t cost them any more than before.

School districts also can ask voter approval of bond issues for capital improvements such as building a new school for improving an existing one.

The Arizona school funding mechanism has received its share of criticism over the years. Areas of the state with older populations and more expensive homes have from the beginning complained that they are forced to subsidize schools outside their districts. They would like to go back to the pre-1980 system where schools were supported entirely by property taxes collected within their districts.

The Arizona Tax Research Association also has criticized the funding formula as favoring districts where students live far from schools and must travel further on buses. The group also calls for the end of special funding for districts that have high populations of students speaking languages other than English, or must bus students for court-mandated antidiscrimination reasons.

By eliminating these parts of the funding formula, the state’s educational budget could be trimmed further than it was a few years ago, an association spokesman said.

This has baffled leaders in some school districts, who note that the earlier budget cuts made their continuing the overrides more essential to maintaining a high level of educational performance, but also harder to enact override continuations.

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