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FY2018 Executive Budget Analysis


What does it mean for Arizona Educators and Students?

During his State of the State address, Governor Doug Ducey promised a big commitment to Arizona public education. He stated he would be making a significant investment in Arizona education to tackle the teacher shortage and improve outcomes and results. On Friday, the Governor’s Office released the Fiscal Year (FY)2018-19 Executive Budget proposal. Here is AEA's summary of the governor's budget and what it means for educators and students in Arizona.

General Fund Snapshot

$ in thousands     FY2017 FY2018 
 Total Revenues   9,763,143   9,802,196
 Enacted Base Spending    9,608,269  9,608,269
 Baseline Changes    35,790  1,340
 New Initiatives    0 175,651 
 Total Spending    9,644,059  9,785,259
       
Ending Balance    119,083  16,937


Governor’s Investment in Education

For FY2018, the Governor plans to make a total education investment of $165 million. Of that investment, $114 million will be designated for K-12 education. 

K-12 Education     $114 million
Higher Education    $51.8 million
Total New Investment    $165 million


K-12 Education

The governor identified the teacher shortage in Arizona as an issue. Here are his solutions:

  1. 2% Teacher Salary Increase
    The plan is to increase teacher salaries in Arizona by 2% over the next 5 years. In FY2018 the $13.6 million appropriation would result in a 0.4% salary increase. With the average teacher salary being $46,358, the total 2% increase would amount to $927 and teachers would not see that full amount for 5 years. For FY2018, that would amount to approximately $185 salary increase per teacher. For this pay raise, teacher is defined by Proposition 301.
  2. New Teacher Signing Bonus
    The governor expressed concern about attracting highly qualified teachers to low-income schools. His solution is a one-time $1,000 signing bonus for new teachers in districts or charters in which more than 60% of students are eligible for free or reduced lunch. The $6.4 million recommended appropriation for FY2018 would result in signing bonuses for the 6,400 new teachers during the 2017-18 school year.
  3. Teacher Loan Forgiveness
    To attract qualified teachers to rural and remote communities, this appropriation would expand the Math, Science, and Special Education Teacher Loan Forgiveness Program. The $250,000 recommended appropriation for FY2018 would assist an additional 61 student teachers, per year to serve in rural communities. 

The governor doubles down on high-stakes testing.

  1. Results-Based Funding
    The Governor’s plan appropriates $38 million in FY2018 to reward schools that are already scoring in the top 10% of AZMerit. Low-income schools (schools where 60% or more of the students qualify for free and reduced lunch) that achieve AZMerit scores in the top 10% will receive $400 per pupil. High-income schools (schools where less than 60% of the students qualify for free and reduced lunch) that achieve AZMerit scores in the top 10% will receive $225 per pupil. Low-income schools will not compete with high-income schools for the funding.
  2. Enrollment Reconciliation Funding
    The transition to current year funding has been difficult for school districts. School districts will receive this one-time $20 million funding to help manage the impact of declines in enrollment that are greater than 2%. 

The Governor’s Achieve60AZ and Arizona Education Progress Meter will be developed through initiatives outlined below:

Higher Education 

  1. $1 Billion Bonding Package for ASU, UA and NAU
    The universities will be enabled to invest approximately $1 billion in research and development and capital. The $1 billion ongoing investment will be supported by redirecting transaction privilege tax (TPT) revenues paid by the universities. A total of $36.8 million in TPT revenues will be redirected to the universities. The $30.3 million in redirected State component TPT revenues are to be used for capital investments, including research and development infrastructure and deferred maintenance projects. Any TPT revenue growth above 2% will be provided to universities for general operating expenditures. The universities will also receive approximately $6.5 million in State-shared component TPT revenues for general operating expenses.  
  2. Arizona Teachers Academy
    In return for the financing package above, the three state universities are tasked with creating the Arizona Teachers Academy which is scheduled to begin in Fall 2017. Initial plans for the Teachers Academy are due within the next 90 days and should include: student preparation for the teaching profession, professional support for teachers, new accelerated model for high-demand disciplines (e.g., STEM) and for career changers that result in professional certification. The plans should also establish stronger partnerships between universities and school systems to build a pipeline for teacher employment. The universities are expected to graduate students from the Arizona Teachers Academy debt free. For every year of free tuition received, the student is committed to teaching in an Arizona school for a year. 
  3. Universities will also receive a one-time $15 million general fund appropriation. 

Conclusion

While the governor’s budget does prioritize investing in public education, there are continued revenue constraints that do not allow for significant and long-term investments. If the governor and the legislature want to attract and retain talented individuals to the teaching profession, they need to start looking at ways to increase revenue to the state. The continued expansion of Corporate Tax Breaks, Empowerment Scholarship Accounts (ESA) vouchers, and Student Tuition Organizations are diverting funds from Arizona classrooms and hurting students and teachers. 

Governor Ducey’s FY2018 Education Investments

 Teacher Salary Increase    $13.6 million
 Kindergarten and Early Literacy    $10 million
 New Teacher Bonus    $6.4 million
 Enrollment Reconciliation    $20 million
 Results-Based Funding    $37.6 million
 AZ Education Progress Meter Investments    $8.9 million
 School Facilities Board Building Renewal    $17.2 million
     
 Total K-12 Investments    $113.6 million
     
 University One-Time Resources    $15 million
 University Bonding Package    $36.8 million
     
 Total University Investments    $51.8 million



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