Lawmakers, educators say Ducey must address school funds crunch

PHOENIX — A bipartisan group of legislators is calling on Gov. Doug Ducey to live up to his promise to call a special session to address a school spending crunch before he, and some of them, leave office at the end of the year.

At stake is whether schools will have to cut nearly 18% of their budgets before July 1.

Lawmakers approved a $1 billion increase in funding for K-12 education in their 2022 regular session.

However, that new money bumps total state and local education funding against a 1980 voter-approved cap in school spending. Adjusted for inflation and student growth, that limit now is $6.4 billion.

School districts already prepared budgets and are on target to spend nearly $7.8 billion this fiscal year based on the funding lawmakers approved.

Legislators can waive the cap with a two-thirds vote, and they have in the past.

Rep. Michelle Udall, R-Mesa, who chairs the House Education Committee, said Thursday that the governor’s deputy chief of staff, Katie Ratlief, said Ducey committed to calling a special legislative session only on two basic conditions.

First, a lawsuit challenging a voter-approved income tax increase for education needed to be resolved. That was done.

Second, said Udall, Ducey wanted proof there were the necessary 40 votes in the House and 20 in the Senate — two thirds of each chamber — to approve an override of the spending cap. That list was presented to Ratlief in October, Udall said.

To date, however, the Republican governor has not acted.

Sen. Sean Bowie, D-Tempe, said the bipartisan state budget Ducey wanted would not have gotten the necessary Democratic votes — there were holdouts among the majority Republican caucus — without that promise.

“His legacy will be diminished if he fails to hold up his end of the bargain,’’ Bowie said.

‘Kids are going to be the ones that suffer’

It’s not just lawmakers who are waiting for gubernatorial action.

Strictly speaking, lawmakers have until the end of March to waive the cap by the necessary $1.4 billion.

But Michael Wright, superintendent of Blue Ridge Unified School District in Pinetop-Lakeside, said that is leaving districts like his in a precarious situation.

He said if the waiver fails so close to the end of the school year, that will mean having to cut total spending by 18% in just the last three months. That will wreak havoc, he said, through required layoffs of teachers and support staff and possible school closures.

“Kids are going to be the ones (who) suffer,’’ Wright said. What is needed is immediate action, not promises, he said.

“I heard it said this: You can pretend to care,’’ he said. “But you cannot pretend to show up. Governor, we need you to show up.’’

John Scholl, superintendent of Chino Valley Unified School District north of Prescott, has similar concerns. He said failure to raise the cap would force a $3 million cut in his district’s spending with just three months left in the school year.

“The only way to manage that would be to lay people off,’’ Scholl said.

He said that doesn’t just affect the students and the employees. He said it would have a ripple effect on the economy throughout the whole area as the laid-off employees would cut spending.

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Ducey’s office points to discussions

The other risk of waiting is that there will be a fresh crop of legislative leaders in January, for whom the spending cap may or may not be a priority.

Risk aside, Udall said bumping the decision to the next regular legislative session, which starts in January, would be inappropriate.

“This is the Legislature that approved the money,’’ she said of the current lawmakers.

Gubernatorial press aide C.J. Karamargin said Ducey wants to be sure schools get, and can spend, their extra dollars.

“We are having discussions with lawmakers,’’ is all Karamargin would say about Ducey following through and using his constitutional powers to call legislators back to the Capitol.

The lawmakers and school leaders who spoke out Thursday are not alone.

Outgoing House Speaker Rusty Bowers, R-Mesa, said he’s ready to bring lawmakers back to waive the spending cap on schools. He said there appears to be a coalition of Democrats and some Republicans who can provide the necessary votes for approval.

“Personally, I’m OK with it,’’ added Senate President Karen Fann, R-Prescott.

But Fann said she first needs to see the measure.

Potentially more problematic, she said, is that some lawmakers argue if there is to be a lame-duck special session, they want other issues addressed, ranging from adding some accountability for public schools to demands for changes in election laws.

Udall conceded some of the people on the list she presented to the Governor’s Office also have other ideas. But she insisted that each has committed to vote to waive the spending cap if that is the lone issue in the session.

Reduced enrollment a factor

The current situation is caused by the convergence of several unusual factors.

First, the limit is always based on the prior year’s school enrollment numbers, but enrollment remains down due to COVID.

The bigger problem is actually due to one the Legislature created in seeking to provide financial help.

In 2000, voters approved Proposition 301 to levy a 0.6-cent sales tax to fund education, including teacher salaries, for 20 years. Voters exempted those revenues from the aggregate expenditure limit.

Facing expiration of that tax, lawmakers agreed in 2018 to a new, identical levy to pick up when the old one expired. That would keep the money flowing through 2041 without interruption.

Only thing is, the Legislature never exempted what the new levy would raise from the expenditure limit. That alone amounts to anywhere from $600 million to $800 million of the money now coming into schools, said Chuck Essigs, lobbyist for the Arizona Association of School Business Officials.

Moreover, to balance the budget last decade, lawmakers cut dollars from various capital funding accounts.

With the state flush in revenues, those accounts are now fully funded. But the additional funding that was restored to schools also helped to push total statewide expenditures above the constitutional limit.