Eye of the Budget Storm: Governor’s Speech and the First FY 2010 Budget


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Tuesday, September 8, 2009

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Governor Brewer signed a number of budget bills on Friday and vetoed several key cuts to K-12 education.  Your AEN representatives spent this weekend analyzing the bills and have provided a list of what was cut — and what was signed into law – below.

The Good News!

So, what does this mean for our schools?  For K-12 district and charters, the formalization of the state’s FY 2009-2010 budget means that schools can now finalize their operating budget for this year.  The fact that the Governor vetoed the sweeping $175 million in soft capital (aka classroom supplies) and $5 million for charter schools is a good thing – as is the fact that the State Equalization Tax will be able to provide an estimated $240 million in revenue for education this year (though this is likely to simply supplant existing general fund dollars to our schools).

The fact that Arizona finally has a signed budget will also give our state a tiny boost with the credit rating agencies that have become increasingly skeptical of our state government’s ability to pull together an adequate short and long term budget plan.  The emphasis, however, is on the word ‘tiny’, due to…

The Why We-Aren’t-Going-to-Wrap-up-the-AEN –Updates-Just-Yet News:

After she signed the bills into law, the Governor held a press conference at 2:00 Friday.  We have printed the majority of her speech below as it was provided by KOLD News (the caps emphasis is from the Governor’s transcript):

(Governor Brewer, 2pm on Friday, September 4, 2009):

*****Good afternoon:

*****Today I have approved a number of budget bills that will allow state government to continue important operations – and I have vetoed legislation that needs additional work and compromise…

*****…Right now, Arizona faces a roughly $4 billion deficit.  We are spending roughly $11 billion, and we are bringing in roughly $7 billion.

*****So what can we all do – in addition to my actions today – to solve this historic problem?

*****This fall and in the next regular session of the Legislature, legislative leaders and I must work to break the stranglehold that a handful of Republican and Democratic EXTREMISTS have on the Arizona legislature.

*****We cannot cut our way out of this problem.  We cannot tax our way out of this problem.  BOTH solutions will be necessary to resolve this crisis, and doing both will take incredible political courage and compromise.

*****This is NOT a political game.  It is gravely serious.  It is time to set aside political agendas, or personal campaign agendas, and –for once – place our State ahead of the tired and uncivil politics of the most extreme in both Parties…

*****…Whether it is now – or whether it is in the next several weeks – the handful of extremists on the fringes of the Legislature will see the deeper and more painful cuts that will be necessary because of their delays on resolving the state deficit.  Every month that goes by only makes the deficit and the pain more severe.

*****My actions today – and the clean-up bill I have proposed – will allow our State to weather the storm at least until the next regular session of the Legislature.

*****Until then, the voters of this State can be confident that we will continue to prioritize education, public safety, and protect our state’s most vulnerable.

*****Let me reiterate once more:  I am NOT giving up, I am NOT surrendering, I am NOT abandoning what the people of Arizona want me to do.  I am doing what is right, and I believe they know that.

*****Following the speech, the Governor told reporters:  “Certainly (the budget) is not balanced.  It continually gets worse.  We need to do more cutting.  We need additional revenues…Education levels are higher than the state can sustain given current available resources.  I want to reaffirm that I believe reductions in spending on education and DES are necessary.”

Bill and Veto Highlights

The Joint Legislative Budget Committee reported today (Sept 8th) that the Governor’s line-item vetoes for HB2006 and HB2011 eliminated approximately $359 million in proposed cuts to K-12 district and charter schools. While we consider this information to fall somewhere in our Good News category, the JLBC also noted that they expect the FY 2010 budget to fall short by $(964) million after you add in all of the Governor’s vetoes ($464 million in total) and the FY 2009 budget shortfall, which has reportedly risen to $(500) million.

You can visit this site for a full list of budget bills and for specific details on the Governor’s budget and veto decisions.  Highlights related to education funding are listed below:

HB2012 Higher Education (Signed – no veto action)

  • $100 million in reduced funding to the universities for FY 2009-2010.
  • Suspends capital outlay funding for community colleges.
  • Sets new stipulations for the LEAP program fund.
  • Beginning in FY2010-11, funds community college district dual enrollment at 50% of the state aid that the college would otherwise receive from students.
  • Limits university use of lottery money for building projects.

HB2006 General Appropriations (line-item vetoes)

  • Vetoed:  Cuts to the Department of Economic Security (DES) and formula cuts to K-12 Education.
  • Signed into law by the Governor:
  • Section 14 states the “intention of the legislature” to disburse $472,114,000 in federal state education stabilization funds (SESF) to K-12 school districts and not-for-profit charter schools and to reduce state general fund payments in the same amount.
  • In regards to higher education, the legislature expects to receive $10 million in federal aid and will reduce state funding in the same amount if funds are received.
  • The Jack Harper amendment was not vetoed, much to our surprise. The amendment reads:

“On or before February 1, 2010, the number of full-time equivalent employees for every general fund supported agency, board, commission or other entity of this state shall be reduced by five per cent.  To meet this requirement, an agency, board, commission or other entity may not reduce the hours of or furlough any employee.  The reduction may only be made through reduction of positions.”

As we reported in our last update, the amendment above was introduced by Senator Jack Harper (Surprise, AZ) not long after he lashed out at teachers who were attending a legislative session and accused them of  “begging for money” at the “public trough”.

Your AEN representatives were able to reach Senator Harper last week to ask him about the ambiguous language of the amendment above.  Would the 5% staff reductions apply to our K-12 schools and universities?  Would they be made in addition to staff reductions that are already in place due to budget cuts?

Sen. Harper responded that the amendment was added hastily and that a more complete and specific version was not used due to the rush to push the budget through.  In his opinion, the 5% cuts would not apply to district teachers because they are technically employees of a district, but they would apply to university and community college staff.

Senator Harper also stated at the time that he believed that the Governor would veto this amendment.  So did we.  It remains to be seen how the ambiguous language will be interpreted by the legislature.

HB2011 K-12 Education (line-item vetoes)

Vetoed:

  • Soft capital reductions of $175 million.  This reduction would have been applied to all classroom and instructional items.
  • A $5 million reduction to charter schools.
  • A reduction to the base level amount used to calculate per-pupil funding.

Signed into law by the Governor:

  • The repeal of the rapid decline statute.  This statute had originally allowed districts to ‘ease out’ of state funding if they experienced a rapid decline in enrollment from their budget and current year.

SB1025 General Revenues (Vetoed)

  • The State Equalization Tax for Education repeal and a number of other smaller funding mechanism adjustments were vetoed in this bill.   The subsequent scheduled re-enactment of the State Equalization Tax is expected to provide an additional $250 million in funding for K-12 education.  The state will likely reduce the equivalent amount in education funding from the general fund.

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If you’d like to take a moment to contact Governor Brewer, we would encourage you to send her a quick thank you for what has been a very trying and politically charged week.  We are in the eye of the budget hurricane, so to speak, and your AEN team gives the Governor kudos for making some tough choices in support of our schools.

The Governor can be reached via this link or by phone at (602) 542-4331.

We will be posting an additional update on the State Fiscal Stabilization Fund (SFSF) and the K-12 Arizona federal assistance later this week.

Find Out More

States’ fiscal problems have never been worse (AZ Capitol Times), September 8, 2009

Unbalanced 2010 budget makes major cuts, policy changes (Arizona Guardian – subscription required), September 7, 2009

In budget session, disorder was rule (Arizona Republic), September 6, 2009

Governor vetoes key parts of budget (Arizona Daily Star) September 5, 2009

Brewer deletes school cuts from budget plan (East Valley Tribune) September 4, 2009.

Brewer signs piece of state budget, frees up ADOT funds (Arizona Republic), September 4, 2009.

Arizona Joint Legislative Budget Committee – Monthly Fiscal Highlights, August 2009

Joint Legislative Budget Committee (JLBC), “Current FY 2010 Budget Status after Governor September 4th Vetoes report”, September 8, 2009

Governor Brewer’s statement (KOLD News), September 4, 2009

Summary of Governor Brewer’s Budget Actions – September 4, 2009

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