Arizona Education Network

January 15, 2010

Governor Brewer released her Fiscal Year 2011 Budget Proposal plan to the public this afternoon.  You can view the full budget proposal, summary and related information via this link.

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The Arizona Education Network volunteers will be reviewing the detailed budget information over the weekend.  You can find education funding and budget highlight excerpts from the Governor’s press release and corresponding PowerPoint presentation below:

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Highlights from the Governor’s Media Release (bold emphasis is ours):

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The Executive Recommendation for balancing the General Fund budgets for Fiscal Years 2010 and 2011 is built on a decisive, well-conceived plan that begins to correct our structural deficit, weans State government from one-time fixes and other fiscal gimmicks, rejects arbitrary or across- the-board funding cuts, and paves the way for future economic growth…

…For Arizona, the middle of the last decade was a period of unprecedented growth and prosperity. With increased revenue streams, our State wisely and correctly lowered taxes, and today Arizona’s tax burden, per $1,000 of personal income, is at its lowest level in over 30 years. Arizona also increased services in every area of State government: Medicaid expansion provided health coverage for hundreds of thousands; expansions in our K-12 system provided a State-funded full-day kindergarten benefit; and our higher education system enjoyed unprecedented levels of support and expansion.

Those days of expanded government services are over. Since the start of the recession in December 2007, Arizona’s unemployment rate has more than doubled, from 4.3% to 8.9%. More than 270,000 Arizonans have lost their jobs, and our job growth rate is next-to-last among the 50 states.

We anticipate that we are four years away from returning to our 2007 peak in employment…

The recession and State government’s structural deficit – an institutionalized misalignment of revenues and expenditures – have combined to devastate the State’s finances. Revenues have declined for three consecutive years, and, for Fiscal Year 2010, they are projected to be 34% less than in FY 2007. While revenues have decreased sharply, we have had to accommodate enrollment growth in our K-12, community college and university systems; extraordinary mandated growth in our Medicaid population; and continued obligations for public safety and general governmental services.

We have taken difficult action in the last 12 months – action that has impacted our citizens. We imposed the largest spending reductions – $1.09 billion – in Arizona’s history, eliminated State services and programs, and reduced the State workforce by almost 10%. Yet despite our efforts to date, our job has just started. State government still must resolve a $1.4 billion shortfall for our current fiscal year, and for FY 2011 we face a projected shortfall of $3.2 billion…

…Further, education is fundamental to Arizona’s societal and economic future, and we must protect it to the maximum practicable degree. While the Executive Recommendation reflects the reality that we cannot continue education spending at the rate of the last few years, we will protect total education funding at the State’s FY 2006 funding levels. Reducing education expenditures to that standard will be difficult and require significant change, but the change is necessary.  At the same time, dropping below the FY 2006 levels is not an option; I will not accept any budget that reduces education funding below that line, and – in light of the reductions in General Fund support – during this fiscal crisis I will oppose encroachment on locally raised education funding streams…

…Consistent with the core principles stated above, we must make dramatic changes in the way

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State government fulfills its mission. Specifically, the Executive Budget Recommendation:

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• Maintains State support for K-12 education FY 2006 levels, despite reductions in federal support;
• Maintains university funding at FY 2006 levels (75% of FY 2008 levels);
•  Reduces the AHCCCS rolls by 25%, or 310,000 individuals, and eliminates the KidsCare program, which provides health coverage for  nearly 47,000 children;
• Reduces services for 17,000 seriously mentally ill adults – approximately half of that population;
• Eliminates cash assistance for 10,000 families;
• Places a hard cap on day care assistance and eliminates services for more than 10,000 children of low-income working parents;
• Closes the Department of Juvenile Corrections, transitioning the custody of minors to county detention centers and laying off an additional 900 State employees;
• Reduces State employee pay by 5%; and,
• Redirects Lottery revenue streams.

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In addition to the press release, Governor Brewer’s office also released a corresponding PowerPoint presentation to highlight revenue and spending issues.  Education-related highlights:

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Page 17 illustrates the growing populations served by state services.  Note the statistics below:

Current revenues = FY 2004

• Since FY 2004, Arizona has added 121,500 K-12 students and more than $1.0 billion in annual costs to the K-12 system.
• Since FY 2004, enrollment in State universities has increased enrollment by 18,100 students and annual General Fund costs of $393.5 million.
• Since FY 2004, Corrections has added 10,800 prisoners and annual General Fund costs of $405.4 million.
• Since FY 2004, AHCCCS has added 475,000 new members and annual costs of nearly $1.5 billion (General Fund).

–In calendar 2009, AHCCCS has grown by 203,000 members –

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Pages 40-47 of the PowerPoint highlight the Governor’s proposed plan for education.  It includes:

• Elimination of funding for “non-formula” K-12 programs, including Gifted support, Teacher Training, Adult Education and GED, the Early Education Block Grant, etc.
• The elimination of the ‘full day Kindergarten’ funding rate ($218 million)
• Reduced funding for charter schools ($10 million)
• Reduction of FY2011 per pupil support to FY2005-06 funding levels.
• No funding for building renewal and only $5 million for building renewal grant funds for the “most critical projects” state-wide.
• Support for Community Colleges and Universities at FY 2006 levels. Per pupil support would drop for universities from $9,480 to $7,100 per student.
• Continue to rollover payments to K-12 and universities – total rollovers at the end of FY201 = $1.3 billion

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Page 69 poses recommendations to borrow from the dedicated First Things First fund for early childhood development ($260 million) and a FY 2011 refinance of the School Boards Facility Debt ($60 million).

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Page 74 outlines the suggested one-cent sales tax revenue increase and a proposal to expand sales tax to cover repair services.  The Governor’s estimated additional revenue projection = $263 million in FY 2010 and $1,074,200 in FY 2011.

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Page 77-78 states that the Voter Protection Act (Prop 10) should be “reformed” so that legislators can modify voter-approved programs “under specific circumstances” and that the “Governor should have authority under certain conditions to modify appropriations – including voter-approved programs.”

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The Governor’s full Fiscal Year 2011 Budget Proposal Presentation can be accessed by clicking this link. The PowerPoint presentation can be found by clicking “The Executive Budget:  Media Presentation FY 2011”.

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Articles

Planned cuts to schools stir fears, Arizona Republic, Jan. 24, 2010 (including section – Arizona education leaders speak out on budget crisis)

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