Janice Palmer and Dr. Chuck Essigs

February marked the 7th consecutive month of year-to-year growth in base General Fund Revenues

Sales, Individual Income, and Corporate Income tax collections are all above the forecast

Other Indicators: Unemployment Rate is unchanged at 9.6% The Arizona Department of Commerce did its annual revision of employment data

– the result is that “the state suffered considerably higher job losses in 2010 than previous estimates had indicated.” In 2010, Arizona had an average of 27,100 FEWER jobs PER MONTH than previously

reported. January 2011’s net job gain of 700 positions marked the end of 35 consecutive months of

year-over-year job losses -- “Contrary to what was previously reported, revised unemployment estimates now indicate that the state has just barely started to reverse an unprecedented 3-year streak of job losses”

1.34 million persons AHCCCS (Arizona’s Medicaid system) 1.1 million persons receiving food stamps

FY 2011 $550 million

FY 2012 $1.0 billion

FY 2013 $600 million

FY 2014 $1.1 billion

Estimated revenue in FY2014 of $8.46 billion

Vs. actual revenue in:FY2005 of $7.72 billionFY2006 of $9.26 billionFY2007 of $9.62 billion

Sales Tax $4.3 billion 52%Individual Income Tax $2.5 billion 31%Corporate Tax $0.6 billion 7%Other $0.86 billion 10%

Total $8.2 billion

One cent sales tax ends in FY2014 - $1 billion

K-12 rollover - $1 billion (estimate)

Suspended funding formulas - $1 billion

Increased cost to State from AV decline

Full-day K $218 million

No inflation increase for Base Formula over $50 million

Classroom Site Fund over $200 million

Capital Outlay (CORL)** $ 98.864.800 Soft Capital $188,120,700 New Utilities (Repealed) $100,000,000 Charter School Add’l Assistance $ 17,656,000 Building Renewal $241,593,600

$646,235,100

*No estimate for New School Construction** Included both $63,864,800 and $35,000,000 Edu. Jobs Related Cut.

“Jobs” Bill – K-12 Specific Items Reduces the Class 1 (business) assessment ratio from 20% to 18%, in ½

percentage point increments per year, beginning in Fiscal Year 2014 (FY14) and ending in Fiscal Year 2017 (FY17)

Reduces Class 2 (agricultural and vacant land) from 16% to 15% beginning in Fiscal Year 2017

Increases the homeowner’s rebate for FY14 through FY17 by the amount needed to offset the assessment ratio change effects

TABOR Various bills and referenda Would limit general fund revenues to the previous year’s budget plus

population growth and inflation

State Funding Reduced by $101.2 Million

Districts and Charters Budget Capacity Reduced by 101.2 Million

Districts Could Use Edu. Jobs Funds to Cover Reduction (1/2 of Total Available)

Base Level stays at $3,267.72/ No Increases

Inflation Increase of 0.9% Transportation $0.02 Mile Increase Addition Assistance for Charters

▪ K-8 Increase of $14.47 to $1,621.97▪ 9-12 Increase of $16.86 to $1,890.38

Soft Capital Cut by $188.1 Million – Most Likely a Greater than 90% Reduction

CORL Cut by $63.9 Million

CORL Cut by an Additional $35 Million – Edu. Jobs Issue

Additional Assistance Cut by $17.7 Million

For districts with fewer than 1100 students, Soft Capital and CORL cuts cannot total more than $5 million statewide

Base Level Adjustment 4% FY2012 3% FY2013 2% FY2014 1% FY2015

Qualifying Tax Rate $0.10 K-8 and 9-12 districts $0.20 K-12 Districts

New School Formula – Suspended

Building Renewal Formula - Suspended

Prohibits JTED’s from Receiving State Funding for 9th Grade Students

Actual Utility Funding Formula Eliminated

Teacher Performance Pay Program (ARS15-977) Eliminated

Changes Current 50/50 Split to Employee Pay 53% and Employer Pays 47%

Estimated Rate Beginning July 1, 2011 Employee would be 10.75%, now will be at 11.40% Employer would be 10.75%, now will be at 10.10%

Employee goes from 9.85% to 11.40%

Employer goes from 9.85% to 10.10% Employee up 1.55% Employer up 0.25%

Salary Employee Employer

$20,000 $130 increase $130 decrease

$40,000 $260 increase $260 decrease

$80,000 $520 increase $520 decrease

Amount district saves will result in reduced state aid and budget capacity. Charters are also impacted.

Started In FY2002 Highest year FY2008 $397 per weighted student District had been allowed to spend to estimate For FY2010 cumulative shortfall of $195 Starting in FY2011 state had to adjust for shortfall

Estimated amount $220 Adjusted for shortfall $220-$195 = $25 Legislature set amount at $120

Estimated amount $219 Adjusted for shortfall $219-$124.99 = $94 Legislature may set amount at $120 (SB1263)

AZ

Year AZ U.S. Average AZ Percent of U.S. Average

1969-70 $674 $751 89.7%

1979-80 $1865 $2088 87.3%

1989-90 $3717 $4643 80.1%

1995-1996 $4476 $5689 78.7%

1999-2000 $5030 $6412 72.8%

2006-07 $7610 $10041 75.7%

2007-08 $7608 $10259 74.2%

Source: National Center for Education Statistics (NCES)

1969-70 AZ ranked 29th above 21 other states

2007-08 AZ ranked 48th above 2 other states

To move back to 89.7% of U.S. Average Increase expenditures to $9202 (2007-08) Increase of $1594 per pupil

ArkansasGeorgiaIdaho*IndianaKentuckyLouisianaMaineMississippiMissouriNew HampshireNew Mexico

North CarolinaNorth DakotaOklahomaSouth CarolinaSouth DakotaTennesseeUtah*VirginiaWest Virginia

* States AZ was above in 2007-08

Area National AZ Difference AZ % of National

Total $10,297 $7,814 <$2,483> 75.9%

Classroom $6,262 $4,481 <$1,781> 71.6%

Student Support $556 $577 $21 103.8%

Food Service $390 $373 <$17> 95.6%

Plant Operations $1,003 $881 <$122> 87.8%

Instructional Support $539 $436 <$103> 81.4%

Transportation $438 $346 <$92> 79%

Administration $1,109 $720 <$389> 64.9%

Source: Arizona School District Spending (Classroom Dollars) Fiscal Year 2010, Office of the Arizona Auditor General

Area National AZ

Total $10,297 $7,814

Classroom $6,262 $4,481

Student Support $556 $577

Instructional Support $539 $436

Plant Operations $1,003 $881

Subtotal $8,360 $6,375

% of Total 81.2% 81.6%

Source: Arizona School District Spending (Classroom Dollars) Fiscal Year 2010, Office of the Arizona Auditor General

SB 1286 (2010, 2nd Regular Session) Labeling changed from word labels to letter

grades Adds the labeling of school districts in the

aggregate New formula:

50% of the school and district profile must be based on academic performance measures▪ ½ = all students academic gain▪ ½ = lowest quartile academic gain

SB 1040 (2010, 2nd Regular Session) Requires the State Board of Education, on or before December 15, 2011, to

adopt and maintain a model framework for a teacher and principal evaluation instrument

Must include quantitative data on student academic progress that accounts for 33% and not more than 50%

Must include best practices for professional development and evaluator training Requires school districts and charter schools to annually evaluate individual

teachers and principals beginning in school year 2012-2013 Teacher and Principal Evaluation Task Force

Expedited process Will provide a framework to districts March State Board of Education Study Session and scheduled for Final Adoption

in April Various organizations will be charged with implementation assistance

HB 2731 (2010, 2nd Regular Session) Creates the Grand Canyon Diploma to enable high school students to

choose different educational pathways. HB 2732 (2010, 2nd Regular Session)

Establishes the Task Force on Reading Assessment to report by January 15th, 2011

Requires that a student not be promoted from the 3rd grade if the student obtains a score on the reading portion of the AIMS test, or a successor test, that demonstrates that the student is reading far below the 3rd grade level

Requires the State Board of Education (SBE) to develop intervention and remedial strategies▪ Requires school districts to offer at least one of the intervention and

remedial strategies developed by the SBE