1. Arizona School Funding 101 2010 AASBO Vendor/Buyer Conference Gerrick Monroe February 18, 2010

2. Essential Questions Where does the funding to operate Arizona public schools come from? Where does the funding to operate Arizona public schools come from? What types of funds are used by Arizona school districts? What types of funds are used by Arizona school districts? What factors determine the budget for Arizona school districts? What factors determine the budget for Arizona school districts? What are the various terms that vendors may hear when working with Arizona school districts? What are the various terms that vendors may hear when working with Arizona school districts?

3. Overview of Arizona School Finance Districts receive funding from: State Aid State Aid Income Tax Income Tax Sales Tax Sales Tax Property Tax Property Tax Primary and Secondary Primary and Secondary Sales Tax (.5%) Sales Tax (.5%) Proposition 301 Proposition 301 Other Sources Other Sources Federal and State Grants Federal and State Grants

4. Overview of Arizona School Finance Primary Tax Rate Primary Tax Rate The amount levied to the local taxpayers of a School District to provide a portion of the revenue needed to fund operational budgets The amount levied to the local taxpayers of a School District to provide a portion of the revenue needed to fund operational budgets Secondary Tax Rate Secondary Tax Rate The amount levied to the local taxpayers of a School District to provide the revenue to fund Overrides and Debt Service from Bond Sales. The amount levied to the local taxpayers of a School District to provide the revenue to fund Overrides and Debt Service from Bond Sales.

5. Overview of Arizona School Finance Primary Tax Rate helps fund: Primary Tax Rate helps fund: Maintenance and Operations Maintenance and Operations Soft Capital Soft Capital Unrestricted Capital Unrestricted Capital Adjacent Ways Adjacent Ways Desegregation Desegregation

6. Overview of Arizona School Finance Secondary Tax Rate funds: Secondary Tax Rate funds: Maintenance and Operations Override Maintenance and Operations Override Special Programs Override Special Programs Override Capital Override Capital Override Bonds Bonds

7. Maintenance and Operations (M&0) Maintenance and Operations (M&0) Maintenance and Operations budget limit Maintenance and Operations budget limit Revenue Control Limit (RCL) Revenue Control Limit (RCL) Based on data from previous year Based on data from previous year RCL calculation includes: RCL calculation includes: Regular ADM (Average Daily Membership) Regular ADM (Average Daily Membership) Preschool Handicapped, K-8, 9-12 Preschool Handicapped, K-8, 9-12 Special Program ADM Add-ons Special Program ADM Add-ons Special Needs, ELL, and K-3 students Special Needs, ELL, and K-3 students Career Ladder – 5.5% increase Career Ladder – 5.5% increase Teacher Experience Index Teacher Experience Index Pupil Transportation Pupil Transportation Overview of Arizona School Finance

8. Maintenance and Operations Budget Maintenance and Operations Budget District M&O budget are primarily used for employee compensation (80-90%) District M&O budget are primarily used for employee compensation (80-90%) Sample district (Mesa Public Schools): Sample district (Mesa Public Schools): MPS Salaries – 72% MPS Salaries – 72% MPS Benefits – 18% MPS Benefits – 18% MPS Supplies – 4% MPS Supplies – 4% MPS Other – 6% MPS Other – 6% Utilities Utilities Property Insurance Property Insurance Purchased Services Purchased Services

9. Unrestricted Capital Allocation Unrestricted Capital Allocation Capital Outlay Revenue Limit (CORL) Capital Outlay Revenue Limit (CORL) Average Daily Membership (ADM) Average Daily Membership (ADM) K-8 -- $226 per student K-8 -- $226 per student 9-12 -- $268 per student 9-12 -- $268 per student CORL growth factor (5% growth min.) CORL growth factor (5% growth min.) High School Textbook Allocation High School Textbook Allocation $70 per high school student $70 per high school student Soft Capital Allocation Soft Capital Allocation ADM x $225 ADM x $225 Overview of Arizona School Finance

10. Soft Capital (Short-term Capital Items) Soft Capital (Short-term Capital Items) - Textbooks- Library Resources - Technology- Instructional Aids - School Buses- Furniture and Equipment Unrestricted Capital Unrestricted Capital - Vehicles - Land Improvement - Any soft capital item - Building Improvement

11. Average Daily Membership ADM directly affects these funding levels: ADM directly affects these funding levels: Maintenance and Operations Maintenance and Operations Unrestricted and Soft Capital Unrestricted and Soft Capital Overrides Overrides Career Ladder Funding Career Ladder Funding Classroom Site Fund (Prop. 301) Classroom Site Fund (Prop. 301) Instructional Improvement Fund (Prop. 202) Instructional Improvement Fund (Prop. 202)

12. Voter Approved Funding M&O Override Funding M&O Override Funding Increase M&O budget by up to 15% Increase M&O budget by up to 15% Special Program Override Funding Special Program Override Funding Increase M&O budget by up to 5% Increase M&O budget by up to 5% Capital Override Funding Capital Override Funding Increase Capital Outlay available for district use up to 10% of RCL Increase Capital Outlay available for district use up to 10% of RCL Bond Funding Bond Funding Limit tied to bonding capacity of the school district (A.V.) Limit tied to bonding capacity of the school district (A.V.) Funds specified capital improvements to schools and grounds Funds specified capital improvements to schools and grounds Recent legislation allows purchase of Furniture, Fixtures, and Equipment (FF&E) with bond funds Recent legislation allows purchase of Furniture, Fixtures, and Equipment (FF&E) with bond funds

13. Arizona School Finance Terms Maintenance and Operations Fund Maintenance and Operations Fund Also Known As: M&O, Fund 1, 001 Also Known As: M&O, Fund 1, 001 Unrestricted Capital Fund (Fund 610) Unrestricted Capital Fund (Fund 610) Soft Capital Fund (Fund 625) Soft Capital Fund (Fund 625) Classroom Site Fund – Proposition 301 Classroom Site Fund – Proposition 301 Revenue from State Sales Tax and State Land Trust Revenue from State Sales Tax and State Land Trust Instructional Improvement Fund – Proposition 202 Instructional Improvement Fund – Proposition 202 Revenue from Indian Gaming Revenue from Indian Gaming

14. Arizona School Finance Terms E-rate funding E-rate funding Priority One – Telephone, Internet, Pager Priority One – Telephone, Internet, Pager Priority Two – Internal Connections Priority Two – Internal Connections Adjacent Ways Funding Adjacent Ways Funding Funds projects to bring utilities to a school site Funds projects to bring utilities to a school site Funds projects or expenses to make necessary road and sidewalk enhancements adjacent to school property Funds projects or expenses to make necessary road and sidewalk enhancements adjacent to school property Funds projects that provide for the safe ingress and egress of school busses and emergency vehicles on school property Funds projects that provide for the safe ingress and egress of school busses and emergency vehicles on school property

15. Arizona School Finance Terms Federal Grants Federal Grants Title 1 – Schools that serve a higher number of low income students Title 1 – Schools that serve a higher number of low income students Title 6B – Funds dedicated to support program designed for special needs students Title 6B – Funds dedicated to support program designed for special needs students American Recovery and Reinvestment Act 2009 American Recovery and Reinvestment Act 2009 Stimulus dollars (Two years) Stimulus dollars (Two years) ARRA funding essentially doubled district funding for Title One and Title 6B ARRA funding essentially doubled district funding for Title One and Title 6B

16. QUESTIONS? Arizona School Funding