As we examine the latest proposed budget and its impact on education in Arizona, keep in the mind the following numbers reported in The Arizona Republic, Laurie Roberts’ latest column:   
“Corporate tax collections were $663 million in 2015.  By 2010, when the 2011 tax cuts are fully phased in, they’re expected to fall to $263 million.  Meanwhile, corporate tax credits for private-school tuition, which drained away a modest $10 million in 2007, are now sucking $74.3 million from the state treasury,,,,By 2020, that’ll jump to $107 million.  Add in individual tax credits for private and public schools, and thAAe drain is $207 million this year.”

January 27, 2017

School Choice and Educational Equity for All Arizona Youth

by Joye Kohl, Northwest Valley Branch  – (reprinted with permission)   2017
(additional information by Jim Hall, Arizonans for Charter School Accountability- reprinted with permission 2017)

Although the stated purpose of school choice is entirely appropriate — “to provide parents with
decision making options for the education of their children”, there are many who are alarmed at the impact it is having toward the privatization of K-12 schooling at the expense of the timehonored national commitment to public education for ALL students. This document is designed not as an opposition to school choice, charter or private schools in general, but rather the lack of fiscal accountability in the use of public monies and the lack of transparency as enacted in AZ which has led to serious inequities in services, funding, enrollment, plus allowing much higher administration costs and exploitation by for-profit entities. The intention is to facilitate needed discussion of and understanding of the critical nature of funding and the complexity of early education and K-12 schooling in AZ.
Background Information:
1. The structuring of private and charter schools precludes or weeds out enrollment by many
minority, lower income youth and those with disabilities resulting in resegregation of schools.
This may be true as a result, but not as prescribed by law. Charter schools are required by law to serve all special education students. They are also open to all students on a first come basis, with exceptions of siblings already at the school, employee’s children, etc. When capacity is reached, students must be put on a waiting list and drawn at random if an opening occurs. Charters use a variety of means to “select” students – application fees (BASIS is $300 for high school students), not having programs a parent desires (multi-handicapped classes), no ELL, no transportation, no food service, etc.
Charter schools are deemed public schools because they receive public monies, however, they might be more appropriately called quasi-public schools. As Gene Glass has noted there are many instances showing the exploitation by charter schools of the public purse and contributing greatly to the resegregation of public education (Blog by Gene Glass, ASU emeritus professor and National Education Policy Center). Many charter schools in Arizona are closely integrated financially with forprofit entities.
“Arizona’s charter legislation was designed to free charter schools from most regulations and
reporting requirements and enable them to more efficiently utilize resources in the classroom not for added expenses. Charter schools can opt out of all procurement procedures and avoid having to get competitive bids on major purchases. They can also opt out of following the Unified System of Financial Records, the accounting guideline required by the Auditor General for districts, so charters can keep accounting costs to a minimum.” (Wells and Hall)  Private schools are defined as a “nonpublic institution, other than the child’s home, where academic instruction is provided for at least the same number of days and hours each year as a public school.”
AZ. Rev Stat. Ann. 15-802F.2. There are no requirements for accreditation, registration, licensing, approval or teacher certification.
FY 2015 data shows that 85 percent of the state’s public school students attend district schools and 15 percent attend charter schools.
“Children living in poverty and children whose parents have limited educational attainment require more resources than the average child. Similarly, children whose first language is not English are more costly to education. Arizona compares unfavorably on each of these demographics.” (Hoffman and Rex, ASU W.P. Carey School of Business)
“The “20 best’ charters in Phoenix (identified by The Phoenix Business Journal) serve 13,452
students: The enrollment breaks out to be 66 percent White, 17 % Asian, 11% Hispanic and 2%
Black. There is not a single public district with demographics like these and almost no districts
outside of Reservation schools that have 11% or less Hispanic students. Eleven of those 20
schools are run by corporations, BASIS and Great Hearts.’ (Wells and Hall) …..
 [Read entire multipage report, click on title  –  School Choice and Educational Equity for All Arizona Youth]

K-12 Public Education Funding: The Settlement Plan — Prop 123                              PASSED on May 17, 2016

The Arizona Constitution states “the legislature shall make such appropriations, to be met by taxation, as shall insure the proper maintenance of all state educational institutions, and shall make such special appropriations as shall provide for their development and improvement. “

Why Prop 123: Education funding for K-12 public education has remained low in Arizona for many years. Proposition 301, when approved by voters in 2000, provided for inflation funding and raised the sales tax from 5.0 to 5.6 percent with the increased revenues dedicated to public education at all levels. The new sales tax rate went into effect in 2001 and, under the terms of Proposition 301, will expire June 30, 2021. The mandated cost of living inflation increase for school budgets does not expire.

A lawsuit was filed after the legislature failed to include the full inflation funding for the schools’ base formula in the fiscal 2011 budget and again in fiscal 2012 and 2013. In a lawsuit called Cave Creek v. Ducey, the state Supreme Court ruled unanimously in 2013 that the state legislature had violated the voter mandate by only partially funding inflationary adjustments for three years. Noting adjustments in Prop 301 could not be undercut by legislative action, they ruled the legislature had run afoul of the Voter Protection Act and its limits on changes to laws approved by voters.

The Court sent the case back to Superior Court to determine how the decision would be implemented. The state was ordered to re-set the funding base by adding $336 million every year. The state legislature appealed the ruling and political fighting continued while Arizona’s public K-12 school budgetary needs have remained underfunded. Since Feb. 2015, settlement discussions had been proceeding over the disputed state funding and a settlement agreement (forged by the Governor, majority legislative leadership and the plaintiffs) was approved by the state legislature in the recent special session. The agreement, Prop 123, must now be approved by the voters of the state in a special May 17, 2016 election.

What does the plan entail? The funding, which would provide $3.5 billion over the next decade, requires approval by Arizona voters in the special election. If the measure is approved by voters, schools will begin receiving additional funds after the election.
1. Appropriates an average of $348 million to public school budgets for inflation each year for 10 years: ($206 million from the state land trust distributions, already designated for education; $80 million from current state funding; and $62 million in new general fund dollars)

2. Continues the current inflation language that base level funding per student would increase each year by inflation or 2%, whichever is less.

3. Distribution annually of additional funds in consideration of back inflationary payments to schools ($50 million per year for the first five years; $75 million per year for the second five years). The agreement will account for 72 percent {or 50 percent by some accounts} of what the courts identified was owed in back inflationary payments.

4. Provides a series of triggers whereby the state legislature can reduce the inflation agreement payments for K-12 education.

5. Allows the legislature, beginning in FY 2026, to cap K-12 funding at less than 49 percent of the general fund or if it reaches 49 percent will trigger removal of inflationary payments.

6. With no new mandates from the state, public schools (charter and district) could use the funding increase to meet their most important needs.

What are the counter points?
Accelerating withdrawals for 10 years and up to 6.9 percent from the State Land Trust, as spelled out in Prop 123, means dipping into the corpus (principal) of the trust fund already designated for education and will result in less monies available in the future. The Joint Legislative Budget Committee estimates that the plan for accelerated withdrawals in Prop 123, will result in a loss of $3.2 billion or a 33 percent reduction in trust value as of 2026. In other words, it means borrowing from tomorrow’s education funds to partially restore the court mandated inflation payments and needs today. The plan asks voters to amend the Constitution and, thus, raises the question about whether increased withdrawal from the state land trust will end up in new litigation.

Arizona may face additional funding crises for schools when the Proposition 301 sales tax expires in 2021 and again in 2026 when the high withdrawals from the Land Trust expire.

Triggers included in the plan permit (1) the inflation factor to be suspended for any fiscal year that sales taxes, revenue growth and employment growth are between 1% and 2%, and (2) mandates suspension of the inflation factor if sales tax, revenue growth and employment growth are less than 1%.

Capping the K-12 funding at 49 percent of the general fund beginning in FY2026 further pushes local districts to seek additional funds through override elections if budget needs are not being met by state funding.

Money could be infused into the schools to meet the mandated court ruling by drawing from the $325 million current budget surplus and the $460 million rainy day fund rather than jeopardizing future funding. The rainy day fund earns just one percent vs the trust fund which is earning about five percent. Use of the budget surplus to justify providing additional tax cuts seems unwise.

New individual and corporate tax cuts and continuing and/or expansion of tuition tax credits to support private schooling could further divert funds from the general fund and, thus, the avail-ability of dollars for K-12 public education funding. (NOTE: DOR reports show through FY 2013, $689.3 million has been diverted from the general fund through tuition tax credits. In FY 2013, over $73 million was diverted from the general fund as tuition tax credits to subsidize private schooling and 42,259 private school empowerment scholarships were given. The actual number of private school student scholarship recipients is unknown as some students received multiple scholar-ships. As of Sept. 2013, the State reported more than 1 million students enrolled in our state’s underfunded public schools.)

If prop 123 is not approved by the voters in the special election on May 17, 2016, the legal process to resolve the conflict over the court mandated inflationary payments would resume.   Public policies shape the foot prints we leave as a society. The question is — What footprints do we want to leave?
_________________
For further understanding of the State Land Trust see the Children’s Action Alliance’s August 2015 Return on Education Brief, State Land Trust Funds for Schools at http://azchildren.org/return-on-education-what-does-the-state-land-trust-mean-for-az-schools   ……………….Joye Kohl, AAUW-Arizona Public Policy -Education, November 2015

Prop 123 Brochure    prepared by the LWV and to be shared with friends and neighbors.

AZ School Board Association View on Prop 123:

A strong argument was presented for passage of Prop 123. It does some good things and would infuse some critically needed monies into the public schools. The presenters acknowledged that should it fail, there is no plan B. There were also several pertinent pieces of information which bear attention:

1. Prop 123 addresses ONLY the inflation payment loss (as spelled out in the lawsuit) and does not address other funding issues. It was acknowledged that monies received via passage of Prop 123 will not alter Arizona’s state ranking of 48th among all states in the nation for support of public education.

2. Public school funding remains low in Arizona and this agreement is based in “good faith” that the Legislature will address the many issues associated with funding of public schools and will not do further harm to public educational funding during the 2016 Legislative session.

3. With voter approval, the accelerated withdrawals from the state land trust for education from 2.5 percent to 6.9 percent, as spelled out in Prop 123, will require Congressional approval to amend the enabling act. Although there seemed to be some question presented about whether it would dip into the corpus (principal), a trust fund which has been averaging about a 4 percent return would, in deed, lose some value with a withdrawal rate raised to 6.9 percent for the next 10 years. It seems undeniable that there will be some permanently reduction in the amount available to future generations of students.

4. There was no intention for this agreement to address the continuing diversion of tax revenue from the general fund through tuition tax credits used to subsidize private schooling. (NOTE: DOR reports show through FY 2013, $689.3 million has been diverted from the general fund through tuition tax credits. In FY 2013, over $73 million was diverted from the general fund as tuition tax credits to subsidize private schooling.) The tuition tax credit program, used by both individuals and corporations, has been escalating rapidly, goes to many other than disabled or low income students, and could impact the total general fund. Thus, this diversion of monies from the general fund could impact the ceiling for the percentage of general fund monies going to public schools as spelled out in Prop 123. The proposition calls for the percentage to public schools to remain under 49 percent; it is currently at 42 percent.
We believe it is important for the public to hold the Legislature and Governor accountable for funding of public schools during the coming Legislative session if they want passage of this proposition. It should not be used, in any way, as an alternative to funding those areas such as CTE programs, JTED and other cuts made to public education during the past legislative sessions nor to continue to push funding needs to the volatility of local voters via district by district override elections.

Panel of Arizona Legislators discussing Education Issues in Arizona at Legislative Day 2016. [..More.. scroll past flyer] 

The following articles on Charter Schools are reprinted with the permission of the author, Beverly Weiss, Scottsdale Branch  (additional information by Jim Hall, Arizonans for Charter School Accountability- reprinted with permission 2017)

 

CHARTER SCHOOLS

To review briefly, a public charter school is publicly funded, but administered by an organization that has a contract or charter with the state.  Charter schools have independence in the areas of organization, decision making, instructional philosophy and program implementation.  This allows charter schools a wider range of options and experimentation in delivering educational services.  They must, however, participate in the AIMS and NAEP assessments.  Charter schools should not be confused with private schools.

How many charter schools are there in Arizona?  According to the State Board for Charter Schools for FY 2011 there were 383 charters serving 120,000 students.  The number has been rising rapidly and is estimated to reach 396 for FY2013.   536 in July 1, 2015 (Auditor General Report on Charter Board) 175,535 students October 1, 2015

What do the data show about student achievement in AZ charter schools?  I found no data comparing scores for district versus charter schools, only information for individual schools.  Charters vary widely in test scores, as do other public schools. Relying on a summary from the National Conference of State Legislatures, nationwide findings show that “traditional public schools have consistently outperformed charter schools in reading and math proficiency of fourth and eighth graders.”    Nevertheless, charter middle school students tend to have the advantage in math and reading, and they are more likely to graduate from high school and enroll in college.  Harvard 2014 study of Charter Achievement :  On average, charter schools at every grade level have been modestly less effective than traditional public schools in raising student achievement in some subjects. But charter schools that closed during this period have been lower performing than schools that remained open, a pattern that is not evident in the traditional public sector https://www.hks.harvard.edu/pepg/PDF/Papers/PEPG14_04_Chingos_West.pdf

What are the arguments in favor of charter schools?  Charter schools offer parents and students a public school option; they have the potential for research to identify successful practices that may benefit other schools; they introduce competition that spurs traditional schools to improve their effectiveness.

What are the arguments against charter schools?  Because of their smaller number and size, they provide a choice for only some families, which may be considered unfair; successful programs that have been identified already should be implemented in public schools rather than opening new schools; if rules and regulations are stifling public schools, then they should be waived for all public schools; start-up charters have access to federal grants for purchase of technology and instructional materials not available to district schools, putting districts at a disadvantage.

Are there some for-profit charter schools?  Yes.  Again Arizona leads the field with 25% of charters in that category as compared with 10% nationally.  Education Management Companies (EMO) hold the charters for for-profit schools and often conduct schools at multiple sites. They receive funding from state and federal agencies and from investors as well.  According to the Education Studies Laboratory at AS U, Arizona and Michigan have the most permissive laws in the U.S.   Typically, charter schools are owned by non-profit companies to take advantage of bond funds to build schools and tax breaks – not paying property taxes, for one. The non-profit then hires their for-profit subsidiary to manage all aspects of school operation including curriculum, personnel, construction, etc. Since the management company is a private, for-profit company, all operations are secret including teacher salaries, management salaries, real estate purchases, etc. All of the large charters operate this way – Great Hearts, BASIS, Imagine, Leona, etc..but many single, small charters operate this way to avoid any public scrutiny of their financial affairs.

What is the per pupil expenditure in Arizona?  The Joint Legislative Budget Memorandum (9/11/12) shows it is $3,008, and this money follows the student.  A school’s basic budget from the state is based on the number of students that it serves, so the loss of students from a district school to a charter school reduces the district’s budget.  Base funding level for 2017 is $3635 plus charters get an add-on of $1700 for K-8 and $2000 for 9-12 to cover capitol and facilities costs that public districts use property taxes for. Charters receive all revenue from the AZ general fund, not property taxes.

In summary, one can regard district and charter schools as complementary rather than a competition, an experiment in what works best.  But there are questions we need to be asking. In an era of limited budgets is this the best use of our dollars?   Might this rapidly expanding movement lead to privatization of Arizona’s schools, and is this what we want?
                                                                                   -Beverly Weiss  10/30/12; (Jim Hall 4/2017) 

CHARTER SCHOOLS UPDATE

Last fall we noted that Arizona has the most public charter schools among the forty U.S. states that allow charter schools as an alternative to district schools. At present the number of charter schools in Arizona is still on the rise. According to an article in the Arizona Republic by Mary Beth Faller (11/15/12), 14% of AZ children attend charter schools as compared to 12% the previous year. Nationwide, only 4.2% of all students attended charter schools in 2011-2012. More recently we have read, also in the Republic, that some districts are converting their district schools to charter schools. It seems that we need to be asking: what is fueling this movement in Arizona, and does it benefit Arizona’s children?

Charter schools were authorized by the legislature in 1994 in order to “provide a learning environment that will improve pupil achievement.” Charter schools were also expected to “provide additional academic choices for parents and pupils.” Arizona does have some first-rate public charter schools that deliver the best academic practices, benefiting the children who attend those schools, but there are many more that perform no better, and sometimes worse than district schools. So why is there not better oversight of charter schools to insure that the education offered is of high quality? Some of Arizona’s public charter schools are for profit. Arizona citizens need to know that children in their care are also profiting from the learning environment.

Regarding the conversion of district schools to charter schools, several administrators have offered the explanation that it is a matter of economics because charter schools receive $1700-$2000 …see above  more per pupil in state funding than do district schools. Former Arizona Superintendent of Public Instruction Lisa Graham Keegan commented recently that the additional money is provided to charter schools because “they have no access to local tax dollars.” Since many district schools do receive local tax dollars, for which presumably they would become ineligible, it is unclear how they will be better off financially as charter schools. What other considerations or inducements are there?

Recently, I visited a charter school designed as a college preparatory school with an emphasis on performing arts. As one of the first charter schools in Arizona, it has an excellent record of placing its graduates in highly-rated colleges and music conservatories. Its curriculum and instructional methodology are unique. The students I talked with were articulate and enthusiastic about their studies and the cohesive, caring ambiance of the school. In an interview with the CEO, I learned that independence and innovation carry a high price tag so fund raising is an ongoing activity. Will that become an issue for districts that convert to charter schools?

Both district and charter schools are public institutions competing for the same inadequate state education dollars. Does the trend toward more charter schools offer Arizona’s children a better education? How are we to know without a more transparent process?

–Beverly Weiss 8/4/13:   Jim Hall 4/2017