Budget Summary HB2648 (K-12 Funding)

FY10 BUDGET SUMMARY

(Fiscal Year 2010: July 1, 2009 – June 30, 2010)

This is a summary of the bigger budget and policy items that passed the House and Senate on July 1, 2009. This is not a complete list of all the changes to education. The budget bills from June 4 along with the “trailer bills” will now be transmitted to the Governor. This summary was created by Jennifer Loredo, AEA lobbyist.

K-12 EDUCATION (HB2648)

Fails to actually fund the 2% inflation to school districts

· Section 9 in HB2648 sets the base level for FY10 at $3,267.72 which gives school districts the full 2% inflation factor. However, in section 25, there is a notwithstanding clause which then removes the 2% inflation to the base and instead sets the base level at $3,201.89 for FY10.

From a historical standpoint, here are the base funding levels for the past two fiscal years:

o 2007-08 school year (FY08): $3,226.88

o 2008-2009 school year (FY09): $3,291.42

o 2009-2010 school year (FY10): $3,201.89 (this is the actual base level amount per student that a school district will receive)

The $3,201.89 amount for FY10 results in an amount that includes the reduction of the $121 million in education funding cuts that were part of the FY09 budget fix passed on January 31, 2009. Unfortunately, the ’09 cuts have become part of the permanent new baseline number for education.

Soft Capital Reduction

· Cuts soft capital funding an additional $175 million on January 1, 2010. The general appropriation trailer bill (HB2643) restores this funding if sufficient excess revenues are available by December 2009. (Note, without the sales tax, there will be no additional revenue available for this restoration.)

o School districts with fewer than 600 students will be impacted with only half of this reduction.

o Of the remaining statewide allocation of soft capital funds (approximately $23 million total), a district may use their local share for any operating expenses.

No Funding for Utility Costs

· Fails to provide any funding for the new utility formula that was passed last session for “excess utilities” (this is an $80 million cut to school districts that previously levied for “excess utilities”).

Teacher Performance Pay

· Reduces the Career Ladder program funding by 0.5% for FY10 (from 5.5% to 5%) and limits this program only to teachers who participated in FY09 (the 2008-09 school year).

· Reinstates the new but unfunded teacher performance pay program that was established last session (the “Gilbert School District” proposal to provide the additional Career Ladder funding to all school districts).

Overrides and Bonds

· Extends the timeframe during which a school district can issue a bond from six years to ten years after obtaining voter approval (this is only for future bonds to be approved by voters).

· Permits a school district to issue Class B bonds for furniture, equipment, and technology provided that the bonds mature within five fiscal years after the bonds are issued.

· Raises the maximum budget increase a school district may request for a Maintenance and Operations (M&O) Override from 10% of the Revenue Control Limit (RCL) to 15% of the RCL. Establishes a Special Program Override by expanding the scope of the K-3 Override to allow for a program to be designed for any or all of the K-12 students. Specifies that the maximum amount a school district may request for an M&O Override is 10% of the RCL if the school district also requests a Special Program Override.

· Authorizes a school district, for FY10, to conduct an election in March 2010 and submit one of the following proposals to the voters of the district:

o A 15% M&O override that, if approved, replaces any previously authorized M&O and K-3 overrides.

o An additional 5% M&O or Special Program override if the voters of the school district authorize a 10% M&O override at the November 2009 election.

o A 17% M&O override for a common school district if an M&O and K-3 override are still in effect on this bill’s effective date. The 17% override, if approved, replaces any previously approved M&O and K-3 overrides and continues for the number of years of the previously approved K-3 override.

· Permits a school board to cancel an override election scheduled for November 2009 by August 1, 2009.