Alia Beard Rau

The Republic | azcentral.com

This Legislature's battle over K-12 funding produced a dizzying array of numbers to reflect how much more money Arizona schools emerged with: $181 million. $0. $230 million. $60 million. $132 million.

So how much will kids really get in the budget Gov. Doug Ducey signed on Tuesday? That depends.

Are you assuming the Proposition 123 school-funding ballot measure will pass? And what if the proposal to increase funding for public schools by $3.5 billion over 10 years and resolve a long-standing lawsuit fails at the polls?

The answer also depends on what you consider "new" money. Does the required annual funding increase based on schools' student-population growth and inflation count? And how much will schools actually grow next year?

Ducey, Democratic lawmakers, the Joint Legislative Budget Committee, and proponents and opponents of Prop. 123 each count those numbers differently, based on their various agendas.

Gov. Doug Ducey signs $9.6 billion Arizona budget

Governor's 'new' money

Ducey on Tuesday signed into law the $9.6 billion budget that lawmakers passed last week.

"This budget is proof that government can live within its means and be responsible with the people's money – while continuing to make strategic investments in our K-12 schools, higher education, child safety and public safety," Ducey said in a statement.

He has said the new budget invests "$181.4 million in new K-12 funding beyond increases from the (Prop. 123) settlement ... to ensure every Arizona student has access to a quality education."

He breaks that down to:

$60 million for enrollment, inflation and other required annual baseline adjustments.

$53.6 million to the School Facilities Board for public-school facility repairs and construction projects. This includes eliminating a cut of $23 million that would have halted projects in the Agua Fria and Chandler districts. It also includes $15 million this fiscal year and $15 million next fiscal year for school-facility repair projects.

$29 million to restore cuts made last year for the Joint Technical Education District programs. This was not part of the budget, but separate legislation passed early in the session.

$31 million to delay a cut schools would have faced moving to a system that pays them based on current-year attendance instead of the prior year.

$6.5 million to delay a cut to the funding formula for smaller charter schools.

$1.2 million to delay a cut to district-sponsored charter schools.

$100,000 for a geography literacy program. This money doesn't go directly to schools but is a grant that will go to a statewide geographic alliance for its geography programs.

Ducey spokesman Daniel Scarpinato defended counting the canceled cuts as new money.

"Those were dollars they weren't getting, based on policy decisions, made in the previous budget," he said. "So the status quo would have been them not receiving any of those dollars. We had to vote to actually appropriate those dollars back in. It's adding dollars."

Morgan Abraham, chairman of the grass-roots Vote No on Prop. 123 campaign, criticized that accounting.

"The claim that there's new money in this budget, it's pretty far from the truth. It's ridiculous," he said. "We were lucky that, because of the public pushback, there were no cuts to K-12 education. In the original budget that the governor and Legislature proposed, the schools were in the negative."

The original version of the budget Republican House and Senate leaders introduced did not delay or eliminate the cuts, nor did Ducey's original budget proposal. A coalition of moderate Republicans successfully negotiated to mitigate the cuts.

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Democratic lawmakers

Democratic lawmakers count schools' net gain, excluding whatever happens with Prop. 123, as $0 in the budget. They say the annual required baseline increase to school funding should not be included in the calculation, nor should money from halting or delaying cuts.

"It's cuts that he's (Ducey's) taken and turned into not cuts, but he's not given them any more money," said Sen. Steve Farley, D-Tucson.

JLBC experts

The Joint Legislative Budget Committee consists of economists and financial experts hired by legislative leadership. Republican and Democratic lawmakers generally consider their numbers to be nonpartisan.

Its summary of the Fiscal Year 2017 budget assumes Prop. 123 will win at the polls on May 17 and that schools will see an additional $132 million in their annual baseline adjustment for inflation and student-population growth next fiscal year. The budget committee's number is higher than the Governor's Office's $60 million because the budget committee is predicting more student-population growth than Ducey.

There's no way to know until the end of next year which number is more accurate.

According to the budget committee, schools get the baseline increase – $132 million in their estimation – regardless of whether Prop. 123 passes.

If Prop. 123 passes, schools will also get an additional $224 million this fiscal year and $230 million next fiscal year. That comes from a combination of the higher state land-trust payout called for in Prop. 123 and about $50 million a year in additional funds from the general fund.

If Prop. 123 fails, schools will only get $132 million for inflation and enrollment growth and approximately $75 million of continuing "additional inflation" funding that they already received for this fiscal year.

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JLBC does not count as new money for schools any of the other items Ducey listed. In budget documents, School Facilities Board funds are included with the other school money under the Arizona Department of Education.

Scarpinato said it makes sense for the budget to assume Prop. 123 passes. That way, the money could be distributed to schools without any additional action by Ducey or the Legislature. "As soon as the election is canvassed, the dollars would go to the schools. So we're talking about, at most, maybe three weeks," he said.

Farley agreed, saying it was logical for JLBC to calculate its numbers that way given the Legislature had approved Prop. 123 and sent it to the voters.

But Abraham sees it as a tactic to make the numbers look better.

"It's dangerous and misleading to budget basically under the assumption that Prop. 123 is going to pass," he said. "Then it feels almost like a threat they're holding money hostage."

Yes on Prop. 123

After the Legislature passed the budget, J.P. Twist, manager of the Yes Prop. 123 campaign, sent a memo explaining its fiscal impact on education.

"If Prop. 123 does not pass, our schools stand to lose almost half a billion dollars," he said in the memo.

He said schools will lose $224 million this year and $230 million next fiscal year without Prop. 123 – using the same numbers as the JLBC.

His memo doesn't mention the $132 million in baseline inflation that JLBC includes, nor does he count the money that Ducey includes as new money.

Scarpinato agreed with Twist's assessment.

"Without Prop. 123, it will result in a severe cut to K-12," he said. "All the numbers we are reporting are based on it passing and all of the budgets have already accounted for it."

But Abraham disagreed.

"If Prop. 123 fails, it does not cut money just because they decided to add Prop. 123 to their budget. That's the way they decided to count it. We have just as much money as we had before," he said. "At the end of the day, the money from the land trust already belongs to K-12. It's just a matter of distribution."

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The bottom line

Regardless of whether Prop. 123 passes, Arizona's K-12 public district and charter schools will get a bump in baseline funding. The amount depends on how much schools actually grow next year. The estimates are just that.

There is, however, no additional money in the budget that will go directly to schools for new programs or to expand existing programs.

If Prop. 123 passes, schools will get an additional $224 million this year and $230 million next year. If Prop. 123 fails, schools will get an additional $75 million next year. And they already received an additional $75 million this year.

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Details on the budget

Here are additional details on the $9.6 billion budget Gov. Doug Ducey signed into law Tuesday:

University funding

The budget gives state universities an additional $32 million.

It includes $5 million earmarked for so-called freedom schools aimed at advancing free-enterprise concepts at Arizona State University and the University of Arizona.

The billionaire Koch brothers, whose network of "dark money" supported Ducey’s 2014 campaign for governor, have provided funding for the freedom centers. ASU has two and UA has one.

The budget also includes:

$8 million more annually to cover an increase in baseline funding due to population increases.

$3 million in ongoing money to an ASU economic-freedom school; $2 million in ongoing money for a UA freedom school.

$8 million in one-time money to UA.

$7 million in one-time money to ASU.

$4 million in one-time money to Northern Arizona University.

Tax cuts

Ducey's promised income tax is included in the budget. It allows businesses to more quickly depreciate the deduction they can take for purchases of new equipment. It is estimated to cost $8 million next year, doubling to $16 million in fiscal 2018.

Child welfare

According to Ducey, the budget includes a $116 million two-year investment in child safety, "while focusing on safely reducing the growth rate of children in state care."

Key funding includes:

$2.7 million this year and $2.7 million next year to have outside contractors work on the backlog of cases of abuse and neglect that have not had services provided to the child or parents for two months or that have not been worked on for at least 60 days.

$13.8 million for investigations and operations.

$10.3 million for out-of-home placements in foster homes.

$12.5 million for out-of-home support-services growth.

$8 million for emergency and residential placement.

$2 million for foster families.

$5 million for preventative services for families.

$6.4 million for adoptive families.

$2 million for child-care growth.

Public safety

Ducey has been running a Border Strike Task Force out of the Arizona Department of Public Safety since September and sought to permanently fund it, hire troopers, buy equipment and maintain it. The task force would partner with federal and county law enforcement to fight drug and human smugglers. Ducey proposed spending $21.5 million of general-fund money to get the program up and running and $10 million in general funds for ongoing expenses.

The budget includes $26.6 million for the program.

Transportation

The budget includes $86.5 million for road improvements and transportation projects.

The state money will combine with federal money to widen Interstate 10 near Picacho Peak, widen Interstate 10 near the Nogales border station and pave a portion of road that connects the Hopi and Navajo reservations.

Interstate 10 near Picacho Peak has been of particular concern in recent years. Blowing dust in the area has contributed to numerous fatal crashes.