Mary Jo Pitzl

The Republic | azcentral.com

Arizona public schools will get $317 million in new funding next year, after a judge Friday did the math on a state Supreme Court decision that found the state shorted the public-school system for four years during the recession.

The total tab could be $2.9 billion.

For the next five years, the ruling could cost the state $1.6 billion as it resets the starting point for school funding. The state may also have to come up with an additional $1.3 billion for inflation costs lawmakers didn't fund during the recession, but that has yet to be decided.

School groups and education advocates hailed the ruling by Maricopa County Superior Court Judge Katherine Cooper. But a key legislative leader signaled an appeal is likely, and Gov. Jan Brewer warned that the decision could take needed funding from other state programs, such as public safety and protection of vulnerable populations.

The ruling will present next year's Legislature — and the new governor — with weighty decisions on where to find the money in a budget that already is stretched so thin that some lawmakers are predicting a budget shortfall in the next two years.

In the court pleadings, legislative leaders argued that the state can't afford the funding.

Cooper directed the Legislature to increase the base per-pupil funding to $3,560 in the budget year that starts next July — a 5 percent increase from the current $3,373. But school advocates say that won't restore funding to pre-recession levels.

"For anyone to characterize this as a windfall for the schools, that would be a mistake," said Chris Thomas, general counsel for the Arizona School Boards Association.

Even with the extra $317 million, the schools are still shy of the $3,776 per student in base funding the state provided in 2008, before the Great Recession sent state tax collections plummeting.

The ruling carries out the findings of the Arizona Supreme Court, which last fall determined the Legislature failed to honor the direction voters gave in 2000, when they approved a ballot measure calling for annual inflation adjustments to the school-funding formula.

The Legislature failed to provide that funding for four years, citing the strains of the recession, triggering a lawsuit on behalf of school districts.

Lawmakers resumed the inflation payments for the fiscal 2014 budget year and the current fiscal year, which began July 1, but did not retroactively adjust the base funding for inflation. They also did not make up for what was lost during the next four years, an amount all parties agree totals $1.3 billion.

"This is a good day for education in Arizona,'' said Tim Ogle, executive director of the school boards group. The 5 percent increase will allow schools to move ahead with reforms they've been trying to implement on the cheap, he said.

"The sad point is, we are more than five years into this, so one-third of our K-12 students have never attended a fully funded classroom," he said. "Isn't that scary?"

The Cave Creek Unified School District was one of the plaintiffs in the case. The district's superintendent, Debbi Burdick, called the ruling "huge."

"I am thrilled that when it seems like so often things have not gone positively for public education, this is a huge victory for public schools, both districts and charters," she said. "I'm looking forward to having a few more dollars to educate my students as they should be."

Senate President Andy Biggs, R-Gilbert, said in a statement that the case is not over, noting that the judge has required another hearing on the $1.3 billion in back payments.

"Because of that, I am going to refrain from commenting on the case until all issues are resolved and we have clarity on what lies ahead," he said.

Brewer's spokesman, Andrew Wilder, said funding the higher base rate, plus the back payments, could come at the expense of other state programs. He said Brewer has tried to balance education needs with other state priorities, something the courts don't have to do.

Brewer agreed with an early offer from school groups, made as the state started to cut programs during the recession, to continue funding the inflation mandate, Thomassaid. They suggested cuts be made elsewhere in the school budget, such as classroom equipment, and that suggestion was followed for one year.

After that, lawmakers decided to halt the inflation funding, and school groups turned to the courts for relief.

Sen. Lynne Pancrazi, D-Yuma, called the ruling a "momentary thrill for education," saying it will offer relief for crowded classrooms and could help rural schools boost salaries to attract teachers. But she said she expects the Legislature to appeal.

Pancrazi said the state may want to look at the "rainy-day fund," which has about $458 million, to help fund the education mandate. The state could eliminate some of the tax credits it has granted, as well, she said, adding that she, like most lawmakers, doesn't want to increase taxes.

"It always seems the Legislature can find the money when they need it," she said. "Except for education."

At the same time the Legislature was cutting budgets, including K-12, lawmakers approved tax cuts that started to phase in last summer. So far, an estimated $183 million in tax reductions have taken effect, aimed at attracting business to the state.

State schools Superintendent John Huppenthal, in a statement, said the court's ruling honors the voters' will. He urged schools to make judicious choices about how to spend the increased funding, but he also suggested the money may not be immediately forthcoming.

Cooper set a hearing for next Friday to determine how, or whether, to make $1.3 billion in back payments.

"The court must determine whether the facts support the disbursement of yesterday's funds today," she wrote. The schools have argued that they can put the money to work on classroom equipment, such as computers and building renovations.

Thomas said schools are open to "reasonable" negotiations on how to pay out the $1.3 billion, but won't budge on the fact schools are owed the money.

One business leader sees a downside to the decision.

The Arizona Business and Education Coalition has been working to reform the state's school-finance model to give schools more flexibility as well as increased accountability in spending.

Susan Carlson, executive director of the group, said she fears the influx of money after the court ruling could delay that discussion.

"This could derail the conversation about what we will do about this system going forward," she said. "And the timing is right to have that conversation now."

Republic reporter Mary Beth Faller contributed to this article.