The temporary 1-cent sales tax approved by voters in 2010 to fund public education expires next year. Prop 204, which would have permanently extended that tax, failed at the ballot box this November. We’ll take a look at how that affects the funding of public schools with John Arnold, Director of the Governor’s Budget Office; Chuck Essigs, Director of Governmental Affairs for the Arizona Association of School Business Officials; and Timothy Ogle, Executive Director of the Arizona School Boards Association.
Ted Simons: We will start with you. the impact of prop 204, what would have happened? What's not going to happen?
Timothy Ogle: Well, Ted, of course, the prop 204 would have been fiscally promising for our schools and our member schools. And, of course, would erase some -- have raised some significant money. And I think what is most significant out of that dynamic is that, from the cuts of 2008, 2009, our revenue to schools has been reduced nearly 22%, most in the nation. And we are residing at the bottom of revenue per student. And I think the defeat of prop 204 probably more than anything is a call to action for our leadership to say, now is the time to invest in our children. And as all of us I think would agree, there's probably no more productive investment this society can give its next generation hand to invest in education. So it's a call to action.
Ted Simons: Impact of prop 204 not making it?
Chuck Essigs: It will mean that a lot of hopes of school districts that they could reinstate some of the programs they were offering to implement some new programs, meeting some of the state mandates, that's probably not going to happen in the short-term. Hope physically the leaders of the state who said, as prop 204 was being debated, we will find other solutions, hopefully they will work with the schools and the schools will work with our state leaders to find another solution. But it's going to be long and spread out before the monies get restored.
Ted Simons: John, there are other solutions out there?
John Arnold: Absolutely. The state has a $9 billion budget. We need to prioritize those dollars. There's a lot of pressure on the state budget these days. There has been for years. But for the governor and I believe for the legislature, k-12 funding has always been one of our key priorities. And as we look into the next, you know, two, three, four fiscal years, we see some opportunities to address the needs that were left over by the failure of Prop 204.
Ted Simons: Are there opportunities, though, when the sales tax expires? There's concern regarding the health care act implementation. We will learn more about that at end of the week but there have to be some concerns.
John Arnold: Absolutely. We have known that the 1 cent sales tax is going to expire for the last three years. It was a temporary tax. The governor was right in calling for a temporary tax. We absolutely needed it. But we have used this time to really stabilize the state general fund, and state spending and revenues. We are balanced. And even as the 1 cent phases out we are going to remain balanced. The question is, will there be enough new revenue as the economy continues to grow, to support new investments in the k-12 and the universities and then tackle the federal health care reform and the pressures that brings to the state? You know, we believe that there are some opportunities there. And likely are going to center to reshuffle a few things and look at some options. But those options are there. And there's always important choices to make but that's why we have elected officials.
Ted Simons: The state budget stabilize to a certain degree. What's going on out there in schools? What's going on the ground with teachers, classrooms, school districts, school boards?
Timothy Olge: Sure. We have been fortunate to travel the state over the last couple of months. The staff and our organization, the spa. And we talk to dozens if not hundreds of school leaders around the whole state. And I would say that there's a lot of hurt out there and a lot of strong feelings about this whole dynamic that we're talking about today. And I think what we are hoping to bring and maybe the three of us here today can begin to talk about solutions with regards to people coming together and finding -- finding productive ways to solve our problems, and really, you know, merge the planes of school reform and sound fiscal policy at the state level. Because those two parallel themes are really coming together now, I believe.
Ted Simons: Coming together but again, the per pupil spending in student funding, soft capital, all these kinds of things, Arizona ranks very, very low. And in terms of percentage of the national average, it's even some cases worse. Is this something that has can gradually improve? What's going on out there?
Chuck Essigs: I don't think it will be lurching into improvement but I think we manage to have a long term gradual plan that will bring some improvements. In a way we are lucky. John has a good background in school finance. He understands school facilities because we have both the facility and an operational problem in Arizona. And we are going to need to solve both of those with additional resources.
Ted Simons: How do we do that? Give me some ideas.
Chuck Essigs: We want john to find hundreds of millions of dollars in the state budget that nobody else was aware of and give them to us. [Laughter] probably in a crisis like this, people can sit down and hopefully come up with solutions but I think it needs to be lodge term. It can't be, we are going to fix everything this next legislative session. But it would be nice to fix some things and start to put a long-range plan in place.
Timothy Olge: John --
Timothy Olge: If I could, before we go to john on that topic, just to reiterate what chuck was saying, the current third graders have never attended a day of school with an appropriately staffed school environment. Because the cuts of '08, '09, and prop 204 would have given promise to reinstate some of those programs that we talked about. but what I mean when I say a call to action in the beginning is that we are endangering of losing an entire generation of young children as they move and ma trick could you lathe through a quarter of their school year. The time is now. Fortunately as Chuck described, john has a great background with school finance and they are advocating for us and I understand the governor has interest in addressing this problem but this is truly a mark in time, I believe.
Ted Simons: I hear from you the word $600 million to the good. You got $450 in the rainy day fund. We hear these different reports. I also hear that some lawmakers saying, no, we got to be careful because of health care reform and the our own little fiscal cliff. The big fiscal cliff included. What are you hearing throughout? What right options out there?
John Arnold: Thank you. [Laughter] you know, both things you are hearing are correct. The state does have some money. It's one-time in nature because of the temporary tax. So we do have a significant budget balance this year. With health care reform we are going to lose a lot of that balance. It's going to go away. It's going to get sucked up by the costs that are associated with health care reform. But does that mean we can't prioritize and try to address some of the issues we have in k-12? And I would add the universities too that. And, yeah, on a per pupil basis we are on the low end of the United States. But we have a lot of hope and options here in the state to do some really good and exciting things. The governor has put in place Arizona ready council that has been studying k-12 reforms that we need, including performance funding. Including the new standards that are coming out, moving away from the Ames test toward a better instrument. Doing additional teacher training and school districts have been great partners as moving through that process. The third grade reading that we have put in place a couple of years ago. But because of our limited amount of resources we are going to have to be very, very smart about how we invest these dollars and make sure they are being used appropriately. So we get the biggest bang for the buck. but I think working in partnership with the school districts and with the university folks and with the legislature, we can come up with a package that addresses, it puts us on that long-term path to improve the things we need and address immediately the generation that's in school right now. We need to get those third graders reading. We need to get our graduation rates up. We need to get kids on a better path towards higher education and vocational skills. We need to invest in our university system. Those are all priorities that I think we can get done if we manage it properly.
Ted Simons: John mentioned standards and mandates and these sorts of things, accountability and all that. I would imagine that has put its own kind of pressure on the schools out there and are the schools handling that pressure?
Timothy Ogle: They're working their tails off. and we have school leaders, board superintendent teams around our state working every day to implement common core standards, third grade remediation that's been talked about and those two school reforms have, are really important, and as I said folks are working hard at those kinds of things. But they do have fiscal impact. and so, you know, we need to recognize that and talk about it and at the ready council meeting the governor's ready council this week, that was discussed actually, the cost of implementing common core which we need to do. It's a great school reform. And we will get it done. there's -- if I am betting, if I am a betting man, I would bet on our teachers because today the teacher of the year banquet we just saw exemplary teachers doing all the work we want them to do.
John Arnold: We have been very impressed at the state level at the local initiative the that, districts have seen this is coming. They have launched teacher preparation programs and they are preparing for it at the local level. So we need to do more at the state level but we have been very impressed.
Ted Simons: What about bond overrides?
Chuck Essigs: Bond elections did really well. Eight off the nine passed statewide. Overrides were about the same as they have been in other years but hopefully as the legislature looks at the solution, they empower school districts to use some of their local resources. Schools only have a third of the bonding capacity they had had a number of years ago. there's some things the legislature can do that won't cost them money but will empower local school districts to solve some of their problems and the biggest problem we all get-together and not be pointing fingers together but holding hands to solve the problem, we can get it solved but helping school, local school districts with some of their own problem solving abilities will be a big plus.
Ted Simons: That's something you see as well?
Timothy Ogle: Absolutely. The collective power of the synergy that can be created when people work together will win the day and now is the time to do it.
Ted Simons: Last question. We have about 30 seconds. I want to ask you this regarding the bond election s and overrides and prop 204 which bent down rather handily. What message are you getting from voters out there.
Chuck Essigs: I think prop 204 was not a response to we don't think schools should receive additional funding. When you look at all the money that went into the campaign, the last couple of weeks and the pro people had no money to respond. So all of the negative campaigning people saw no response because there wasn't any money to buy TV time. But night after night on TV, you see negative ads. That's got to have an impact and I think, I don't know if we didn't do any polling, but that certainly probably is the reason it failed.
Ted Simons: All right. Gentlemen, great discussion. Good to have you here. Thanks for joining us.
All: Thank you, Ted.
Ted Simons: That is it for now. Thank you so much for joining us. You have a great evening.
John Arnold:Director, Governor's Budget Office; Chuck Essigs:, Director, Governmental Affairs for the Arizona Association of School Business Officials; Timothy Ogle:Executive Director, Arizona School Boards Association;