Education Funding Change

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State lawmakers made a change in the way schools are allowed to count students that could mean big funding losses for schools with rapidly declining enrollments. Chuck Essigs, director of governmental relations for the Arizona Association of School Business Officials, will tell us more.

TED SIMONS: Coming up next on "Arizona Horizon," a recent change in the state budget is raising concerns for schools with declining enrollments. And we'll speak with a new innovation chief at ASU's Cronkite School of Journalism. Next on "Arizona Horizon."

VIDEO: "Arizona Horizon" is made possible by contributions from the Friends of Eight, members of your Arizona PBS station. Thank you.

TED SIMONS: Good evening and welcome to "Arizona Horizon," I'm Ted Simons. The Glendale City Council met in executive session today and decided to go ahead with plans to cancel an arena management contract with the Arizona Coyotes. The Council voted to end the contract last week, saying the Coyotes violated a state conflict of interest law when they negotiated the deal. Coyotes claim no law was broken and they have filed suit with the city. The next hearing on the dispute is set for June 29th. The only major airline serving Phoenix-Mesa Gateway Airport may be moving. Allegiant Air is not happy there may be an incentive package given to another airline. They don't mind competition, they just don't like subsidized competition. Aruna Murthys was let go after five years as the state's director of economic analysis. This comes after a series of sobering reports and the state's above average unemployment rate. The new state budget includes a provision that calls for a change in the way schools are allowed to count students, it's a change that has a number of educators concerned. Here now is Chuck Essigs, Director of Governmental Relations of the Arizona Association of School Business Officials. Good to see you again, thank you for coming.

CHUCK ESSIGS: Thanks for having me.

TED SIMONS: A change in school funding comes out of the state budget, the latest budget that was approved, what was the change?

CHUCK ESSIGS: The change will take place in fiscal year 17, this is a year for schools in the state to get prepared for. For over 30 years we had a system in the state where the School Districts started out with funding on students from the prior year so they knew exactly how many teacher contracts they could enter into, how they could put their budget together. If a district grew they could get paid for their growth but everybody worked off a prior year account. The legislature in fiscal year 2017, everybody's on a current year account. No more security and continuity of being on the prior year account.

TED SIMONS: The reason it was done, for uniformity for one thing, and it is true the a student could be counted twice under the old system, right?

CHUCK ESSIGS: Probably that happens quite rarely. Most students, when they start in a particular school district, they remain there for the entire year. There are some changes but to me it's not a justification to disrupt and change the whole system.

TED SIMONS: What about uniformity?

CHUCK ESSIGS: We have a uniform system now. Everybody starts out on the prior year and if you grow you get paid for some of your new students.

TED SIMONS: Do some students use the current year formula?

CHUCK ESSIGS: A little history on this, over 30 years ago we had a system where districts could pick before the year started which system they wanted to be on. But there were a lot of districts who picked current year count, they would estimate too high and they didn't get all the kids they felt they were going to get. They had to cancel future contracts and disrupt their whole system. In some cases there were lawsuits because they didn't honor their contracts. That's why the state went to the system, we'll start everybody out on the current year. Prisons guarantee some customers or prisoners. If you don't have that many we'll pay you anyway so you can have continuity in your operation.

TED SIMONS: But again, I know you're talking about projecting as to future needs. But why not have everyone on the current year funding?

CHUCK ESSIGS: The first declining districts it's really hard. You don't know how many students you're actually going to lose. If you lose students you've got to make your cuts at that point in time. You have to eliminate teacher contracts or you have to make some major reductions starting with prior year gives people a chance to plan and over time, once you start to decline you generally decline for many years. And you get paid for prior years so most kids in your system for 12 years, you'll get paid for 12 years, just not the first year but you'll get paid the year after they have left.

TED SIMONS: So right now fiscal year, what, 17 budgets?

CHUCK ESSIGS: 17.

TED SIMONS: They are being made when?

CHUCK ESSIGS: They will start in the spring of 2015, or fiscal year 16. They will start in the spring putting budgets together for fiscal year 17.

TED SIMONS: And again, this doesn't go into effect until July 1st of 2017.

CHUCK ESSIGS: It'll go into effect July 1st of 16.

TED SIMONS: I'm sorry. What kind of balls are being juggled in the air?

CHUCK ESSIGS: One thing we know for sure our declining districts get a double hit the first year. When they are doing next year's budgets, they are building their budgets on this year's kids, fiscal year 15. When they go to current year count they jump all the way to fiscal year 17. If they were losing 200, they are going to lose 400 in fiscal year 17. They are losing two years of students. It's going to be a really big hit that first year.

TED SIMONS: Was any of this discussed at the capitol? Were people showing up saying, wait a minute, what are you doing here? Was this slipped through at the last second?

CHUCK ESSIGS: It was a last-minute change but they did listen to some of our discussions. That's why they are giving a year before they put it in place and they have the Department of Ed in December is supposed to submit a report to the legislature of what the impact of this change will be. I think they listened a little bit, not enough not to do it, they just delayed it for a year.

TED SIMONS: Lawmakers say the districts and schools need to be more imaginative, creative, able to handle this.

CHUCK ESSIGS: Pretty tough when you have such limited resources as we have in Arizona. And you can't control too much how many kids you are actually going to lose. New charter school opens up in your community, they take 50, 100, 200 kids out of your system. You have parent who moves over the summer, you have a business that closes, a lot of things impact how many students you're going to have in the next year. If you guess wrong you're in big trouble.

TED SIMONS: Who does the counting of students, by the way?

CHUCK ESSIGS: Each district sends their reports to the state. And also an issue with current year count, districts don't get their final reports until maybe April or May.

TED SIMONS: Right.

CHUCK ESSIGS: So you don't know exactly how many students you have until you get your count late in the spring. One of the reasons is if a student is taking courses someplace else, or he took some courses in the summer from an online student, you think you're counting him in the budget projections and the state notifies that Chuck Essigs was taking classes someplace during the summer and you have half a student rather than a full student.

TED SIMONS: I've read the Department of Education, the data system is not even up to task on this. Is that true?

CHUCK ESSIGS: It's getting better but it's a long climb from where they were. They were in real serious trouble in their data system. If you're getting paid you're not going to know until after that's over and all your reports get in. It would be spring sometime before you get a final number.

TED SIMONS: Last point on this, the districts and schools need to figure out how much -- what they need in the way of supplies and teachers, what they need in the way of taking care of all the kids they have coming up. And you're saying next year double whammy.

CHUCK ESSIGS: Fiscal year 17, districts are going to lose two years of students if they are a declining district. They have to go from 15 to 17, that's one problem.

TED SIMONS: Is there any effort by lawmakers or anyone at the Capitol to look again at this thing?

CHUCK ESSIGS: I think that's why they want to get a report from the Department of Education.

TED SIMONS: And what are they saying?

CHUCK ESSIGS: I think they are worried they may have some troubles getting their data system in line. I haven't seen the report, it shouldn't come out until December. And this is one cut on top of there's a cut to district additional system, there's a huge cut to career and technical education coming in 17. You're a district, it's not just one it's cut -- piling on is what the problem is.

TED SIMONS: Chuck, good to see you, thanks for joining us, appreciate it.

CHUCK ESSIGS: Thank you, thank you.

Chuck Essigs:Director of Governmental Relations for Arizona Association of School Business Officials

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