Thursday, March 30, 2017

Arizona Legislative Democrats FY18 Education Policy & Fiscal Priorities

Investing in public education, including K-12 schools and universities, is critical to changing the trajectory of the state. Democrats have prioritized efforts to reduce class sizes, correct the teacher shortage problem and develop long-term solutions that will provide our schools the resources they need.
This session, Democrats introduced a package of bills to properly invest in our educators, students, and schools. Taken together or individually, we strongly recommended that the Legislature consider these items in order to move our K-12 education system forward:  
Teacher Salary  
·         The first step in achieving these goals is providing our classroom teachers an immediate 4% salary increase starting in FY 2018.
·         Arizona ranks 50th in teacher pay, with teachers earning just $45,477 compared to the national median teacher salary of $54,120. (NEA 2015-2016)
·         We recognize the Executive's FY 2018 budget provides a raise for teachers, but the immediate impact is negligible – a mere .4% increase in the first year does little to address inadequate pay and alarming turnover rates.   
Building Renewal & Soft Capital
·         The building renewal funding formula to repair and maintain school buildings was repealed in 2013 and replaced with a grants program that is less than one-tenth of what the formula funded. Last September two Glendale elementary schools were forced to close due to emergency repairs.
·         The Joint Legislative Budget Committee estimates that the now-repealed formula would have generated $289 million for the current fiscal year. The FY 17 budget appropriated just $31.7 million to the building renewal grant program.
·         Governor Ducey's budget proposal continues hundreds of millions of dollars in annual direct cuts to schools for school maintenance and soft capital like technology, textbooks and classroom supplies.
·         Democrats propose reinstating the building renewal formula in statute and increasing funding 10% per year until the formula is fully restored.
·         Addressing soft capital needs is critical to supporting our schools and requires an intentional effort to reverse these devastating cuts to education. Suspensions of these district and charter additional assistance formulas have totaled more than $2 billion since 2009.
·         Democrats propose increasing funding to District Additional Assistance by 10% per year until the formula amount is fully restored.
Prop 301 Renewal
·         Approved by the voters on the 2000 general election ballot, Prop 301 monies provide a key source of financial support for schools and are scheduled to expire in June 2021.
·         Democrats propose referring Proposition 301 renewal to the 2018 General Election ballot and increasing the amount from .6 to 1 cent, which would generate over $400 million additional dollars to support teacher pay increases, reduce classroom sizes and begin to turn the corner on our statewide teacher recruitment and retention crisis.
·         77% of Arizonans want to renew Prop 301 and 65% agree with Democrats that we should renew at a full penny. Now is the time to make that commitment to the children of our state. (SFC).
Volkswagen Emissions Settlement
·         30% of our school buses fail safety inspections and schools are constantly forced to prioritize building repairs over basic needs because of lack of funding.
·         Democrats support using the $48 million in funding received from the Volkswagen Emissions Settlement for the purpose of purchasing or updating school buses in the K-12 education system.
With a population of nearly 7 million and growing, the need for vital state services and infrastructure will not diminish. Nonetheless, our current tax structure is stacked against the middle class and favors special interests. Reckless cuts have left Arizona without the revenue needed to meet the long-term needs of our state's population. We need tax reforms that more fairly impact taxpayers and create a consistent source of revenue to fund the priorities that voters have repeatedly said they value. Legislative Democrats are committed to starting a statewide conversation about how to fund the education system our voters and the business community strongly support. Our state's future economic development prospects are directly tied to educating the workforce needed for our businesses to grow and compete in a global marketplace.
Tax Credit Sunset Process
·         Establish a sunset review of all income tax credits to force the Legislature to proactively assess, debate and act to continue each individual credit
Tax Expenditure Review
·         Require the nonpartisan Joint Legislative Budget Committee to review the return-on-investment for all tax expenditures to determine if they create new economic activity, generate revenue and lead to quantifiable job creation.
·         Cap the School Tuition Organization (STO) corporate tax credit expansion and allocate the savings to teacher recruitment, retention and training. This will save $12 million in revenue in just the first year.        
Rehire Department of Revenue Compliance Staff
·         According to a recent study by the non-partisan Grand Canyon Institute, Arizona could increase annual revenue by $70-100 million dollars by hiring 100 additional collectors and auditors plus needed support staff. 
Finance Review Task Force
·         Create a state finance review task force comprised of legislators, agency representatives, economists, business and community leaders and stakeholders to review the expenditure and revenue sides of the state budget and recommend a reform package that provides for adequate and sustainable funding. The Legislature should ensure that the revenues of the state are sufficient to address the essential functions of government. Fund sweeps and other gimmicks are not an acceptable way to build a sustainable and structurally balanced budget.
Legislative Democrats
K-12 Funding Proposal- FY'18

Proposed Investments
Teacher Raises
$136 M
Reinstate the Building Renewal Formula*
$29 M
District Additional Assistance Formula increase*
$38 M
K-12 school buses
$48 M

$251 M

* First year of a 10-year, 10% per year funding restoration plan
Funding Sources
General Fund
$55.6 M
Shift funding from the Governor's "credit enhancement" funds
$24 M
Freeze growth in corporate STO tax credits for private school tuition
$12 M (20% growth per year)
General Fund lottery revenue
$50 M
Revenue from adding additional DOR tax collection staff
$61.4 M
VW settlement for K-12 school buses
$48 M