Jul 212014

By Tammy Gray

Arizona legislators have been ordered by a Maricopa Superior Court judge to include an additional $317 million in funding for schools in the 2015-16 budget. If the state complies, it could mean approximately $500,000 in additional funding for the Holbrook School District, and more than $100,000 for the Joseph City School District. Winslow School District Superintendent Lance Heister declined to speculate on a potential outcome regarding that ruling, noting that there are too many factors that remain to be resolved before any funding can be considered.

The order handed down on July 11 settles one part of a lawsuit filed against the state for failing to follow a law approved by voters in 2000 that requires regular adjustments for inflation when calculating school funding. For four years during the recession, the state did not include the inflation adjustment in payments to schools. The measure passed by the voters also increased the state’s sale tax rate by 0.6 percent to raise revenues for education.

“The legislature illegally ‘skipped’ the voter approved/mandated inflation funding adjustments during the recession,” District Business Manager Garry McDowell noted prior to his retirement on June 30. “If the skipped per student funding inflation factor is restored for the upcoming fiscal year 2015 funding cycle, it would increase our district’s funding/budget capacity by over $500,000.”

Earlier, the Supreme Court ordered the state to make the adjustments, but a decision was not made on how to calculate the total amount.  Representatives for the state and education advocates disagreed over whether the inflation adjustment should be based on the last amount paid, or on the amount that the state would have been paying had it followed the mandate the entire time. The most recent court ruling settles that dispute.

“The base levels for fiscal years 2009 through 2014 shall be reset to what they would have been if adjusted for inflation,” Judge Katherine Cooper wrote in her decision. “In making the inflation adjustment for fiscal year 2014-15, the legislature shall treat the base level for 2013-14 as having been $3,559.62.”

The cost to the state is estimated at $317 million, but is only a small portion of what schools could potentially receive. An unsettled portion of the lawsuit seeks to force the state to make up the payments it skipped over the last four years.  That total, according to the Joint Legislative Budget Committee, is nearly $1.3 billion. State lawmakers say that there is not enough money in the budget to include either increased education funding or make back payments.

Judge Cooper has scheduled an evidentiary hearing today (July 18) to help determine whether the state should be required to pay the money withheld for four years.

“Disbursements equal to past adjustments not made between fiscal years 2009 through 2014 may also be warranted,” she wrote. “An evidentiary hearing is required for the court to determine whether and to what extent it is equitable for school districts to receive these funds today.”