TUSD faces $58M cut - one of largest in state - as Arizona school funding cap looms

As an effort to lift a spending cap for Arizona schools stalled in the state Legislature this week, local leaders warned that allowing the bar to take effect would result in a "catastrophic cut" to education.

TUSD and other local districts could lose millions of dollars already budgeted for this school year without quick action in Phoenix.

Arizona legislators have until March 1, 2022, to raise — or waive — what's known as the Aggregate Spending Limit, which compares education funding to the level it was in 1980, and allows for slow increases according to the number of enrolled students and inflation.

If the Legislature does not override the AEL with a two-thirds vote in each chamber, Arizona public schools will be forced to cut $1.15 billion from their budgets, or around 15.3 percent. The state House has passed a fix, but Republicans in the state Senate haven't provided enough backing to pass it, falling just one vote short.

The funding in question is not new money allocated to schools, but rather monies that were already earmarked and available for schools across the state. But it legally cannot be spent without the Legislature taking action.

Charter schools will not be affected by the changes.

"This will be a catastrophic cut to education funding and will lead to major staff layoffs and operation cuts in the current school year," said the Arizona Education Association. The AEA said that the legislature has overridden the AEL twice in previous years, once in 2002 and again in 2008.

Meanwhile the Arizona Center for Economic Progress noted that the override "doesn’t increase taxes and is independent of the Legislature’s budget decisions during its 2022 session."

"It simply allows districts to spend funds they have already received and budgeted for this school year," the group said. "The spending limit is antiquated and based on what school needs were like in 1980. That is evident by the fact that Arizona is hitting the spending limit this year despite Arizona school funding being the lowest in the nation."

"Without the expenditure override, schools will be forced to make draconian cuts before the end of this school year. It would be an economic disaster for Arizona schools, which are already experiencing a teacher shortage and struggling with additional costs caused by the pandemic," the group said.

The issue exists because of confluence of events and fights over school funding that rise every 20 years. The issue goes back not only to 1980, but also to Proposition 301, which was passed in 2000, and Proposition 208, which was passed in 2020.

Meanwhile, as the deadline looms, state legislators have considered several other bills surrounding education, including a bill to bring NRA safety classes into classrooms, a bill to bar the state from requiring COVID-19 vaccinations, a bill that could allow parents to sue teachers if they violate the state's parental bill of rights, and tie high school graduation to studying the "evils of communism."

TUSD could be shorted $58 million

Among school districts, the amount varies widely, and potential loss ranges from just a few hundred dollars, like Klondyke Elementary District based in the San Manuel area, to millions from Tucson Unified School District.

In fact, TUSD faces one of the harshest cuts of any district in the state, potentially losing $58.1 million in funding. Meanwhile Amphitheater Unified District faces a cut of $14 million, Catalina Foothills may lose nearly $5.9 million, and Sunnyside Unified District may lose $16 million. Even the relatively small Tanque Verde Unified District faces a cut of over $2.6 million. Mesa Unified District, with about 57,956 kids enrolled, faces the steepest cut in the state and stands to lose nearly $74 million.

Dr. Gabriel Trujillo, TUSD's superintendent, called the aggregate expenditure limit a "relic of the 1980s" and said that state legislators should raise the limit, or waive it altogether. Trujillo warned that if it's not done, his district—which has 45,565 students—would be forced to quickly cut costs.

"The limit was passed as a voter initiative, capping the portion of the state's budget that can be spent on K-12 schools," said Trujillo. "The problem is cost of operating schools, hiring and keeping teachers, as well as technology—really, the whole cost of teaching and learning has dramatically increased since then."

And, over the last two years, districts like TUSD have also absorbed the cost of dealing with the pandemic, Trujillo said. At the same time, the state budget has been "hit particularly hard" by the economic fallout of COVID-19, and this means that the state budget has decreased, shifting the percentage against schools.

At the same time, a decision over Proposition 301—the 6/10ths percent sales tax enacted as part of a voter-approved initiative in 2000—has required the state's education budget to include another $600 million to the calculation, suddenly putting schools over the AEL, he said. "With this $600 million that's put us at this place where we've exceeded the AEL, but we haven't changed anything," he said. "But suddenly there's a huge pot of money that's been added," to limit, Trujillo said. 

As the Arizona Mirror pointed out, Prop. 301 was only good for 20 years, and it was extended in 2018. However, lawmakers simply copied language from the 2000 ballot measure, but didn't ask voters to amend "didn’t ask voters to amend the 1980 spending cap to exempt the sales tax extension."

On Tuesday the Arizona House and Senate moved on parallel resolutions to raise the aggregate spending limit by $1.2 billion on Tuesday. However, while the House bill passed 45-14 , the Senate's attempt to pass their own bill ran aground by a single vote in part because some Republicans said they would wait for a court ruling in a lawsuit over Prop. 208 to see how to vote.

In November 2020, voters approved Prop. 208, which adds a 3.5 percent tax on incomes above $250,000 for teacher salaries. Arizona Republicans challenged the law arguing that it was unconstitutional, and last week, Maricopa County Superior Court Judge John Hannah said he would wait until March 10 to make a ruling on whether the measure is constitutional.

Prop. 208, known as the Invest in Education Act, attempted to get around the AEL, and called the new funding a grant, however, the Arizona Supreme Court rejected that idea.

The initiative increased supplemental base salaries for teachers, and pay for performance, but until now "those dollars, state-wide sales tax funds have never been included until now," in the limit, Trujillo said.

Trujillo said that his district will have to immediately trim $58 million from its expenses if the expenditure limit is not raised.  TUSD staff have not put together a list of "doomsday cuts," Trujillo said that parents can expect to see immediate cuts in transportation, and he expect that class-ratios will "increase dramatically." 

The district may also suspend all-day kindergarten, a program the district "proudly offers" as well as some early childhood education programs, as well as arts and sports programs. And, with 86 school days left in the year, the district may also look at ways to close some schools because the cost of running schools, including utilities and other expenses runs well into the millions per day.

In an email to parents, the district said that the loss of $58.1 million would "significantly increase class sizes and could cut or eliminate key support programs for our students. It will also impact valuable programs like athletics and fine arts." And, the district asked parent to contact legislators and push for a waive on the spending cap.

Trujillo said he didn't expect this to happen because he has "every faith that this matter will be resolved." The district has the "right relationships at the capitol," to make sure that the AEL is raised. "We've spent our energies on legislative advocacy more than anything else."

However, he worried that the district will face the same crisis next year. "We're just trying to survive this crisis, now. How we're going to deal with the next year, I don't know. We want to get this taken care of now."

"What a cruel circumstance for our students on the heels of a difficult 2020-2021 school year due to the pandemic," said Mary Kamerzell, the superintendent for Catalina Foothills School District. Students, she said are "recapturing a more 'normal' experience in person with their peers at school, which is so important for their social and emotional support, and are making larger gains academically."

"Not permitting school districts to spend the budget dollars already allocated to them will make it challenging to keep our schools open in April and May," Kamerzell said.

Kathy Hoffman, the state superindendent of schools, called on lawmakers to pass a "clean fix."

"There was a lot I had planned to talk about in this year's State of Education, but there's only one issue impacting every district that can be described as the school closure ticking time bomb: the Aggregate Expenditure Limit," Hoffman wrote on Twitter. Hoffman also aimed several tweets at state legislators, noting school districts in their districts that could face cutbacks. In a tweet aimed at Arizona state senator Paul Boyer—a junior high school teacher—she noted that Washington Elementary School District could lose $25 million, while she told Arizona state senator TJ Shope that Coolidge Unified School District in his district could lose $2.9 million.

In her speech on Feb. 8, Hoffman told legislators they had just "21 calendar days to prevent students and families from waking up to the consequences of political indifference – and failing to act will harm students and families. 

"The money is already in district bank accounts, you are not adding new money or raising taxes – just letting them spend all the money you budgeted to them last year. There is no other choice but to suspend and repeal the cap," she said.