ARIZONA. Education Equalization Formula

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1 ARIZONA Education Equalization Formula The State of Arizona currently employs an Equalization Formula that determines the spending limit for school districts and charters. The formula is comprised of two components to determine the Basic State Aid for education. Basic State Aid is calculated by taking the difference of the Equalization Assistance formula, and the State Equalization Tax Rate. The State Equalization Tax Rate is calculated through Arizona s Truth in Taxation laws and is assessed by county. For FY 2018 the State Equalization Tax Rate decreased from $ to $ The Equalization Assistance formula is the difference between the Equalization Base and the Qualifying Tax Rate. The Equalization Base is the sum of three components: Base Support Level (BSL) Transportation Support Level (TSL) District Additional Assistance (DAA) formerly known as the Unrestricted Capital Outlay and Soft Capital Outlay. The BSL is the product of a school districts total weighted student count multiplied by the base level amount, multiplied by the teacher experience index. The base level amount is the level of support provided for each student. In FY 18 this amount was set at approximately $3,680, for FY 19 this amount is set to increase to approximately $3,960. The weighted student count is determined by size and location of a district or student group determinants such as language ability, special education status, or grade level. The teacher experience index allocates more funding, 2.25% each year, to a school district whose combined years of teacher experience exceeds the statewide teacher calculation. The TSL is calculated by multiplying a set dollar amount traveled per pupil by a school districts approved daily router mileage calculator. DAA is calculated by multiplying a set amount by a school districts weighted student count for school specific grades (K-8 or 9-12) and specific district sizes (less than 100, , 600 or more). The Qualifying Tax Rate, is a primary property tax rate employed by localities to determine the amount of revenue levied on the local constituency to support Arizona s Basic Student Aid formula. The maximum QTR FY 18 is $2.0234, down from $2.0793, for high school districts and elementary districts located within a high school district. The maximum QTR FY 18 for unified districts and elementary districts not located within a high school district decreases from $ to $ The Arizona state educational funding formula attempts to equalize per- 7

2 pupil spending across school districts by accounting for student enrollment and property value. By accounting for property value, the funding formula controls for per-pupil funding disparity across school districts due to property wealth. Additional State Funding Revenue Control Limit (RCL) The revenue control limit is the sum of the BSL and TSL. This is the amount used to determine the actual maximum expenditure level. The base level amount is set by state legislature in the Arizona Revised Statutes; $3, for FY 2018 and $3, for FY A.R.S allows for an increase on the RCL by 2% or by the change in the GDP price deflator for the most recent prior calendar year, whichever is less. District Additional Assistance (DAA) As of the Department of Education combined Soft Capital Outlay and Capital Expenditure funding (soft capital funds) into District Additional Assistance. DAA is calculated by multiplying a set amount by a school district s unweighted student count for particular grade ranges. The formula has six per-pupil amounts based on school size and grade. Table 1 shows the six dollar amounts and categories. Table 1. FY 2017 District Additional Assistance Per-Pupil Amount Less than 100 students K-8 $ $ Between 100 and 600 students K-8 $ $ students K-8 $ $ Classroom Site Fund The Classroom Site Fund (CSF) is distributed to school districts and charter schools on a perpupil basis in order to fund teacher performance pay (40%), teacher base pay (20%), and general maintenance and operations (40%). These funds are meant to aid districts in class size reduction, dropout prevention, teacher professional development, and for student academic intervention. A.R.S requires the Joint Legislative Budget Committee Staff to determine a per-pupil CSF amount; FY 2018 CSF estimated per-pupil amount is $386. Instructional Improvement Fund (IIF) Instructional improvement funds are those revenues collected from Native American Indian Reservation Gaming Operations, and may be used for teacher compensation, class size reduction, dropout prevention programs, and instructional improvement programs. In 2017, it was estimated that approximately $13 million from the Indian Reservation Gaming Operations will go directly to IIF. 8

3 Additional District Funding Small Size and Isolation Weights The density/ sparsity weights in Arizona have not changed substantially. Arizona establishes the base support level that includes weights applied for student level and district level characteristics. Currently districts with less than 600 average daily memberships (ADM) are considered small. If they are also isolated, they receive additional weights in order to provide more funding. In addition, if any district has than a 100 student count, they are eligible to budget for a small school s adjustment. This small school s adjustment is paid directly from the local tax payer through the primary property tax. Table 2 stablishes the isolation and small school weights applied to for elementary districts (K-8), while table 3 establishes those weights for secondary school districts (9-12). Table 2. Density Weights K-8 Student Count Isolation Weight Small School Weight [ x ( [ x ( [ x ( [ x (500- Table 3. Density Weights 9-12 Student Count Isolation Weight Small School Weight [ x ( [ x ( [ x ( [ x (500- Joint Technical Education There is a multiplier of added to the equalization formula for joint technical education support. Growth in enrollment Additional funding due to growth is available for School districts only because they are funded based on prior year Average Daily Membership (or student count). Growth is not available to charter schools as they are funded based on current year Average Daily Membership. Current year student growth based on a weighted student count in comparison to the prior year is paid in the current year up through the 100 th day. This growth increase also increases districts available Expenditure Budget Limit. Transportation Districts calculate a Transportation Support Level and in most cases receive state aid based on prior year s daily route miles per student transported. Table 4 shows the rates for travel; $2.59

4 per mile for districts with.5 miles or less per student, $2.12 for.501 to one mile and $2.59 for greater than one mile per student. Additional support is allowed for academic, vocational and technical education and athletic trips. This increase is determined by a factor based on district type and mile per student and varies from 10% to 30% over the support level calculated above. Table 4. Transportation support per mile Mileage Support.05mi or less $2.59 More than.05 less than 1.0mi $2.12 More than 1.0mi $2.59 Additional Student Funding Special Education. Funding is provided through eleven weighted student categories. Table 5 outlines the student multipliers added to the equalization formula for specific student educational needs. Table 5. Student Multiplier Weights Hearing Impairment K-3 Grade Level K-3 Reading support English Learners (ELL) MD-R, multiple disabilites; A-R,autism; and SID-R severe intellectual disabilities (Resource programs) MD-SC multiple disabilities A-SC autism, and SMR-SC severe intellectual disabilities (Self-contained programs) Multiple Disabilities & Severe Sensory Impairment Orthopedic Impairment (Resource) Orthopedic Impairment (Self Contained) Preschool-Severe Delayed as primary disabilities age 5 or younger DD developmental delay, ED emotional disability, MIID mild intellectual disability, SLD specific learning disability, SLI speech/language impairment, & OHI other health impairment ED-P Emotionally Disability (Private placement) MODI Moderate Intellectual Disability VI Visual Impairment

5 Low Income / Comp Ed / At-Risk No additional funding for low income students is provided. English Language Learner/Bilingual Education: Weight included in basic state aid calculations to provide additional funds. In FY 2018, the weight is Gifted and Talented Education There is no special equalization formula increase dependent upon the gifted and talented school enrollments. Career and Technical Education Pursuant to A.R.S the governing board of a school district may establish a permanent career and technical education and vocational education projects fund in an amount not to exceed $100,000. The fund shall consist of proceeds from the sale of items produced by career and technical education and vocational education programs. Monies in the fund may be used for the purchase of materials for use by career and technical education and vocational education pupils in an instructional program that produces a product that may be sold by the school district; the purchase of equipment, not to exceed five thousand dollars in any one fiscal year, for use by career and technical education and vocational education pupils in an instructional program which produces a product that may be sold by the school district; expenses directly related to the planning and design of career and technical education and vocational education program products. Preschool Education Early Childhood Education (ECE) is currently funded through state block grants pursuant to A.R.S of the education code. STEM (Science, Technology, Engineering, Math) Targeted STEM funding is appropriated toward rural districts pursuant to A.R.S The rural STEM program fund is established for the purposes of supporting science, technology, engineering and math programs in rural schools. The fund consists of monies appropriated by the legislature and grants, gifts, devises and donations from any public or private source. Other Not applicable Revenue and Expenditure Information State Mandates Restricting Revenue or Expenditure Increases Does not apply. Property Assessment Ratios Used/Legal Standards for Property Assessment 11

6 As stated above the maximum QTR FY 18 is $ for high school districts and elementary districts located within a high school district. The maximum QTR FY 18 for unified districts and elementary districts not located within a high school district is $ In order to determine the tax levy, the total primary assessed value is multiplied by a qualifying tax ratio, and the net assessed amount is then multiplied by the qualifying primary or secondary tax ratio. The amount is the property owner s property tax levy. In Arizona assessed valuations vary for different classifications of property, for FY 2018: Commercial (Legal Class 1) 18% Land (Legal Class 2) 15% Residential (Legal Class 3 & 4) 10% Measure of Local Ability to Support Schools Arizona currently employs a calculation of two separate property tax values for each parcel of property: Full Cash Value (FCV) and Limited Property Value (LPV). LPV cannot exceed full cash value and is calculated to reduce the effects of inflation. LPV (primary tax) is used to pay for basic maintenance and operation of a county, city or school district. FCV (secondary taxes are used to to pay for bonded indebtedness of a local jurisdiction, voter approved overrides of tax limits, and taxes levied by special taxing districts. A.R.S. section School District Budget and Tax Rate Procedures/Sources of Local Revenue County Equalization Tax rate is established by state legislatures to account for local county contributions to fund school districts. For FY 2018 the legislature shall not set a county equalization assistance for education rate that exceeds $ State Support for Nonpublic Schools Arizona currently has statutes for education voucher funds appropriated to those students in private educational facilities. There is currently an established special education fund consisting of legislative appropriations for purposes of special education in non-public districts/ schools. This fund provides funding to a state placing agency for a child who requires a residential special education placement. This funding is for the purposes of Initial residential education to fund the educational costs for any child, whether or not eligible for special education. For continued residential education that funds the educational costs for any child, whether or not eligible for special education, who requires placement in a residential facility after the expiration of the initial education voucher and who is not eligible for a residential special education voucher. Private facilities are eligible so long as they adhere to A.R.S Source: David G. Martinez, Assistant Professor. College of Education, University of South Carolina. 12

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