Amid the passage of historic school choice legislation in Arizona, the educational opportunities available to students and families today are unparalleled with the state’s universal ESA program. In addition to providing Arizona families with voice, choice, and agency in their child’s education, the ESA program has the potential to save Arizona taxpayers considerable funds from future school district bond and override measures.
However, to realize these savings, a long overdue conversation about rightsizing Arizona’s public schools is necessary. Despite significant population growth within Arizona, the enrollment forecasts for most school districts anticipate a period of long-term decline due to lower childbirths, affordability, and alternative options. This demonstrates a pressing need to review the budgets and assets of public school districts and align them with future enrollment projections.
Given the significant competition from the rise in homeschooling, as well as charter and private schools, public schools are no longer the only game in town. As a result, greater scrutiny from local taxpayers is needed in holding school districts fiscally accountable by questioning their need for additional funds through bonds and overrides.
What Are School Bonds & Overrides?
School bonds are loans that school districts sell to investors, who are repaid through the district’s future property taxes. These bond funds have specific limitations on their use and cannot be used to increase staff salaries. In most instances, these funds are leveraged for infrastructure projects involving the construction of new facilities or upgrades to existing ones. In contrast, overrides go directly to school districts and can be used for staff salaries and various programs outlined by the district requesting the override.
This November, a total of 23 school districts in Maricopa County will have bond and/or override measures on the ballot. Among these 23 districts, at least 4—Kyrene Elementary School District, Mesa Unified School District, Gilbert Unified School District, Scottsdale Unified School District—are in dire need of rightsizing before requesting additional funds from taxpayers based on their pronounced decline in enrollment.
In particular, Mesa USD, the state’s largest school district, enrolls fewer students today than it did in the fall of 1990. Yet, the district’s real estate portfolio somehow contains 78 schools, in addition to various non-instructional facilities and offices throughout the city. Mesa USD, as well as surrounding districts in similar positions, need to do right by taxpayers in exploring the sale of underutilized real estate before passing the buck to taxpayers.
As seen in the table below, only Gilbert USD has shown an increase in enrollment since the fall of 2000, and none of the districts can report an increase in enrollment in the last 10 years. Given the growth in ESA adoption and charter school enrollment, the pragmatic move is to respond to these declines now by rightsizing these districts, pursuing the sale of district assets, and removing administrative bloat.
Among the clearest signs of waste and inefficiency can be found in the amount of unspent federal pandemic relief funds provided to schools around the country. In the case of the 4 school districts requesting additional funds from taxpayers, they collectively still have access to tens of millions in unspent, flexible funds that are set to expire in a year.
What this experiment in “helicopter money” confirms is that the problem ailing local school districts is not a lack of funds, but rather their inability to direct funds efficiently. In the absence of a public monopoly, this decline in public school enrollment will continue to eat into taxpayers’ wallets with the additional forces of demographic shifts, affordability, and competition from the growing number of viable and efficient alternatives in the form of charter schools, private schools, microschools, and homeschool co-ops.
In adjusting to this historic era of school choice, the need for fiscal accountability remains essential on behalf of public school districts that have been reluctant to change and control their costs. To avoid perpetually funding buildings and bureaucracy, local taxpayers and residents must ensure their voices are heard.
Arman Sidhu is a lifelong Arizona resident and previously worked in K-12 education as a principal and teacher. He currently leads a nonprofit microschool.
Up to 62 percent of Arizona’s public-school districts and charters have no written plan for maintaining current operations once relief monies run out next September.
Most districts’ lack of preparedness was revealed in an auditor general special report issued last week. 55 percent of those districts and charters revealed the absence of a plan in an auditor general report, with another seven percent failing to respond to the auditor general’s request for a written plan.
The COVID-19 relief funds presented an overall boon to public school districts and charters: from 2020 onward, district fund balances increased by 34 percent ($1.13 billion) and charter fund balances increased by 115 percent ($310 million).
However, the true amount of funding spent or remaining remains a mystery for over one-third of the schools. 213 districts and charters (36 percent) reported relief monies contradicting their reported fund balance.
The auditor general specifically named Gilbert Unified School District (GUSD) and Portable Practice Education Preparation (PPEP) for reporting to have spent all $41.5 million and $4.8 million of their relief funds, respectively. However, the auditor general found that GUSD had used $30.4 million for continuing costs, $24.7 million for salaries and benefits, and a fund balance increase. The auditor general also found that PPEP had only reported $2 million spent for employment retention salaries and benefits with student count declines, and a fund balance increase.
Due to the lack of transparency, the auditor general promised to add additional fund balance/reserve reporting to district and charter fiscal year 2023 annual financial reports and fiscal year 2025 budget forms.
Additionally, 9 districts and 16 charters haven’t corrected their cited noncompliance with statutory reporting requirements. In January, that number was 21 districts and 64 charters. 27 districts and 26 charters didn’t submit required follow-up reporting.
Districts and charters reported spending $2.2 billion of the $4.6 billion in relief funding through last June. The Arizona Department of Education (ADE) only spent 21 percent of its discretionary relief funding as of last June, leaving a remainder of $322 million (79 percent).
The district that received the most relief funding was Mesa Unified School District at $291.6 million, followed by Tucson Unified School District (TUSD) at $289.15 million, Phoenix Union High School District at $182.21 million, Cartwright Elementary School District at $124.76 million, Washington Elementary School District at $119.51 million, and Alhambra Elementary School District at $103.74 million.
Details on school expenditures using COVID relief funds remain murky at best. While the auditor general successfully categorized a number of expenditure types for schools — maintaining operations, mental and medical health, personal protective equipment, technology, school facilities, and food service — there remained the “miscellaneous” or “other” category of expenditures, totaling nearly $121.4 million already spent and over $196.45 million planned for future use.
“Miscellaneous” spending on classroom salaries and benefits totaled $21.66 million, and $23.63 million for other classroom spending. Non-classroom salaries and benefits classified as “miscellaneous” totaled $4.77 million, and $70.8 million for other “miscellaneous” non-classroom expenditures.
As AZ Free News reported last year, districts like Mesa Public Schools (MPS) refused to divulge how millions were issued in expenditures behind labels like “indirect costs,” “other,” and “etc.” MPS claimed it couldn’t produce records that didn’t exist.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
The Gilbert Public School District’s recent notice that 152 teachers, school counselors and nurses, and administrators will be without jobs for the 2021-2022 school year may have upset the staff, but issues with the district’s falling enrollment and worsening financial situation is nothing new.
In a letter sent last week to all staff, Superintendent Dr. Shane McCord noted “it is imperative that student needs remain at the center of our decision-making, and that we remain fiscally responsible to ensure the long-term success of our students, our employees, our schools, and our district as a whole.”
Earlier this month the Arizona Auditor General issued a District Spending Report which noted Gilbert Schools had a projected student enrollment of 33,360 at the beginning of the 2020-2021 school year across 39 schools in Chandler, Gilbert, and Mesa. That enrollment represented a six percent decrease from five years before, even though population within the district’s boundaries has grown.
But in December, the district’s governing board was informed that the 2020-2021 budget -based on 33,360 students- had to be revised for an actual enrollment of less than 29,000. In fact, the nearly 3,900 fewer students resulted in a revenue reduction of $26 million, Assistant Superintendent Bonnie Betz said at the time.
“Statewide, there’s been a 40,000-student loss across the state,” Betz said. “The pandemic has had a significant impact on enrollment statewide.”
Some former Gilbert Schools students went to other districts or charter schools between July 2020 and December 2020, but even the larger Mesa Public Schools announced 3,500 fewer enrolled students during that same period. And the Arizona Department of Education recently announced that statewide enrollment for preschoolers and kindergarteners dropped off more than 40 percent over the last year.
Such decreases are expected to continue, contrary to hopeful claims by some within Gilbert Schools who believe enrollment will recover in the upcoming school year through an increase in primary grade students.
“While some parents of kindergarten and first grade students delayed the enrollment of their children this year in order to spare them the uncertainty created by the pandemic, the Gilbert district’s last minute decision-making has created an atmosphere of distrust that sent parents looking elsewhere,” one parent told AZ Free News.
It appears a majority of those students went into homeschool programs, which became popular -and in many instances necessary- for parents in response to districts kept changing their educational offerings during the pandemic.
Reaction from some teachers and legislators to McCord’s decision has pointed to the fact that the Gilbert Schools could have decreased class sizes instead of laying off teachers, even though the Arizona Auditor General report shows the district’s student to teacher ratio currently stands at 17.5 to 1, below the state average.
Voters in the Gilbert District approved a $100 million bond in 2019 to help build two new schools. There was also a 15 percent property tax override approved to help reduce class size and attract / retain teachers.
That doesn’t count the $2.3 million in federal funds passed along by the state to Gilbert Schools under the Elementary and Secondary School Emergency Relief (ESSER) Fund covered by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Or the $9.7 million of ESSER II funds awarded to the district under the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act in late 2020.
But with fewer enrolled students the district is not getting as much of that money as expected, which has been further exasperated by state education officials who decided to fund distance learners at a lower rate than in-person students.
If enrollment numbers rebound for the next school year then those who were not offered positions will be able to reapply.
“Gilbert Public Schools, along with many other school districts, faces a reduced number of students going into the next school year following the global pandemic. Decisions like this are not easily made, and as a school district, we greatly value all of our employees and their contributions. We continue to make every effort to increase enrollment for next year and it is our hope that many students lost during this pandemic will return to our schools over the next year.” – Gilbert Public Schools Superintendent Dr. Shane McCord
