The cracks in the school walls are still spreading. The fire alarms sound too often or don't sound at all. Mechanics struggle to keep old school buses running one more year. Budget managers try to figure out where the money will come from to fix leaky roofs, wheezing air-conditioners and broken vents.
Across Arizona, school districts struggle to find the funds to fix and maintain their buildings, in large part because state lawmakers over the past decade have countered laws and legal rulings meant to help all public-school facilities meet or exceed a basic standard.
Nearly 20 years ago, four cash-strapped Arizona school districts launched a landmark legal battle against the state's system of relying on local bonds to pay for building and maintaining schools. They argued that leaving it to local property owners to foot the bill for school facilities through bonds left poor and rural districts scrambling to get by in run-down buildings that fell far below the promise, carved in Arizona's Constitution, to provide a "general and uniform public-school system" for children across the state.
Arizona's Supreme Court agreed. Under court pressure, in 1998 the Legislature passed the Students First law requiring the state to pay for and manage construction of most new schools and school renovations. It created the School Facilities Board to oversee the process, and budgeted $1.3 billion to begin fixing or replacing the shabbiest schools. It set minimum standards that school facilities had to meet -- in effect, bridging the canyon that had separated the "have" from the "have-not" districts.
But almost immediately, the supports for that school-financing bridge began to crumble. Lawmakers balked at providing funding, calling the building-renewal formula too generous. The School Facilities Board has built more than 300 schools across this fast-growing state since 1998. But the funds to maintain and fix those buildings and hundreds of older ones have proven harder to come by.
Meanwhile, even districts that can turn to voters for bonds often struggle. Their ability to pass bonds that raise money for school repairs and new construction has been hampered by the years-long plunge in Arizona property values and by lawmakers' decision in 1998 to slash school-bonding capacity by two-thirds. Broader budget cuts to education in the last few years have added to the pressure.
The result is that the divide between the "have" and the "have not" school districts is widening.
An analysis by The Arizona Republic of school bonding and School Facilities Board financing over the past decade shows that the inequities that led to the Schools First lawsuit 20 years ago are returning. It shows that for over a decade, more than half of the 218 school districts in Arizona haven't or couldn't use bonds to fix or replace their deteriorating schools, and that nearly as many districts have essentially no building-renewal funds left. It also shows that by cutting state building-renewal funds while reducing bonding capacity, lawmakers have increasingly left property-poor districts to fend for themselves, and have hamstrung even large and relatively well-off districts that need money to keep their school buildings in good repair.
Specifically, the analysis found that:
69 percent of school districts with Class B bonding authority -- 141 districts -- either have not issued any bonds in more than a decade, have been shot down by voters every time they've tried to do so, or -- in the case of 31 districts -- have had voter approval but can't issue bonds because sagging property prices have left them over their legal debt cap. Statewide, school bond spending has plummeted to less than $500 million each of the past two years from $813.7 million in fiscal 2009.v
Over the past 10 years, 73 percent of school districts that can issue capital overrides have never done so or haven't been able to win voters' approval.
Looking forward, more than 90 percent of Arizona school districts say they have no plans to seek a bond issue or a capital override. In most cases, officials say it's not because they don't need the money, but because they see no prospect of winning voter approval.
As a legislative moratorium on building-renewal funding reached its fourth year, school districts saw their pool of building-renewal funds all but disappear. At the end of the last fiscal year, 56 percent of school districts had less than $10,000 in building-renewal funds.
Statewide, remaining building-renewal funds available through the facilities board fell 61 percent over the last fiscal year, to $8.7 million from $22.1 million. That figure does not include $2.66 million available in an emergency facilities fund; but that money has been almost fully committed.
The findings are based on data from more than 220 public-information requests and interviews by a team of 11 Republic reporters.
Dueling budget plans
In her budget for fiscal 2013, Gov. Jan Brewer has proposed to shore up school financing by scrapping the building-renewal formula, which lawmakers haven't funded for four years. Instead, she wants to provide $100 million for renovations over the next three years, and to have the Facilities Board create a statewide schedule to replace school facilities based on their projected "life cycles." Second, she would double school districts' bonding capacities. And third, she would change the standard for when the state would pay to build new schools by looking first to see if there are available spaces for students at other schools within a 10-mile radius -- even if the schools were in another district.
Meanwhile, Republican legislative leaders, including Senate President Steve Pierce, House Speaker Andy Tobin, and appropriations chairs Sen. Don Shooter and Rep. John Kavanagh, have proposed an alternative budget that cuts the governor's three proposed changes and would continue to provide just $2.7 million in emergency-repair funds to the School Facilities Board.
Tim Hogan, who represented the school districts that filed the 1994 lawsuit, said there's nothing illegal about dropping the building-renewal formula and finding another way to ensure that every district has adequate school buildings, facilities and equipment. But he worries that these measures will make the problems worse at the districts that need the most help, and would widen the gulf between wealthy and poor districts.
"This is their way of coming full circle, right back to where we were before Students First," said Hogan. "It forces school districts to rely again on their property-tax bases ... And this new school thing is ... just crazy. I'm going to put my kid on a bus 10 miles to go out of district? Are you kidding? The idea, apparently, is that neighborhood schools are fine for districts that can afford it, otherwise you're going to be overcrowded."
John Arnold, who as director of the Governor's Office of Strategic Planning and Budgeting helped design the new school-financing proposals, insists the changes aren't as dramatic as they seem, and that property-poor districts won't be shortchanged. "We still have a minimum adequacy standard funded by the state, and the possibility for a district to go above that standard," he said.
Lawmakers are still chewing on these ideas. "It is a huge shift in thinking," said Republican Sen. Rich Crandall of Mesa. "I'm not sure I'm excited about any of these options. They've shifted the burden back to the taxpayer to say, 'If you want a new school, the state isn't going to pay for it if there's capacity.' " Then too, said Crandall, "the districts or parents would have to absorb the transportation costs. And, if you have children, you know it's not even the daily travel, but where all their friends are."
Behind the numbers and rhetoric, the education of more than 1 million students in Arizona's public-school system is at stake. It's clear the current school-facilities funding options fall short for many schools.
At Cave Creek's overcrowded Cactus Shadows High School, students on their way to Spanish or French classes have to scramble across a wash and around a construction site to get to the nearby elementary school where their classes are held, because there hasn't been enough classroom space in their own building for four years. At lunch, most of the 1,800 students wait in long lines and then eat in classrooms because their high-school cafeteria can hold only 400 students.
At Fredonia High School, on the Kaibab Plateau near the Utah border, a few inches of snow blanket the ground. Students waiting for P.E. class to begin hover near a space heater in a corner of the gym. Teachers roll portable space heaters from classroom to classroom as needed, depending how well the old, balky heating and air-conditioning system is working on any given day. School officials haven't been able to come up with the $300,000 they need to repair the system. During monthly fire drills, teachers have to remember to stop by several classrooms where the fire alarm can't be heard, to let students and teachers know what's happening. The best estimate to remedy that situation is $70,000 to repair and upgrade the fire-alarm system, said Dorene Mudrow, business manager of the Fredonia-Moccasin School District.
At Elfrida Elementary School District, in the small town of the same name east of Tombstone, Lupe de la Cruz works to keep two old Bluebird school buses running, despite the daily pounding they take on rutted dirt roads. "He's an amazing mechanic who does an amazing job of keeping them going," says Vicki Brand, Elfrida's superintendent. A new bus, at $100,000, is out of reach; the district has only $20,000 in capital funds. "We're trying desperately to accumulate a trickle of money to be able to pay for something like that," Brand says.
At Palo Verde Elementary School, west of Phoenix, as at Camp Verde High School, 50 miles south of Flagstaff, administrators say they have had to put off buying new textbooks because they need the money for repairs.
Funding out of reach
In theory, all of these and other school districts that need capital funds, either for new facilities or to renovate or repair existing ones, have two main options: They can ask voters to approve school bonds or capital overrides, or they can seek funds from the School Facilities Board.
For most districts, all three funding sources have become purely theoretical.
The Republic's analysis showed that 141 Arizona school districts, or 69 percent of the districts that theoretically can issue bonds, essentially can't. That includes 108 districts that haven't issued a bond in more than a decade, or have been shot down every time they've tried. In many of these districts, the assessed property values are so low that to raise any meaningful amount of money, they would have to ask voters to approve unrealistically high tax rates. When voters approve a school bond, they're agreeing to raise their property tax rates to pay the interest on the bond; that's how bonds are repaid. The lower the assessed property values in a district, the higher the tax rate has to be to repay a bond. And property values vary enormously.
As of last fiscal year, secondary assessed property values (on which bond rates are calculated) ranged from the equivalent of just $514 per student in Pinon Unified School District in northeastern Arizona to nearly $2 million per student at Walnut Grove Elementary School District, southwest of Prescott, according to the Arizona Tax Research Association. Taxpayers in the most property-poor districts would have to pay rates as much as 37 times higher than the richest districts to raise the same amount.
When contacted by The Republic, officials at many districts couldn't even say what their bonding capacity was, nor when, if ever, their district had issued a bond, because getting approval for a bond hasn't been a realistic prospect. Fewer than one in 10 of the 186 districts that responded to The Republic's request for information said they plan to or are even considering seeking bonds or capital overrides.
"The idea that we could pass a bond out here is ... is ..." said Mary Love, business manager of the Morristown Elementary School District, near Wickenburg. Her voice trailed off for a moment. "I think we would be dreaming."
The district consists of a single K-8 school with 150 students. After the Students First law, Morristown was among the first districts to receive a new school building, completed in 2001. But now, district officials are trying to figure out how to repair structural problems that are apparent from the horizontal cracks, 6 feet long and a quarter-inch wide, that are forming along the sides of the building's exterior stucco walls.
Love said she has no money in the budget to address the structural issues. She hasn't submitted a formal request to the School Facilities Board for emergency funds because she knows those funds have dried up.
"They want to do something for us," Love said, "but their hands are kind of tied, too."
The Elfrida district faces the same dilemma. "We don't do bonds or overrides in our district; I can't imagine going to our taxpayers to ask for more money," says Brand, the superintendent. "We have a high poverty rate, and we're too small. It wouldn't work for us, so we just have to pay as we go."
Then there are districts such as Cave Creek Unified School District, where the property-tax base is solid -- but so is the opposition to increased taxes. "We have 4,000 parents in a district of 40,000 voters," says Debbi Burdick, the superintendent. "Many are retired or tell us philosophically they don't believe in taxes."
Since 2000, when Cave Creek voters approved a $41 million bond for construction of new schools, support has withered. After the Legislature in 2010 passed a law to allow some school districts to redirect unspent bond funds, Cave Creek Unified tried to use $13 million it hadn't spent from the earlier issuance to fix air-conditioning systems and buildings damaged by rainstorms, among other renovations. But the Goldwater Institute won a lawsuit against the district, holding that the bonds couldn't legally be redirected in that manner. The district is preparing an appeal. Then in November, voters shot down the district's request for an override.
"We have a critical issue with fire alarms going off at the wrong time," says Burdick, "and we will appeal to the School Facilities Board for emergency money for those." The other projects, including additional classrooms and a larger cafeteria, will have to wait, because, Burdick said, voters have made their opposition clear. "At this point, we don't see that we're going to change that mind-set," she said.
Stuck with bond debt
Twenty districts have a different problem. Their voters approved bonds that can't be issued because of the sharp decline in Arizona property values. When the Students First law passed, lawmakers decided that districts would need fewer school bonds. They slashed districts' bonding capacity by two-thirds, to 10 percent of the secondary assessed valuation for unified districts, and 5 percent of that valuation for elementary and high-school districts.
Districts don't generally issue their bonds all at once, but over the course of several years. So when Arizona property values dropped precipitously over the last few years, some districts' bonding capacity, which is a percentage of their property values, fell below the amount they owed on bonds already issued. Dysart, Higley, Roosevelt, Queen Creek and Tempe Elementary, among other districts, are stuck, and can't issue bonds until they pay down their bond debt or their assessed property values bounce back.
"There are plenty of districts that won't get there for a long time," said Randie Stein, a bond analyst at Stone & Youngberg Finance Co.
Last year, Sen. Crandall of Mesa pushed through a bill to temporarily double school districts' bonding limits; but legal questions about the temporary exception prevented the law from actually being used. That's part of the reason the governor is calling for doubling the bond limit. While about two dozen school districts appear likely to benefit from that proposal, there are some who fear that what the governor's proposal gives with one hand, it will take away with the other, and then some.
According to the Governor's Office of Strategic Planning and Budgeting, Laveen Elementary School District would go from having a $4.9 million shortfall in bonding capacity, because of its debt, to having an additional $5.9 million in capacity if existing bonding limits were doubled. However, under the governor's plan, which requires that there be no capacity available within a 10-mile radius before providing state funds, Laveen would receive no state money for new schools for the next three years. Under the existing approach, it would receive $12.8 million from the School Facilities Board.
"We're expected to double in size before the district is built out; that could be six more schools," says Bill Johnson, Laveen Elementary School District's business manager. "From what I understand, Laveen has a good chance of not qualifying for any funding from the state for any of those six schools because our 10-mile radius includes some districts that are older and mature and not growing." He says it isn't a fair, consistent approach to school funding. At least six other districts expecting roughly $37 million in funding for new schools also would receive nothing under the governor's plan -- and that's the whole idea: to "force new construction funding decisions back to the local school board and its community," as the executive budget states.
The other primary source of funds for renovations and repairs, the School Facilities Board's Building Renewal Fund, has only been fully funded in one year: 2001. Unhappy with the funding formula, lawmakers have put in no money at all the last four fiscal years, instead dropping a few million dollars each year into a small grant fund for renovations and repairs. As a result, over the last four years school districts have received 2 cents of every dollar that they were supposed to receive for renovations and repairs. Many districts tried to squirrel away the partial funding they'd received in prior years; but most have had to spend that money on repairs, and a majority of school districts have less than $10,000 left, an amount that can easily be swallowed by the failure of a single air-conditioning condenser.
"The majority of our facilities are over 50 years old, and some are over 100 years old," says Darwin Stiffler, superintendent of the Yuma Elementary School District, which encompasses 2,200 square miles. Stiffler is wrestling with declining enrollment and the need to close schools in some parts of the district, and growing enrollment and the need to build schools in other areas.