School districts will have to dig deeper in their own pockets to pay electricity, water and telephone bills for the next two years, thanks to a new legislative cap on excess utility funding for the schools.
Large districts say the money - millions of dollars that would ordinarily come from an excess utility tax levied by the districts as a portion of local property taxes - will have to come from the same pool of money that districts use to pay for salary increases, new positions, supplies and special programs.
"I'll have to cut from the classroom," said Clyde Dangerfield, an assistant superintendent in the Gilbert Unified School District. "It's the only place to get the money."
But a pro-business watchdog group says homeowners and businesses should not have to shelter school districts from poor management of their utility bills.
"There is no limit on what districts can spend," said Kevin McCarthy, president of the Arizona Tax Research Association, which lobbied hard for the legislative cap. Some districts use the excess tax and some don't, he said, which creates inequities in what property owners pay from district to district.
In 1984, when utilities costs were escalating at a rate that school districts could not manage, the legislature allowed them to levy local property taxes in excess of their normal budget growth. For example, if a district's overall budget grew 6 percent and its utilities costs 9 percent, the district could tax local homeowners and businesses for the 3 percent difference.
The new legislation prohibits districts from collecting more for excess utilities costs for the next two school years than they budgeted in 2001-02.
For large districts with growing populations, it's a big hit.
Mesa Public Schools paid more than $10 million in utilities fees in the 2000-01 school year. About $1.5 million came from the excess utility tax.
"We're going to have to be very careful looking at energy in the next two years," said Dave Peterson, director of operations. "We're opening a brand new school this coming year (Zaharis Elementary) and we're going to have to absorb the cost of operating it."
The Paradise Valley Unified School District paid $9.2 million in utilities costs last year, $2.8 million of which came from the excess allowance.
Jim diCello, assistant superintendent for business, predicts that the district will be able to cover utilities costs in 2002-03 but may have to pull as much as $200,000 from its maintenance and operations budget the following year.
"It's going to cut into salaries in the future," said diCello, noting that utilities and health insurance could easily consume the district's available money each year.
In the Gilbert Unified School District, where utilities ran $7 million last year, $3 million was paid by the excess utility tax.
That means Gilbert, which averages a utilities increase of about $300,000 per year, will have to come up with at least $600,000 from its own budget, said Dangerfield, assistant superintendent for business and legal services.
The excess utility tax will die at the end of the 2008-09 school year.
With that deadline looming, districts should be planning and budgeting now, said McCarthy of the Arizona Tax Research Association. Statewide, district utilities bills overall rose from $60 million, to $68 million last year, according to the association.
McCarthy also said many districts increased their excess utilities budgets just days before the May 15 deadline, with the intent of increasing their budget capacity during the freeze.