School spending needs math lesson

The Arizona Republic
Friday, March 21, 2003
Robert Robb

The discussion of education spending in the state tends to be generalized and selective.

For example, Arizona's relatively low ranking among the states in per-pupil operating expenditures is widely cited. But the fact that Arizona ranks first in per-pupil school construction expenditures is virtually never mentioned.

Nor does this high rank in capital costs result from making up for years of neglect, as sometimes claimed. Even before Students FIRST, Arizona ranked seventh in per pupil capital spending.

Spenders want a simplistic discussion and debate: Are you for or against education?

But the state's school finance system is extraordinary complex, with lots of moving parts. Carefully and fully examined, several of those parts are in need of reform.

The school finance formula limits what school districts can spend, roughly based on the number of students they have. That substantially circumscribes local control of education. But it's necessary to achieve equalization, which, rightly or wrongly, is the principle that drives education finance in the state right now.

School districts can ask voters for permission to spend slightly above what the state spending limits provide. But there are a couple of areas in which school districts have authority to impose additional local property taxes without voter approval.

Unsurprisingly, school district expenditures in these areas are rapidly increasing. And the state shares in the cost through the homeowner rebate, which subsidizes 35 percent of residential school district property taxes.

In Monday's special session on this year's budget deficit, the Legislature took action to rein in one of these runaway expenses, so-called "excess utility costs."

This program was started in 1986 and allows school districts to directly levy additional property taxes to cover utility costs that supposedly grow more rapidly than budget capacity under the state spending limit.

Since the program started, expenses that school districts have claimed as "excess utility costs" have skyrocketed by more than 700 percent, despite moderate to declining utility rates.

Eliminating the program over nine years was part of the education sales tax plan approved by voters in 2000 - some fiscal discipline the business community insisted on in exchange for supporting the tax hike.

Instead of beginning to phase out such expenditures, however, school districts have continued to escalate them, by 34 percent just since the ballot measure passed.

Last year, the Legislature capped such expenditures, but school districts finagled a way around it. So in the special session, led by Senate President Ken Bennett, R-Prescott, a harder cap at last year's spending level was adopted.

A politically more delicate example is desegregation expenses. School districts can also levy additional property taxes without voter approval to comply with a desegregation court order or a civil rights agreement with the federal government.

In 1984, there was only one school district in the state under a desegregation order. Although Jim Crow hasn't exactly been on the march in Arizona schools since, there are now 19.

Only one of the additional 18 came through the hard work of filing and winning a lawsuit. The rest are agreements reached with the civil rights office of the federal Department of Education, something districts are quite willing to do since it gives them unlimited access to local property taxes.

Spending has grown more than 2,000 percent without schools becoming any more integrated. This has contributed to another unremarked phenomenon in Arizona education finance. Most of our inner-city schools already spend considerably more than the state average. In fact, most already spend at or above the national average.

Reform measures (HB 2357 and HB 2358) have passed the House, championed by Republican Steve Huffman from Tucson, where the abuses have been the greatest. These cap such expenditures, limit what they can be spent on, require voter approval for future desegregation program levies, and eliminate the state subsidy. The legislative leadership budget would also eliminate the state subsidy.

Legislators are more willing to brave the political flak from reining in such programs because of their impact on the anemic state budget. Encouragingly, Gov. Janet Napolitano has said she won't veto the cap on excess utility costs passed in the special session.

Perhaps there will be an opportunity for a fuller and more sensible discussion of education spending after all.