Arizona schools are suffering from a combination of lower public investment, higher child poverty and rising enrollments. This is the result of a multiyear effort by Republicans and allies like the Goldwater Institute to cut taxes for the rich in a manner that forces schools to make tough choices while the state’s richest households do better than ever. The legislature should make a bold investment in public education with reliable and sustainable revenue sources; K-12 education in the state remains over $1 billion below 2008 funding levels when accounting for inflation and population growth. The Governor’s budget proposal to restore millions in classroom and building funding is an insufficient response to this ongoing crisis.
To: Ralph Quintana, President, AFT Arizona
From: Michael Piccinelli, Senior Associate
Research and Strategic Initiatives
Date: March 5, 2018
Subject: Arizona Budget
Introduction—Arizona schools are suffering from a combination of lower public investment, higher child poverty and rising enrollments. This is the result of a multiyear effort by Republicans and allies like the Goldwater Institute to cut taxes for the rich in a manner that forces schools to make tough choices while the state’s richest households do better than ever. The legislature should make a bold investment in public education with reliable and sustainable revenue sources; K-12 education in the state remains over $1 billion below 2008 funding levels when accounting for inflation and population growth. The Governor’s budget proposal to restore millions in classroom and building funding is an insufficient response to this ongoing crisis.
Revenue—Lower Taxes For the Rich—Arizona’s tax cuts benefit the rich and leave the rest of us holding the bag. According to the Institute on Taxation and Economic Policy, Arizona has the eighth most unfair state and local tax system in the country. The poorest 20 percent of Arizona residents (who earn an average income of $13,100) pay 12.5 percent of their income to state and local taxes, whereas the richest one percent (who earn more than $400,000 a year) pay 4.6 percent. Seventeen states have a lower tax responsibility for the one percent. Only four states tax their poorest residents more heavily than Arizona.[i]
Moreover, the one percent in Arizona stands to reap a windfall from the recently enacted Tax Cuts and Jobs Act. Arizona’s richest will receive 29% of the tax cuts, with an average decrease of over $54,000 in their tax bills in 2019. Meanwhile, the bottom 60%, or all resident making less than $62,000 will see a slight tax increase in 2027.[ii]
As documented by Children’s Action Alliance, the Arizona’s Individual income tax has fallen by 35 percent since 1990.[iii] The state corporate income tax collections will be the lowest since 1993. The sales tax—the most regressive tax of the three main types of state taxes that fund most of state government—has only seen a small increase approved by voters, and is riddled with loopholes for things like fine art out-of-state purchases, private jet timeshares, and horse vitamins.[iv] Little surprise that since 2003 the state’s top one percent have seen their share of family income that go to state and local taxes drop from 4.9 percent to 4.6 percent.
Along with low rates on persons and business, the state has also been very generous with tax credits, tax expenditures, and corporate subsidies. All of the state’s tax credits cost the state budget $618 million in 2017, with the state’s expansion of private school tuition tax credits being particularly costly for both the state and public schools.[v]
Working Arizonans Are Still Struggling—It is important to understand the state budget—and the funding of public education—in the context of the state’s working people. Even as the “official” end to the economic crash in June 2009 becomes more distant[vi], the state is still dealing with the harms. Consider:
· There were 960,105 Arizonans receiving supplemental nutritional assistance in 2016, still above the state’s peak of 894,269 in 2009 and almost double the 554,389 recipients 2007.[vii]
· Arizona ranks 46th among states in childhood poverty and well being in the Annie E. Casey Foundation Kids Count Report. Twenty four percent of Arizona children live in poverty, well above the national average of 19 percent.[viii]
· The number of children in foster care has nearly doubled in the past six years.[ix]
More of our children are in need of both instructional and non instructional supports than before the recession. Arizona continues to be one of the top ten states in the country in year over year population growth.[x] The state’s public school enrollment increase by 3 percent from 2009-2014, and total public school enrollment is expected to increase by 13 percent by 2026, well above the national projection of 3 percent.[xi]
A Funding Crisis—According to the Grand Canyon Institute, “compared to 2007 after adjusting for population growth, inflation, and continued use of accounting maneuvers, Arizona faces nearly a $5 billion deficit relative to state revenue at that time. Effectively, the state has about $3 for every $4 it had in FY2007 when adjusting for both inflation and population growth.” This is a result of tax cuts and an economy that has lagged its neighbors like California, Nevada, and Colorado in job growth.[xii]
These dynamics have increased the stress on Arizona families while limiting our ability to help. In particular, children in poverty need more intensive supports, including smaller classes, provision of health and counseling services and summer learning opportunities. Yet less and less money has been available. From 2008-2018, Arizona cut state funding per student by 13.6 percent, the fifth highest cut in the states.[xiii] The state has shorted its children almost $950 million in classroom operational funding since 2008, while continuing to expand private school choice programs. According to the Grand Canyon Institute, just one program, private school tax credits amounted to $150 million in 2017 and “cost the state around $10,000 from the General Fund for each new private school student who would not have otherwise enrolled….This amount far exceeds the amount allocated from the General Fund per student to public schools.”
Arizona lags behind the national average for almost every category of school spending: classroom instruction, administration, student support, and instructional support.[xiv] The state has eliminated state funding for all-day kindergarten and overhauled the formula to fund school repair and maintenance to the detriment of school districts. And, the legislature has offered no fair and sustainable revenue plan for the $600 million the state will lose when Proposition 301’s sales tax increase expires in 2020.
These funding drops have held back the state and contributed to an alarming teacher shortage in the state. A survey of 172 school districts and charter schools by the Arizona School Personnel Administrators Association found in 2017 that “more than 62 percent of the state’s nearly 8,600 teacher vacancies this year have either not been filled or they were filled with people who couldn’t qualify for a standard teaching certificate.” The survey found that state was short 1,968 teachers in 2017, and that 866 teachers left schools during the first four months of the school year. [xv] A report by the Morrison Institute for Public Policy found that median pay for elementary school teachers is 14% less than in 2001 after accounting for inflation and median pay for secondary school teachers is 11% less. The report found that, after adjusting for the cost of living, elementary educator salaries are the lowest in the nation and high school teacher salaries are 49th.[xvi]
Bold Action Is Needed—The state needs bold action, not small improvements in classroom funding and building construction and maintenance. Schools need $1.5 billion in additional funding this year to restore the education budget to its prerecession levels with big investments in early child education, full day kindergarten, building maintenance, for classroom supplies, teacher salaries and teacher development. Without these, Arizona will continue to grapple with teacher and support staff shortages, antiquated facilities, and unrealized student potential. [xvii]
MP : cw
cc: Ed Muir