Maricopa County Superior Court Judge Katherine Cooper last Friday issued a decision on inflationary funding for the state’s K-12 schools that will have far-reaching implications for state budgets for years to come. Here are some questions and answers:
1) What did the judge rule?
Judge Cooper ruled that the base level funding for Arizona’s K-12 public schools should be $3,560 per pupil in fiscal year 2014. That dollar figure represents what the base level funding would have been had the state been accounting for inflation in fiscal years 2009 to the present as required under Proposition 301.
2) What led the court to make this decision?
The Arizona Supreme Court in 2013 ruled that the Legislature violated Proposition 301 when it failed to make inflation-adjusted payments to K-12 schools as required under the voter-approved measure from 2000. The Supreme Court sent the case back to Superior Court to determine what the base level funding should have been for fiscal years 2014 and forward. The Superior Court was not ruling on the merits of the argument of whether the state violated Prop. 301; it was only ruling on the financial settlement for the plaintiffs.
3) The case was Cave Creek v. Martin,et al. Does this affect all schools, or just those in the Cave Creek School District?
This ruling affects all schools. According to Judge Cooper’s ruling:
School districts are political subdivisions of the State. They are bound by the result in this action whether joined or not. The State takes the same position with respect to all districts, not just the Cave Creek plaintiffs
4) How much money are we talking about?
Here’s what the court found the base level amounts should have been:
Fiscal 2009-10: $3,357.25
Fiscal 2010-11: $3,397.54
Fiscal 2011-12: $3,428.11
Fiscal 2012-13: $3,496.68
Fiscal 2013-14: $3,559.62
Fiscal 2014-15: $3,609.45
For the current fiscal year 2015, the state is required to make a payment of an additional $317 million to schools.
5) When is the payment due?
The Ruling to adjust the base level an additional $317 million is effective immediately. However, when the Legislature will react to the ruling and actually make the adjustment is unknown at this time.
6) Does the state have the money?
If necessary, there is $459 million in the state’s rainy day fund, but things get murkier in future budget years. Tough decisions await the Legislature and governor, though some potential options are emerging.
7) How does this affect charter schools?
Charter schools are public schools, so the base level funding for charters is also reset at $3,560.
8) This inflationary funding requirement is the result of Prop. 301. When does Prop. 301 expire?
Proposition 301, which voters passed in November 2000, expires in 2020.
9) What’s next?
An evidentiary hearing awaits to discuss whether the state also owes $1.3 billion in back payment for the years when the base level funding was not adjusted for inflation.
According to the judge’s ruling:
An evidentiary hearing is necessary on two issues regarding disbursements. First, the court must determine whether the facts support the disbursement of yesterday’s funds today. It is the Court’s understanding that, had the adjustments been made timely, the funds would have paid teacher salaries and other recurring costs for a given fiscal year. Obviously, funds released today will not be used to compensate teachers between 2009 and 2013. Cave Creek contends that the school districts will put the money to good use to purchase such things as books, computers, and building improvements. The court must determine whether equitable relief in the form of disbursements is warranted under these circumstances.