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11/28/2012 6:01:00 AM
Unsure Fiscal Future
With one fix in place, Kingman schools await full budget picture
Kingman Middle School students are pictured Tuesday in Marilyn Westercamp’s full seventh-grade class of over 30 students. About 85 percent of KUSD’s general fund budget pays for the salaries and benefits of district staff, including teachers and administration. Roughly $50,000 is enough to pay one teacher’s salary and benefits.
Kingman Middle School students are pictured Tuesday in Marilyn Westercamp’s full seventh-grade class of over 30 students. About 85 percent of KUSD’s general fund budget pays for the salaries and benefits of district staff, including teachers and administration. Roughly $50,000 is enough to pay one teacher’s salary and benefits.

Ahron Sherman
Miner Staff Reporter

The passage of Proposition 118, known as the permanent funds amendment, means an additional $8.4 million will be dispersed from the state's $3.67 billion Permanent Land Endowment Trust Fund to Arizona public schools for fiscal year 2013.

That may seem like a great deal of money, but at the individual district level, it really isn't. Spread evenly among the state's public school districts, it translates to about $50,000 each, said Kingman Unified Finance Director Wanda Hubbard.

"That's enough money to hire one teacher and pay (his or her) benefits," she said.

However, it's all speculation at this point, and Hubbard decided to hold off on making any value judgments about the money until she sees Gov. Jan Brewer's budget in January, which should give KUSD as well as districts across the state a better idea of just how much funding they'll receive from the state.

Proposition 118, approved by voters earlier this month, deals with only one aspect of public school funding.

Any time the state sells a piece of its land the proceeds are deposited in the land fund. The fund is invested and the annual earnings are doled out to its 14 beneficiaries, including K-12 public schools. The proposition amended the formula used to disperse those market earnings to make the year-to-year funding more consistent and reliable.

"Fixing this formula is good news for our public schools and for taxpayers," said State Treasurer Doug Ducey. "After we discovered that the old formula would cause continued budgetary uncertainty, we received broad bipartisan support in the Legislature and from both the business and education communities to make sure Prop 118 was passed by the voters."

From the state's inception to 1998, the fund, which is managed by Arizona's Treasury Office, was invested solely in fixed income products, such as U.S.-backed bonds, said Kevin Donnellan, the legislative liaison for the Treasury.

In 1998, voters gave the state permission to invest the fund in the stock market as well as in fixed income products, he said. The investment is split 60/40 between the stock market and fixed income products.

Along with the change in investment plans, the original funding formula was added to the State Constitution. Its goal was to protect each year's distribution from inflation, but instead, it created peaks, valleys and budget uncertainty that came to a head in 2010, when the fund dispersed zero dollars to its 14 beneficiaries, he said.

Proposition 118 simplified the formula, using a flat distribution of 2.5 percent a year based on the fund's market value from the previous five years.

"We needed to make sure there's never a year where zero dollars go to education," Donnellan said.

Had Prop 118 not passed, the state would've dispersed $54 million to K-12 public education for fiscal year 2013 from the trust. Instead, it'll distribute $62.4 million because of the formula change, he said.

The State Land Department generates revenue from land leases as well, Donnellan said. The money from the trust along with the money from the Land Department go two places, he said. The first $72.3 million goes into school funding formulas used by the Legislature. Anything above the first $72.3 million goes into the Classroom Site Fund, which was created by the passage of Proposition 301 in 2000.

Every cent of the Site Fund is paid to teachers annually, explained Hubbard. Commonly referred to as 301 money because of the proposition that created it, each KUSD teacher received a check for $4,360 last school year.

The checks have steadily gotten smaller since the 2006-2007 school year, when teachers received more than $6,000 each, she said.

Donnellan said the Land Department hasn't published what it plans to distribute to K-12 public education, but the lowest amount it provided since 2004 was $38 million.

Combined with the $62.4 million from the trust, $38 million from the Land Department would push the funding over $100 million, with nearly three-quarters of it going into the general funding formulas and the rest going to the Site Fund.

Donnellan expects the trust and the Land Department to exceed the $72.3 million.

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Reader Comments

Posted: Thursday, November 29, 2012
Article comment by: Town Crier

Who thinks this REALLY matters? Can you trust this state or district to make the right decisions? Consider this before you answer...Arizona was recently named the 5th worst managed state and the 4th worst state in terms of overall education. So let me get this straight, the same idiots that created the mess now think they have a "plan" to clean it up? We truly have the blind leading the blind in this state, at all levels. Come on people...demand better!

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