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Sequestration Impacts on Arizona Charter Schools

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How will the federal budget sequester impact your Arizona charter school? Charter School Capital discusses what changes you might see and what you can do to avoid any negative effects.

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Sequestration Impacts on Arizona Charter Schools

  1. 1. Copyright © 2013 Charter School Capital, Inc.SequestrationImpacts OnAZ CharterSchoolsJune 18, 2013
  2. 2. 2Copyright © 2013 Charter School Capital, Inc.WELCOME•  Panelists– John Helgeson, Charter School Capital– Frank Yanez, FMY Consultants– Lynne Adams, Osborn Maledon•  What is sequestration?•  What are the impacts?•  How will it impact my charter school?•  What should I plan for?Agenda
  3. 3. Copyright © 2013 Charter School Capital, Inc.What Is Sequestration?
  4. 4. 4Copyright © 2013 Charter School Capital, Inc.WHAT IS SEQUESTRATION?•  Budget Control Act of 2011– Creates a mechanism to encourage a “give and take” in budgetnegotiations known as sequester– Implementation is sequestration•  Definition– “Sequestration is a mechanism to enforce deficit reduction by motivatingCongress to compromise on budget negotiations or face mandatory cutsof $85B.”– Forces federal budget cuts– Budget cuts like this are bad policyDefinition
  5. 5. 5Copyright © 2013 Charter School Capital, Inc.WHAT IS SEQUESTRATION?•  Legislators in DC not able to create a budget with appropriate cuts to reducethe federal budget deficit•  What is the budget deficit?– Deficit versus debt•  No compromise made•  $85B of mandatory cuts go in to effect and will impact every federal programPolitics
  6. 6. 6Copyright © 2013 Charter School Capital, Inc.WHAT IS SEQUESTRATION?Federal Deficit – FY 2008 - 2015020040060080010001200140016002008 2009 2010 2011 2012 2013 2014 2015US Federal Deficit - FY2008 - 2014
  7. 7. 7Copyright © 2013 Charter School Capital, Inc.WHAT IS SEQUESTRATION?•  Began March 1 of this year•  Continue through end of Federal Fiscal Year (Sept 30)•  This year cuts will be implemented over 7 months instead of 12 months•  Feel more painful because of reduced timeframe this calendar yearWhen?
  8. 8. 8Copyright © 2013 Charter School Capital, Inc.WHAT IS SEQUESTRATION?•  Unknown•  If Congress does not agree to a compromise, then the sequester will continue•  Next year it would start in September, so cuts implemented across 12 monthsrather than 7 months this yearIs this one time?
  9. 9. Copyright © 2013 Charter School Capital, Inc.9Copyright © 2013 Charter School Capital, Inc.What Are The Impacts?
  10. 10. 10Copyright © 2013 Charter School Capital, Inc.SEQUESTRATION IMPACTSPre-cut federal spending on elementary/secondary edSchool Lunch(Dept. of Ag)23%Title 1 (Ed)20%Special Ed(Ed) 16%Head Start(HHS) 9%Other 21%SchoolImprovements(Ed) 9%Impact Aid (Ed)2%Total = $78B
  11. 11. 11Copyright © 2013 Charter School Capital, Inc.SEQUESTRATION IMPACTSNon-exemptdefensediscretionary28%Non-exemptnondefensediscretionaryfunding18%Medicare7%Non-exemptnondefensemandatoryprograms18%Non-exemptdefensemandatoryprograms29%Overall $85B in CutsWhat is being cut?
  12. 12. 12Copyright © 2013 Charter School Capital, Inc.SEQUESTRATION IMPACTSTitle 1, $740Impact Aid,$58Special Ed,$644Head Start,$406TeacherQuality StateGrants, $12621st CenturyCommunityLearning Ctrs,$59Rural Ed, $9Federal cuts in $ millions to education$2 Billion in total cuts across programs
  13. 13. 13Copyright © 2013 Charter School Capital, Inc.SEQUESTRATION IMPACTS•  Effects are not universal because states and individuals benefit fromprograms differently•  Impact timing depends on program and local delivery system•  Federal funding for education cut 5.2%•  It appears students most impacted will be those from disadvantaged areasand those with special needs, although ALL federal funding is reduced– Title 1 and Special Ed being hit hardest– Many Federal programs help those from disadvantaged areas and withcuts, these areas will be hit the mostWhat are the impacts?
  14. 14. 14Copyright © 2013 Charter School Capital, Inc.SEQUESTRATION IMPACTS•  Charters will be particularly hard hit– Facility costs won’t be reduced to account for less funding, so entirety ofbudget cuts will be forced to come from smaller classroom budgets– Nationally on average, charter school students received $4,000 less eachyear than peers in traditional public schools– In Arizona, disparity is $1,900– Cuts in spending or significant delays in payment for key programs andservices such as Special Education, Title 1 and Impact Aido Title I, II, IDEA, NSLP and Impact Aid could be reduced 5-6%o Requirements for programs will not be lessenedo Less money to run programs with the same requirementso Decision on where to attain the money that is being lost to continueprograms at current level of successGeneral impacts to charter schools
  15. 15. Copyright © 2013 Charter School Capital, Inc.How Will Cuts Impact You?
  16. 16. 16Copyright © 2013 Charter School Capital, Inc.HOW WILL CUTS IMPACT YOU?•  $52.9M in cuts statewide•  Title 1– $18M cut– 240 teacher and aide jobs at risk– 19,000 fewer students would be served– 70 fewer schools would receive funding•  Education for Children with Disabilities– $10M cut– 120 fewer teachers, aides, and staff who help children with disabilities•  National Education Association puts loss higher suggesting more than 1,000teachers could be laid off hurting more than 100,000 studentsImpacts to Arizona schools
  17. 17. 17Copyright © 2013 Charter School Capital, Inc.HOW WILL CUTS IMPACT YOU?•  Title 1 and Special Education cuts will hit schools next month (July)– These programs are “forward funded,” so no cuts last fiscal year– Schools receive funding in July and October– DOE has stated that the total amount of cuts will be made in Julypayments•  Schools will start new fiscal year with significantly reduced federal funds•  Good news? No delayed funding for charter schools, just for district schoolsImpacts to Arizona schools
  18. 18. 18Copyright © 2013 Charter School Capital, Inc.HOW WILL CUTS IMPACT YOU?•  School districts likely to see the greatest cuts in Title 1 funding– Tucson Unified Districto 8.8% cut = $2.4M– Phoenix Union High School Districto 8.7% cut = $1.5M– Mesa Unified Districto 1.9% cut = $454,077•  Districts that receive impact aid (districts with reservation lands or militarybases) will continue to see significant reductions in impact aid fundingImpacts to Arizona schools
  19. 19. 19Copyright © 2013 Charter School Capital, Inc.HOW WILL CUTS IMPACT YOU?•  Tucson-area charter school in operation for 11 years•  Approximately 1,300 students, 2 campuses•  2013 Allocations– Title I $835,376– Title II $25,271– IDEA $182,634•  2014 Potential Reductions– Title I $49,553– Title II $1,516– IDEA $10,958•  Total Potential Reduction -- $62,027Scenario – Arizona Community Development Corp
  20. 20. Copyright © 2013 Charter School Capital, Inc.What Can You Do?
  21. 21. 21Copyright © 2013 Charter School Capital, Inc.WHAT CAN YOU DO?•  Do the math and forecast so you know how much less you have to spend•  Don’t assume you will get the same funding amounts as last year becauseTitle 1 and IDEA cuts will hit for the first time in July•  Build in the potential for significant delays in payments•  Plan for the worst case scenario•  If you have questions…ask us – we’re here to help youPlan
  22. 22. 22Copyright © 2013 Charter School Capital, Inc.WHAT CAN YOU DO?•  How will this impact new schools?•  As schools opt out, will these funds go to schools continuing Title I?•  What type of reduction should we be planning for?•  What is the impact on CSP grant for new schools?•  In FY13, our school experience 20% not paid for Impact Aid. What % shouldwe expect for FY14?FAQs
  23. 23. Copyright © 2013 Charter School Capital, Inc.Questions?
  24. 24. Copyright © 2013 Charter School Capital, Inc.24Copyright © 2013 Charter School Capital, Inc.Thank You.
  25. 25. 25Copyright © 2013 Charter School Capital, Inc.877-272-1001Frank Yanezfyanez@charterschoolcapital.org

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