20050317 A Case Study of Arizona’s School District Consolidation Debate SWPSA
20060417 Murray Opening the Books 2006 Annual Report on Arizona Public School Finance
1. POLICYbriefG o l d w a t e r I n s t i t u t e
No. 06-02 I A p r i l 1 7 , 2 0 0 6
Opening the Books: 2006 Annual Report on Arizona Public School
Finance
by Susan L. Aud, Ph.D., Senior Fellow, Milton and Rose D. Friedman Foundation; and Vicki Murray,
Ph.D., Former Director, Goldwater Institute Center for Educational Opportunity
In January 2005, the Goldwater Institute and the Milton and Rose D. Friedman
Foundation jointly produced A Guide to Understanding State Funding of Arizona
Public School Students to bring simplicity, transparency, and accuracy to Arizona
public school finance by detailing the underlying funding formulas and
mechanisms. Like the 2005 study, this analysis examines updated financial data
from the Arizona Department of Education’s multiple accounting systems: the
Uniform System of Financial Reporting (USFR), the Student Accountability
Information System (SAIS), and the Superintendent’s Annual Financial Report (SAFR).1
This policy brief also describes
the changes that have occurred in Arizona funding between the 2002-03 and 2003-04 fiscal years.
The state does not synthesize its multiple accounting systems, making it hard for the public to know how much
is actually spent on public school students and difficult for policymakers to obtain accurate figures to inform sound
education policy. For example, the National Education Association, the country’s largest teachers’ union, says the
state spends $5,222 per student, and Education Week’s annual “Quality Counts” ranking claims Arizona spends
$6,331.2
The online K-12 Funding Index, available at www.goldwaterinstitute.org/k-12fundingindex, has been updated
with fiscal year 2003-04 Arizona Department of Education financial data. With the online database, policymakers
and the public can readily access the most accurate per-student funding figures—by both student and district type—
for all 218 regular Arizona public school districts. The only resource of its kind in Arizona, the Index breaks down
state equalization base funding for students into four categories, and non-equalized district funding into per-student
amounts by local, county, state, and federal funding categories.3
The Arizona School Boards Association, the Arizona Association of School Business Officials, the Arizona School
Administrators Association, and one Arizona Daily Star columnist publicly criticized last year’s study and online
Index. As Chuck Essigs and Jim DiCello of the Arizona Association of School Business Officials put it, bringing
transparency to politically unpalatable revenue categories such as capital and debt service, typically excluded from
national funding rankings, “is confusing, misleading, and not right.”4
In fact, Essigs and DiCello praised the Arizona
Department of Education for having “the knowledge and insight” to confound public access to school district
funding data by having multiple, uncoordinated accounting systems and financial reports. We disagree and will
2. GOLDWATER INSTITUTE I policy brief
2
continue to update the K-12 Funding
Index as the latest financial data become
available.
This analysis finds that the
minimum average state base
equalization funding is $4,000 per
elementary student and $4,400 per high
school student in 2003-04, an increase
of almost $100 over 2002-03. The
weighted average per-student amount of
non-equalization base funding is
$3,965, $344 less than the 2002-03
average.5
Thus, for 2003-04 the average
total funding for an Arizona public
school student is between $8,000 and
$8,500, very near the 2003-04 U.S.
average of $8,900.6
However, those
figures represent minimum averages
because they apply to students who do
not have special educational needs, such
as learning or physical disabilities or
English language learner status, and who
do not attend schools in districts that are
small or located in rural areas.
With the Arizona Department of
Education financial information
available through the K-12 Funding
Index, policymakers can readily calculate
the fiscal impact to school districts and
the state if students were given
education grants to attend independent
schools. For instance, if five percent of
public school students in Arizona,
roughly 40,000, had transferred to
independent schools using elementary
education grants worth $3,500 and high
school education grants worth $4,500—
both less than current state base
equalization funding—the net savings to
the state and local districts would have
For 2003-04 the
average total funding
for an Arizona public
school student is
between $8,000 and
$8,500, very near the
2003-04 U.S. average
of $8,900.
Grades K-3 Grades 4-8 Grades 9-12
Average Base Equalization
Funding per student
(Based on student count) $4,054 $4,053 $4,438
+
Average Non-Equalization
Base Funding as a
per-student amount
(Not based on student count) $3,965 $3,965 $3,965
=
Total Average
Base Funding
per student $8,019 $8,018 $8,403
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Source: Arizona Department of Education, in fiscal year 2004 unadjusted dollars.
Notes:
1. “Average Non-Equalization Base Funding as a per-student amount” includes local, county, state,
and federal funding.
2. The base funding categories do not match the source of revenue/expenditure categories. Thus,
this study uses total revenue for each district and subtracts the reported equalization base revenue to
determine the non-equalization base revenue.
3. April 17, 2006
3
amounted to $32 million in fiscal year
2003.7
Under the same scenario, the net
savings to the state and local districts
would have increased to over $37
million in fiscal year 2004 due to the
increase in base equalization funding per
student.
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Total per-student funding consists of
two types of revenue; the first varies
according to the number of students in a
district, and the second varies according
to other parameters, such as the total
assessed value of the property in the
district. The first type is referred to in
Arizona as base equalization funding.
This is the amount the state has
determined should be allocated to a
student when they enter the public
school system and is equalized across
districts to ensure that all students have
a similar amount of revenue available to
cover the basic cost of educating them.
Similarly, when a student leaves a
district, or when they change districts,
this amount of money follows them.
The remaining public education revenue
is non-equalized funding comprising
local, county, non-equalized state, and
federal funding. This funding is not
dependent upon the number of students
and, thus, does not directly change when
students leave.
Base equalization funding is
designed to ensure that each student has
the same minimum amount allocated to
cover basic operational expenses. It is
broken down into four components: a
base amount, a capital amount (bricks
and mortar), a soft capital amount
(books and desks), and a transportation
amount. Each of the four categories has
a formula, or set of formulas, that
determines how much is allocated for
each type of student. For example, the
base amount is weighted differently for
elementary students than it is for high
school students. Also, districts that are
exceptionally small or isolated use higher
weights for each grade level than larger
suburban or urban districts. Similarly,
the capital portion of the formula is
higher for districts that are growing
faster than five percent per year, as they
will presumably have a greater need to
expand their facilities. Each of the four
base equalization funding components
has complex underlying formulas that
require accumulating substantial data.
A Guide to Understanding State
Funding of Arizona Public School
Students, published in 2005, explains
base equalization funding and formulas
in greater detail. That study
incorporated all of the necessary 2002-
03 data from the dual sources of the
Student Accountability and Information
System (SAIS) and the Superintendent’s
Annual Financial Report (SAFR). The
Student Accountability and Information
System (SAIS) is a database into which
districts are required to upload
numerous categories of data, such as
daily enrollment. This system produces
several data reports. The base
equalization funding data, however, can
be accessed in one particular report
5. April 17, 2006
5
referred to as APOR 55-1, “Basic
Calculations for Equalization Assist-
ance.” The Arizona Superintendent of
Public Instruction publishes the
Superintendent’s Annual Financial Report
(SAFR), which contains both summary-
level and district-level financial reports
on all sources of revenue and all
categories of spending. While the two
reports do not always use the same
terminology or categories, merging them
offers the most complete picture of
Arizona’s public school finance system
currently available.
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Equalization funding increased
about $100 from 2002-03 to 2003-04,
from an average of $3,968 to $4,054 for
elementary students and from $4,344 to
$4,438 for high school students. As
shown in Table 2, the base support level
(BSL) amount rose slightly, from an
average of $2,788 to $2,858. This
funding covers general maintenance and
operations expenses, including teacher
salaries and classroom supplies. The BSL
increase represents the most substantial
change between the two years and
accounts for most of the total increase of
$248 million in equalization funding
when combined with an enrollment
increase of over 21,000 students
statewide.8
Other than the higher base support
level (BSL) amount, most of the
equalization funding was unchanged
from 2002-03 to 2003-04. The
transportation amount increased due to
a six-cent increase in the per route mile
amount (factor). The net result of these
changes is a roughly two percent
unadjusted increase in per-student
equalization funding from 2002-03 to
2003-04.
Changes to the district financial
reports contained in the Superintendent’s
Annual Financial Report (SAFR) are
more complicated. Each district has a
unique set of circumstances that
determines how funds are spent. The
online K-12 Funding Index, updated
with 2003-04 financial data, allows users
to compare district finances in 2002-03
to those in 2003-04. Subsequent annual
updates to this data will allow for a
clearer interpretation of public school
district spending trends.
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FFuunnddiinngg ffrroomm FFiissccaall YYeeaarrss 22000022--0033 ttoo 22000033--
0044
Because most published reports do
not include total district revenues in per-
student amounts, the 2005 study
contained a comparison of both the base
equalization funding and total district
revenues per student for 22 non-
isolated, non-rural districts. Total per-
student funding consists of equalized
funding, which is the amount the state
has determined is tied to students when
they enter the public school system,
when they leave it, or when they change
districts. It also consists of local, county,
non-equalized state, and federal
funding. This portion of per-student
funding is not based on student counts
and includes such funding categories as
7. April 17, 2006
K-12 public education
finance is based on
complex funding
formulas that only a
handful of experts truly
understand. Therefore,
the Goldwater Institute
and the Friedman
Foundation undertook
a six-month effort to
deconstruct Arizona’s
funding formulas and
translate them into an
online database that
every Arizonan could
access.
7
capital and debt service.
In a January 25, 2005 letter titled
“Distortions and Errors Undermine
Goldwater Report on School Funding,”
Arizona Association of School Business
Officials’ director of government
relations Chuck Essigs and legislative
liaison Jim DiCello claimed, “It is not
appropriate to include high school
expenditures or revenues in computing
spending for a 4th grade student in a
high school district.”9
Essigs and DiCello
also objected to the inclusion of the table
comparing the 22 districts in the 2005
study because it “reports bond refunding
dollars as actual new revenue…This
bond refunding did not provide…one
cent of additional revenue.”10
Eight of the 22 districts highlighted
in the 2005 study are elementary school
districts, and 14 are unified districts,
meaning that they have both elementary
and high schools. The comparison in the
2005 study illustrated how similar
districts, with similar per-student
equalization funding, can vary widely
with regard to total per-student funding.
Those variances occur because in any
given year some districts may be
undertaking capital and building
projects, for example. Thus, total per-
student funding in individual districts
will change from year to year.
Presumably, the non-equalized portion
of district funding should decline as
capital or other projects are compeleted.
As Table 3 indicates, total per-
student funding in some districts
highlighted in last year’s study has
increased, and in others it has declined.
Again, those changes are often related to
the number of capital projects
undertaken or financed in a particular
district.
Because the online K-12 Funding
Index contains financial data for all 218
districts for fiscal years 2003 and 2004 as
the Arizona Department of Education
reports it, users can track annual revenue
changes for any districts they choose.
Appendix A summarizes the changes in
non-equalized funding for all Arizona
school districts from 2002-03 to 2003-
04. As indicated previously, critics
faulted the 2005 study and database for
compiling Arizona Department of
Education financial data and making it
readily accessible to the public. The
following section answers the criticisms
they raised.
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There is a general consensus that K-
12 public education finance is based on
complex funding formulas that only a
handful of experts truly understand.
Therefore, the Goldwater Institute and
the Friedman Foundation undertook a
six-month effort to deconstruct
Arizona’s funding formulas and translate
them into an online database that every
Arizonan could access, without
requiring them to decode the formulas
themselves. Creating this tool and
providing access to this data were the
primary purposes of the 2005 study.
8. Unlike other reports
and rankings, such as
those published by
Education Week and
the National Education
Association, we do not
exclude politically
unpalatable figures such
as capital and
construction or debt
service. The K-12
Funding Index allows
users to see all the
funding figures reported
by the state department
of education.
GOLDWATER INSTITUTE I policy brief
8
However, the Arizona School Boards
Association, the Arizona Association of
School Business Officials, the Arizona
School Administrators, and one Arizona
Daily Star columnist publicly criticized
the study.11
This section answers those
criticisms.
•• “Many revenues are counted twice,
which distorts both individual and state
numbers.”12
Unfortunately, the Superintendent’s
Annual Financial Report does not make
annual school district revenue
transparent enough. For example, there
are two categories of “Other” revenue for
each district. One details the revenue
according to local, county, state, and
federal funding sources and is listed
under “Revenues by Source.” It includes
funds from a variety of sources, such as
auxiliary operations, insurance, and tax
credit fees.13
The second “Other”
revenue category is listed under
“Finances by Fund.” There is no
explanation of what revenue falls into
this “other” category. More disturbing,
the two “other” revenue category totals
do not always match. Because revenues
such as tuition and self insurance, which
Essigs and DiCello highlight, are not
reported as distinct line items, there is
no way to know for sure whether they
are double counted. Complicating
matters, the Superintendent’s Annual
Financial Report relies on individual
district Annual Financial Reports
(AFR), and the Arizona Department of
Education admits, “Information on the
AFR is not audited at this time.”14
We
note the possibility of double-counting
on our K-12 Funding Index.
•• “This study includes over $1.3 billion in
funding related to Deficiencies Corrections,
New School Facilities and Debt Service.
This distorts the numbers greatly and since
many of the dollars are one-time funding,
they are misleading.”15
Critics oppose the inclusion of such
non-equalization funding in our 2005
study, but ignore the fact that the state’s
base equalization funding also includes
funding for buildings and interest on
debt. The primary purpose of the 2005
study and the online K-12 Funding
Index is to enable the public to see how
much base equalization funding is
associated with any given Arizona public
school student. In order to place the
student formula funding into context,
however, the database also includes
detail about a district’s overall finances,
including funding districts receive that is
not based on formulas.
The best publicly available source
for this non-equalized district funding is
the Superintendent’s Annual Financial
Report’s individual district detail reports.
These reports list budget, revenue, and
expenses across a dozen or more
categories, including those singled out
by Essigs and Arizona Daily Star
columnist Jim Kiser. Unlike other
reports and rankings, such as those
published by Education Week and the
National Education Association, we do
not exclude politically unpalatable
figures such as capital and construction
or debt service. The K-12 Funding
Index allows users to see all the funding
9. April 17, 2006
Critics do not protest
when a student leaves
the Phoenix Elementary
district (which then
loses the $3,952 in base
equalization funding
associated with that
student) for the
Scottsdale Unified
district (which then is
allocated $4,464 in
base equalization
funding for that
student Critics cry foul
only when we proposed
that same student could
leave the Phoenix
Elementary district
(which then loses the
same $3,952 in base
equalization associated
with that student) for
an independent school
using an education
grant.
9
figures reported by the state department
of education.
•• “The report tries to quantify how much
money actually follows students and how
much goes to school districts regardless of
how many students they lose or gain. The
purpose is clear: Friedman and Goldwater
both support school vouchers, and they
wanted to use the numbers in their
arguments. But the authors have overstated
the amount of money that does not follow
students by hundreds of millions of dollars.
That is a substantial distortion that allows
them to argue vouchers won’t significantly
hurt the public schools.”16
The 2005 study attempted to
determine as far as possible based on
best-available Arizona Department of
Education financial reports how much
of Arizona school districts’ funding is
based on student enrollments, and how
much is not based on student
enrollments; that is, how much base
equalization funding follows students if
they transfer out of districts, and how
much non-equalization base funding
remains with districts. With that data,
policymakers can readily calculate the
fiscal impact to school districts and the
state if students were given education
grants to attend independent schools.
For instance, if five percent of public
school students in Arizona, roughly
40,000, transferred to independent
schools using elementary school
education grants worth $3,500 and high
school education grants worth $4,500—
both less than the 2002-03 state base
equalization funding—the net savings to
the state and local districts would have
amounted to $32 million in fiscal year
2003.17
Total funding in half of the
school districts would have remained
unchanged, and in the other half it
would have decreased by less than one
percent. In 2003-04, the net savings to
the state and local districts would have
increased to over $37 million due to the
increase in equalization funding per
student. Any education grant worth less
than the base equalization amount
would, in fact, result in a net savings to
the state and local school districts.
Under such a scenario, however, parents
using grants to send their children to
independent schools would receive less
than a public school district would
receive to educate their children.
Critics contend those savings rely on
Arizona Department of Education non-
equalization revenue figures they claim
are not really revenue, such as bond
refinancing revenue, which the
Department refers to as “Debt Service.”18
However, the $32 million annual savings
projection for fiscal year 2003 under the
proposed grant scenario relied
exclusively on base equalization revenue
figures that critics did not dispute.
Ironically, critics do not protest when,
for instance, a student leaves the
Phoenix Elementary district (which then
loses the $3,952 in base equalization
funding associated with that student) for
the Scottsdale Unified district (which
then is allocated $4,464 in base
equalization funding for that student
and a net increase to taxpayers of $88).
Critics cry foul only when we proposed
that same student could leave the
Phoenix Elementary district (which then
10. The Arizona
Department of
Education should
improve transparency
by making more
financial data available
at a finer level of
detail, and making it
more readily accessible
to the public.
GOLDWATER INSTITUTE I policy brief
10
loses the same $3,952 in base
equalization associated with that
student) for an independent school
using an education grant worth $3,500
(a net decrease to taxpayers of $452).
This criticism illustrates a double
standard that limits parents’ options
when it comes to making one of the
most important choices of their
children’s lives: which school is best for
them.
•• “The study...is not a perfect tool. It does
not factor out, for example, the percentage
each school district spends on
administration overhead. And it provides
no response to that ages-old debate over
where Arizona actually falls among the 50
states in terms of per-pupil spending.”19
The 2005 study did not recalculate
where Arizona ranks nationally in terms
of student funding because its purpose
was to identify how much Arizona
taxpayers are spending to educate
children in the state’s public schools.
With the most comprehensive financial
revenue data available for the first time,
it was possible to conduct a subsequent
analysis of Arizona’s national ranking.
Leaving aside the fact that rankings tell
policymakers little about student
learning, findings from our 2005 study
showed that fiscal year 2003 per-pupil
education funding in Arizona was
roughly $8,500, significantly more than
the $5,000 reported by the National
Education Association and very near the
U.S. average of $9,000 for the same
fiscal year.20
However, the K-12 Funding
Index is only as good as the financial
data it contains. For that reason, in our
2005 study we recommended the Arizona
Department of Education define and
disaggregate district funding for
administration and overhead.
RReeccoommmmeennddaattiioonnss
One positive development that
resulted from the 2005 report is an
improved collaboration with the Arizona
Department of Education that made
data collection for the 2006 report
somewhat easier. Last year, all financial
data contained in the Superintendent’s
Annual Financial Report had to be re-
typed to compile the database.
Moreover, extracting the necessary
student data from the state’s Student
Accountability Information System
would have taken weeks, if not months,
had the Arizona Tax Research
Association not already compiled the
necessary data and provided it to us.
For the 2006 report, the Arizona
Department of Education directly
supplied the financial and student data.
However, it took more than three
months to receive all the necessary data.
It then took another two months to
convert nearly 57,000 lines of raw
Access data into a usable Microsoft Excel
format, obtain the missing data, and
attempt to reconcile discrepancies, such
as the inclusion of school districts
located in California, Nevada, New
Mexico, Utah, and Mexico.21
Overall, there has been no
significant improvement in the
11. April 17, 2006
One difficulty in
obtaining Arizona
Department of
Education financial
data on school districts
is navigating disparate
accounting systems for
some publicly available
data. To obtain other
publicly available data,
one must go through
Department personnel.
11
transparency, simplicity, or account-
ability of Arizona public school finance.
As recommended in the 2005 funding
report, the Arizona Department of
Education should improve transparency
by making more financial data available
at a finer level of detail, and making it
more readily accessible to the public. For
instance, reports only break down
financial data to the district level.
Individual school-level data should also
be available. Additionally, administrative
revenue should be uniformly categorized
and broken down into greater detail. For
example, budgeted administrative funds
are broken down into numerous sub-
categories, while actual administrative
expenditures are not. Revenues and
expenditures should be uniformly
reported at the finest level of detail
possible. What follows are additional
recommendations for improving public
school finance in Arizona.
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The Superintendent’s Annual
Financial Report is compiled using self-
reported, un-audited individual district
Annual Financial Reports (AFR). It
notes, “Information on the AFR is not
audited at this time.”22
All financial
information should be audited as well as
student enrollment data. We also
discovered enrollment discrepancies
between the raw data we received from
the Department and the enrollment data
it subsequently reported. Our raw data
files indicate a “Total Attending ADM”
of 842,598 students, while the
Superintendent’s Annual Financial Report
lists 859,023. There should be no
discrepancies over a matter as basic as
student counts.
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iinnffoorrmmaattiioonn
The complexity of Arizona public
school finance makes gathering basic
information extremely difficult. One
difficulty in obtaining Arizona
Department of Education financial data
on school districts is navigating disparate
accounting systems for some publicly
available data. To obtain other publicly
available data, one must go through
Department personnel. This is
cumbersome and time consuming.
Additionally, state agency personnel
should not be gatekeepers of public
information. This creates needless work
for agency staff and long delays for those
requesting what should be readily
available public information. The
Indiana Department of Education, for
example, lists all school district financial
reports, with supporting data, right on
its website (http://mustang.doe.state.
in.us/SAS/sas1.cfm). Extracting comp-
arable data on the Arizona Department
of Education website is cumbersome
and in some cases requires special
permission from the Department to
access what should be public
information. Last year, superintendent
of public instruction Tom Horne
discussed the possibility of
implementing a $1 million data
extraction tool. Indiana’s web-based
system may be a more cost-effective and
accessible model.
12. Self-reported individual
district Annual
Financial Reports
(AFR) used to compile
the Superintendent’s
Annual Financial
Report should be
audited, as well as
district enrollment
counts.
GOLDWATER INSTITUTE I policy brief
12
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A serious consequence of having
such a complex, opaque public school
finance system is that it hinders
accountability. According to recent
reports by the Office of the Auditor
General, public school personnel have
been found guilty of malfeasance, theft
of public monies, and waste. Officials in
one district improperly procured
software systems costing over a half
million dollars, then discarded them
after only one year. Because of improper
oversight, officials in the same district
had also lost or stolen nearly $10,000.23
Officials in other districts embezzled
tens of thousands of dollars each and
violated laws regarding construction
projects totaling nearly $3 million.24
A
system in which funding is tied directly
to students in real time, as opposed to a
prior-year basis, would make education
finance more transparent and
accountable because actual attending
students and their education funding
would not require numerous
cumbersome reports and repeated
enrollment counts.
CCoonncclluussiioonn
In January 2005, the Goldwater
Institute and the Milton and Rose D.
Friedman Foundation jointly produced
A Guide to Understanding State Funding
of Arizona Public School Students to bring
simplicity, transparency, and accuracy to
Arizona public school finance by
detailing the underlying funding
formulas and mechanisms. We have
updated the accompanying K-12
Funding Index, available online at
www.goldwaterinstitute.org/k-12fundin
gindex, with the latest Arizona
Department of Education financial data.
This policy brief describes the changes
that have occurred to Arizona funding
from 2002-03 to 2003-04.
Like last year’s study, this analysis
examines updated financial data from
the Arizona Department of Education’s
multiple accounting systems: the
Uniform System of Financial Reporting
(USFR), the Student Accountability
Information System (SAIS), and the
Superintendent’s Annual Financial Report
(SAFR).25
With the online K-12
Funding Index accompanying this
analysis, policymakers and the public
can readily access the most accurate per-
student funding—by both student and
district type—for all 218 regular Arizona
public school districts for 2002-03 and
2003-04.
This analysis finds that the
minimum average state base
equalization funding is $4,000 per
elementary student and $4,400 per high
school student in 2003-04, an increase
of almost $100 over 2002-03. The
weighted average per-student amount of
non-equalization base funding is
$3,965, $344 less than the 2002-03
average. Thus, for 2003-04 the average
total funding for an Arizona public
school student was between $8,000 and
$8,500, very near the 2003-04 U.S.
average of $8,900.26
13. April 17, 2006
Public school finance in
Arizona should be
simplified to improve
transparency and
thereby minimize fraud
and waste. A student
grant system in which
money is directly tied to
students would help
improve transparency,
simplicity, and
accountability in
Arizona education
finance.
13
With the online Index, policymakers
can readily calculate the fiscal impact to
school districts and the state if students
were given education grants to attend
independent schools. For instance, if five
percent of public school students in
Arizona, roughly 40,000, had
transferred to independent schools using
elementary education grants worth
$3,500 and high school education grants
worth $4,500—both less than current
state base equalization funding—the net
savings to the state and local districts
would have amounted to $37 million in
fiscal year 2004, $5 million more than
projected for fiscal year 2003.
Overall, there has been no
significant improvement in the
transparency, simplicity, or
accountability of Arizona public school
finance. Like the 2005 Goldwater
Institute analysis, this analysis
recommends three improvements. First,
self-reported individual district Annual
Financial Reports (AFR) used to
compile the Superintendent’s Annual
Financial Report should be audited, as
well as district enrollment counts.
Second, the Arizona Department of
Education should make school financial
data available online as the Indiana
Department of Education does, instead
of requiring the public to go through
Department personnel to access
information. Making such information
available online is also less expensive
than purchasing million-dollar data
extraction tools. Third, public school
finance in Arizona should be simplified
to improve transparency and thereby
minimize fraud and waste. A student
grant system in which money is directly
tied to students would help improve
transparency, simplicity, and account-
ability in Arizona education finance
because actual attending students and
their education funding would not
require numerous cumbersome reports
and repeated enrollment counts. Most
important, letting parents control their
children’s education dollars would give
them the buying power they need to
find improved educational opportunities
for their children.
14. GOLDWATER INSTITUTE I policy brief
14
District Name Decrease Increase Code
Agua Fria Union HS X DS
Aguila Elem. X NSF
Ajo Unified X DC
Alhambra Elem. X O
Alpine Elem. X O
Altar Valley Elem. X NSF
Amphitheater Unified X DS
Antelope Union HS X DC
Apache Elem. X O
Apache Junction Unified X NSF
Arlington Elem. X DC
Ash Creek Elem. X DC
Ash Fork Joint Unified X O
Avondale Elem. X NSF
Bagdad Unified X DS
Balsz Elem. X DS
Beaver Creek Elem. X DS
Benson Unified X DC
Bicentennial Union HS X DC
Bisbee Union X DS
Blue Elem. X *
Blue Ridge Unified X DC, DS
Bonita Elem. X 0
Bouse Elem. X DC
Bowie Unified X DC
Buckeye Elem. X NSF
Buckeye Union HS X NSF
Bullhead City Elem. X NSF
Camp Verde X DC
Canon Elem. X NSF
Cartwright Elem. X NSF
Casa Grande Elem. X DC
Casa Grande Union HS X DS
Catalina Foothills Unified X DS
Cave Creek Unified X O
Cedar Unified X DC, DS
Champie Elem. *
Chandler Unified X NSF
APPENDIX
Summary of Changes in District Funding from 2002-03 to 2003-04
15. April 17, 2006
15
District Name Decrease Increase Code
Chevelon Butte X O*
Chinle Unified X DC
Chino Valley Unified X DC
Clarkdale-Jerome Elem. X O
Clifton Unified X DS
Cochise Elem. X DC
Colorado City Unified X DC
Colorado River Union HS X DC
Concho Elem. X DC
Congress Elem. X NSF
Continental Elem. X DS
Coolidge Unified X NSF
Cottonwood-Oak Creek Elem. X NSF
Crane Elem. X NSF
Creighton Elem. X DC
Crown King Elem. X O
Deer Valley Unified X NSF
Double Adobe Elem. X DC
Douglas Unified X O
Duncan Unified X O
Dysart Unified X NSF
Elfrida Elem. X O
Eloy Elem. X O
Empire Elem. X O
Flagstaff Unified X DS
Florence Unified X NSF
Flowing Wells Unified X DC
Fountain Hills Unified X DS
Fowler Elem. X NSF
Fredonia-Moccasin Unified X DS
Ft Thomas Unified X DC
Gadsden Elem. X O
Ganado Unified X DS
Gila Bend Unified X O
Gilbert Unified X NSF
Glendale Elem. X NSF
Glendale Union HS X DS
Globe Unified X DS
Grand Canyon Unified X DS
Hackberry X DS
Hayden-Winkelman Unified X O
16. GOLDWATER INSTITUTE I policy brief
16
District Name Decrease Increase Code
Heber-Overgaard Unified X O
Higley Unified X NSF
Hillside Elem. X O
Holbrook Unified X NSF
Humboldt Unified X NSF
Hyder Elem. X DS
Indian Oasis-Baboquivari Unified X O
Isaac Elem. X DS
JO Combs Elem. X DS
Joseph City Unified X DC
Kayenta Unified X O
Kingman Unified X O
Kirkland Elem. X O
Klondyke Elem. X O
Kyrene Elem. X O
Lake Havasu Unified X O
Laveen Elem. X NSF
Liberty Elem. X NSF
Litchfield Elem. X NSF
Littlefield Unified X NSF
Littleton Elem. X NSF
Madison Elem. X DS
Maine Consolidated X NSF
Mammoth-San Manuel Unified X O
Marana Unified X O
Maricopa County Regional X NSF
Maricopa Unified X NSF
Mayer Unified X DC
McNary Elem. X NSF
McNeal Elem. X DC
Mesa Unified X DC
Miami Unified X O
Mingus Union HS X DC
Mobile Elem. X O
Mohave Valley Elem. X O
Mohawk Valley Elem. X DC
Morenci Unified X O
Morristown Elem. X O
Murphy Elem. X DC
Naco Elem. X DC
Nadaburg Elem. X NSF
17. April 17, 2006
17
District Name Decrease Increase Code
Nogales Unified X O
Oracle Elem. X DS
Osborn Elem. X DS
Owens-Whitney Elem. X O
Page Unified X DS
Palo Verde Elem. X NSF
Paloma Elem. X O
Palominas Elem. X DC
Paradise Valley Unified X DC
Parker Unified X O
Patagonia Elem. X O
Patagonia Union HS X NSF
Payson Unified X DS
Peach Springs Unified X DC, DS
Pearce Elem. X O
Pendergast Elem. X DC
Peoria Unified X DS
Phoenix Elem. X O
Phoenix Union HS X DC
Picacho Elem. X DS
Pima Unified X DC
Pine Strawberry Elem. X DS
Pinon Unified X NSF
Pomerene Elem. X O
Prescott Unified X DC
Quartzsite Elem. X O
Queen Creek Unified X NSF
Ray Unified X NSF
Red Mesa Unified X DC, DS
Red Rock Elem. X DC
Redington Elem. X O
Riverside Elem. X NSF
Roosevelt Elem. X O
Round Valley Unified X DS
Rucker Elem. X O
Sacaton Elem. X O
Saddle Mountain Unified X O
Sahuarita Unified X DS
Salome Consolidated Elem X DS, O
San Carlos Unified X O
San Fernando Elem. X NSF
18. GOLDWATER INSTITUTE I policy brief
18
District Name Decrease Increase Code
San Simon Unified X DC
Sanders Unified X NSF
Santa Cruz Elem. X DC
Santa Cruz Valley Unified X NSF
Santa Cruz Valley Union HS X DS
Scottsdale Unified X DS
Sedona-Oak Creek Joint Unified X O
Seligman Unified X DS
Sentinel Elem. X O
Show Low Unified X DS
Sierra Vista Unified X O
Skull Valley Elem. X DC
Snowflake Unified X DC
Solomon Elem. X DC
Somerton Elem. X NSF
Sonoita Elem. X DS
St David Unified X DC
St Johns Unified X DC
Stanfield Elem. X DS
Sunnyside Unified X DS
Superior Unified X DC
Tanque Verde Unified X NSF
Tempe Elem. X DC
Tempe Union HS X O
Thatcher Unified X DC
Tolleson Elem. X DS
Tolleson Union HS X NSF
Toltec Elem. X NSF
Tombstone Unified X NSF
Tonto Basin Elem. X O
Topock Elem. X O
Tuba City Unified X NSF
Tucson Unified X DC
Union Elem. X DC
Vail Unified X NSF
Valentine Elem. X DC
Valley Union HS X O
Vernon Elem. X NSF
Walnut Grove Elem. *
Washington Elem. X DS
Wellton Elem. X O
19. April 17, 2006
19
District Name Decrease Increase Code
Wenden Elem. X DC
Whiteriver Unified X DC
Wickenburg Unified X DC
Wilcox Unified X O
Williams Unified X DS
Williamson Valley Elem. *
Wilson Elem. X DC
Window Rock Unified X O
Winslow Unified X DS
Yarnell Elem. X DC
Young Elem. X DC
Yucca Elem. X O
Yuma Elem. X O
Yuma Union HS X NSF
Source: Arizona Department of Education.
Notes:
1. Blue, Champie, Walnut Grove, and Williamson Valley Elementary districts reported no students
in 2003-2004.
2. Eagle Elementary district reported no students and no revenue in 2003-04.
3. “DC” is Deficiencies Correction; “DS” is Debt Service; “NSF” is New School Facilities; “O” is
Other.
4. Districts marked with * have no reported students. Districts marked with ** have no reported
students or funding. Some school districts are transporting districts, with students attending another
district. Reported revenues may include those for such expenses as tuition paid to sending districts,
transportation and other expenditures. The ADE noted Williamson Valley Elementary District was a
transporting district for 2003-04. In some cases, districts may have no reported students but schools
may be under construction and so receive funding for construction-related expenses and expenses as
they prepare to offer instruction.
20. GOLDWATER INSTITUTE I policy brief
20
NOTES
1. For clarity, throughout this report
standard acronyms are provided, but full
agency names and funding categories are
used. The SAFR data used is from the
District Detail Reports. The SAIS data is
from the APOR 55-1, “Basic
Calculations for Equalization
Assistance,” Arizona Department of
Education, Memo # 02-055, May 14,
2002, http://www.ade.az.gov/school
finance/Memos/FY2001-2002/ (Dec-
ember 20, 2004). Additional detail was
derived from SAIS BUDG25,
“Expenditure Budget Report for Fiscal
Year 2003.” http://www.ade.az.gov/
Budget/ReportsData/ReportsData.asp
(December 20, 2004).
2. National Education Association,
Rankings & Estimates: Rankings of the
State 2004 and Estimates of School
Statistics 2005, June 2005, Table H-9, p.
54. Expenditure figures are based on
2002-2003 academic year data.
However, the NEA also reported that
per-student revenues in Arizona were
$7,614, based on 2003-2004 academic
year data. Education Week, Quality
Counts, January 5, 2006, p. 98. Figure
cited is adjusted for regional cost
differences. The unadjusted spending
figure is $6,282.
3. There is another category of state
funding, generated by a 0.06 percent
sales tax, which follows a student to his
or her district. However, we do not
include that portion in the equalization
funding analysis, as it does not affect the
overall level of state funding, only the
mix between districts. Arizona voters
approved this sales tax in November
2000 through passage of Proposition
301. State student funding and local,
county, state, and federal district
funding categories are not “either/or
categories,” as the four categories of base
student funding are also dispersed
within those district funding categories.
When compiling the database, Susan
Aud was never able to locate a document
that explains the mapping of one to the
other. However, some of the
equalization base funding is found in the
M&O budget. Aud encountered the
same problem compiling the 2002-03
database.
4. Public letter of January 25, 2005,
written by Arizona Association of School
Business Officials’ director of
government relations Chuck Essigs and
legislative liaison Jim DiCello, titled
“Distortions and Errors Undermine
Goldwater Report on School Funding,”
with a cover letter dated February 2,
2005, signed by Panfilo Contreras,
executive director of the Arizona School
Boards Association; Harold Porter,
executive director of Arizona School
Administrators; and John Fung,
executive director of the Arizona
Association of School Business Officials.
5. The non-weighted average is
$5,037. Excluded from the authors’
calculation are three districts with
unreliable data: Hackberry, Santa Cruz
Valley Union High School, and
Williamson Valley Elementary. The first
two districts report students, but no
revenue, while Williamson Valley
21. April 17, 2006
21
Elementary reports revenue but no
students according to the data sent to
the authors by the Arizona Department
of Education on June 28, 2005, which
are the same unaudited data submitted
by individual districts and reported in
the Superintendent’s Annual Financial
Report.
6. The National Center for
Education Statistics reports the 2001-02
U.S. average per pupil spending was
$8,575, which is $8,909 in 2003 dollars.
That figure includes current
expenditures, capital expenditures, and
interest on school debt. See the National
Center for Education Statistics, 2004
Digest of Education Statistics, Table 166,
http://nces.ed.gov/programs/digest/d04
_tf.asp; and the NASA Consumer Price
Index (CPI) inflation calculator at
http://www1.jsc.nasa.gov/bu2/inflateC
PI.html.
7. This savings projection assumes
that local funding—based on property
values and tax rates—would not change.
Federal dollars would presumably, but
not necessarily, follow the students out
of the system.
8. Equalization funding is shared
between the local districts and the state
department of education based on the
property wealth of the district. The data
presented here do not address changes in
the division between the two.
9. Essigs and DiCello, “Distortions
and Errors Undermine Goldwater
Report on School Funding.”
10. Ibid.
11. Ibid.; cf. Jim Kiser, “New School
Finance Report Leaves a Haze of
Confusion,” Arizona Daily Star, January
30, 2005.
12. Ibid.
13. SAFR, FY 2003-2004, vol. II, p. 2.
14. SAFR, FY 2003-2004, vol. I, p.
33; cf. SAFR FY 2002-2003 vol. I, p.
35.
15. Essigs and DiCello, “Distortions
and Errors,” January 25, 2005.
16. Kiser, “New School Finance
Report,” 2005.
17. This savings projection assumes
that local funding—based on property
values and tax rates—would not change.
Federal dollars would presumably, but
not necessarily, follow the students out
of the system.
18. Kiser, 2005; cf. Susan Aud, “Give
the Public Access,” Goldwater Institute
Daily Commentary, January 31, 2005.
19. “Educated Guess,” Arizona
Republic editorial , January 25, 2006.
20. Vicki Murray, “Rankings cloud
real school indicators,” Arizona Republic,
March 27, 2005.
21. Murray placed the original data
request with the Arizona Department of
Education on March 18, 2005. The
22. GOLDWATER INSTITUTE I policy brief
22
Department did not send the necessary
base equalization data contained in the
SAIS APOR 55-1 report “Basic
Calculations for Equalization
Assistance” until May 5, 2005, after
numerous email and telephone follow-
up requests. The Department did not
provide the necessary SAFR summary-
and district-level financial reports on all
sources of revenue and all categories of
spending until June 28, 2005. That
delay was due in part to technical
difficulties the Department was having
with the district coding, but fulfilling
our data request still took repeated
follow-up emails and telephone calls. A
discrepancy we did not resolve from the
Arizona Department of Education data
was the inclusion of school districts in
Mexico, New Mexico, Utah, Nevada,
and California. Those school districts
were excluded from our analysis.
22. SAFR, FY 2003-2004, vol. I, p.
33; cf. SAFR FY 2002-2003 vol. I, p.
35.
23. Debra K. Davenport, “Dysart
Unified School District,” Office of the
Auditor General, November 2004.
24. “Yuma County School
Superintendent: Conflict of Interest and
Misuse of Public Monies,” Office of the
Auditor General, April 2003; “Ganado
Unified School District No. 20:
Malfeasance by District Officials,” June
2003; Bowie Unified School District
No. 14: Theft of public Monies,
December 2003; and Santa Cruz
County School Superintendent: Theft of
Public Monies,” November 2005.
25. For clarity, throughout this report
standard acronyms are provided, but full
agency names and funding categories are
used. The SAFR data used is from the
District Detail Reports. The SAIS data is
from the APOR 55-1, “Basic
Calculations for Equalization
Assistance,” Arizona Department of
Education, Memo # 02-055, May 14,
2002 at: http://www.ade.az.gov/school
finance/Memos/FY2001-2002/ (Dec-
ember 20, 2004). Additional detail was
derived from SAIS BUDG25,
“Expenditure Budget Report for Fiscal
Year 2003.” http://www.ade.az.gov/
Budget/ReportsData/ReportsData.asp
(December 20, 2004).
26. The National Center for
Education Statistics reports the 2001-02
U.S. average per pupil spending was
$8,575, which is $8,918 in 2003 dollars.
That figure includes current
expenditures, capital expenditures, and
interest on school debt. See the National
Center for Education Statistics, 2004
Digest of Education Statistics, Table 166,
http://nces.ed.gov/programs/digest/d04
_tf.asp; and the NASA Consumer Price
Index (CPI) inflation calculator at
http://www1.jsc.nasa.gov/bu2/inflateC
PI.html .
23. 500 East Coronado Rd., Phoenix, AZ 85004 I Phone (602) 462-5000 I Fax (602) 256-7045 I email info@goldwaterinstitute.org
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