PHOENIX — Arizona school districts and charter schools may have to wait to get all of their state funding this month, as the Arizona Department of Education told local school leaders they’re currently in a $200 million shortfall.
Superintendent Tom Horne said schools may only get 60% of their regular monthly payment in what’s called Basic State Aid unless the state legislature passes a new budget or supplemental package to help make up for the shortfall before June 13.
Basic State Aid is money that goes to school districts and charters that helps with operational costs, including paying staff. This money is calculated differently for different school districts and charters, depending on how much they get from property taxes in their area.
As the fiscal year comes to an end at the end of June, Horne said they’re short $206 million.
For education advocates, this can be worrisome.
“It's a concern when there's uncertainty of funding. $200 million spread over all the districts may not sound like a lot, but districts don’t have a lot of wiggle room in their budgets,” said Paul Tighe, the executive director of the Arizona School Administrators Association.
Tighe said the delay in payment can affect staff working 12 months as opposed to the educators who are not in school right now unless they’re helping with summer programming.
How did this shortfall happen? The state typically estimates how much things are going to cost, and a certain amount gets allocated. However, calculations were off.
Here is what made up the $206 million shortfall, according to the Arizona Department of Education:
- $10 million more was needed for career technical education funds
- $13 million was needed for a difference in state aid for charters and school districts
- $17 million was because of lower-than-projected property tax collections
- $45 million was due to a higher-than-anticipated recalculation adjustment for school enrollment, or Average Daily Membership
- $52 million more was used due to Empowerment Scholarships Accounts
- $69 million was used for a Maricopa County taxing error lawsuit
Universal Empowerment Scholarship Accounts, which continue to be criticized by opponents for using public tax dollars to fund private education, were originally estimated to use $820 million for Fiscal Year 2025. However, ADE told ABC15 the actual cost was roughly $872 million.
“It looks like, not exclusively, but certainly a factor is ESA voucher, and not having any kind of cap or limit on those makes it very difficult for the legislature and others to manage the state budget when you don’t have any kind of cost containment,” Tighe said.
While other education advocates continue to push for caps and other changes to the universal program, Horne says ESA spending was not the only issue a part of the shortfall.
“It's only 25% of the problem. So, why would you pick out something that's 25% when you've got other issues that are 75% unless you're just hostile toward parental choice,” Horne said.
So, how will this affect schools? School financial experts say it may be a problem for school districts and charters that don’t have enough financial reserves.
“There could be some school districts that are not in as strong a financial position as we are. But I think for the most part, most school districts are in a pretty healthy place financially,” said Charlie Martin, the chief financial officer for the Laveen Elementary School District.
Martin also oversaw Basic State Aid payments for the Arizona Department of Education in his time prior to going to the school district.
“It's not unusual for the assumptions in the budget to come up somewhat different than what's actually needed,” Martin told ABC15.
According to State Senator John Kavanagh, he told ABC15 they’ve known about the ADE’s needs since January. He said they do plan to give the ADE that money when they pass the budget, which they have until the end of this month to do.
“They'll all get fully paid. It will just be a fairly slight delay in part of their payment,” Horne said.
