Arizona’s Schools Flush With Billion Dollar-Plus Surplus

Arizona’s schools have more money than in years before with a billion dollar-plus surplus, says the Arizona Department of Education (ADE).

Though districts have accessible cash on hand to spend, largely at their discretion, activists have continued to criticize teacher pay rates in the state. Average teacher pay in the state, adjusted for cost of living and inflation, amounts to around $58,000 according to the Auditor General.

The department, through ADE’s CFO Tim McCain, shared with the Arizona legislature earlier this month that the school district fund balance reached $6.4 billion last year, nearly $2 billion more than it was six years ago, with the revenue percentage around 50 percent.

The school district maintenance and operations (M&O) balance also experienced a significant increase, reaching nearly $1.4 billion last year: an increase of one billion compared to six years ago. Revenue reached 19 percent, more than triple the total six years ago.

Such significant increases could be linked to a combination of factors, with levels of influence varying from enrollment patterns to the pandemic.

Apart from the increase in funding, one reason for the dramatic surge in cash funds was the billions in federal grants handed out to Arizona schools over the last three years. Arizona received over $4 billion in ESSER funds broken into three installments with staggered expiration dates, the last of which expires this fall ($2.5 billion).

According to ADE, school districts capitalized on these ESSER funds to pay for services and projects previously subsidized by M&O funds. Instead of depleting their M&O funds, districts carried them over.

The decision to carry over M&O funds came from a desire to increase spending power. Funds carried forward ultimately secure a raise in school budgets. Districts aren’t hindered by a “use it or lose it” which would require them to spend as much of their budget as possible by the end of the fiscal year to ensure no reduction in budget the next year.

“Budget balance carry forward goes to the next year for their increase, so their budget will be increased by the amount that they carried forward to the next year,” said McCain.

McCain clarified that $300 million of funds weren’t tied to the M&O budget.

The CFO also speculated that budgetary growth had resulted from independent decisions by districts to mitigate risk due to the current state of the economy, specifically inflation and minimum wage increases. McCain added that the teacher shortage and the relatively recent elimination of a cap on the budget balance carry forward also likely contributed to the significant budgetary growth.

ADE’s former school choice head, Christine Accurso, criticized the complaints from public school advocates alleging a shortage of funds to districts.

“All we hear is that they [schools] don’t have enough money,” said Accurso.

Wow! The public school districts in Arizona are flush with cash…over ONE BILLION DOLLARS carried over from one year to the next. 🤦🏻‍♀️

All we hear is that they don't have enough money. This is worth 43 minutes of your time! Click here! ⬇️https://t.co/iiXlounTqP pic.twitter.com/DOX7DSkqZh

— Christine Accurso (@ArizonaCatholic) February 17, 2024