Praise for restoring school funds

The most consequential line in Gov. Doug Ducey’s State of the State address was largely overlooked. It was this: “And a full, complete and accelerated restoration of flexible funding — two years ahead of schedule.”

The reference is to a K-12 funding source known as Additional Assistance.

AA is allocated to districts and charters on a per-pupil basis. Originally, it was restricted to what is known in education wonk circles as “soft capital” — things such as books and desks. But the Legislature long ago lifted this restriction. Now it can be used for whatever schools decide is most important.

However, unlike the main funding source for K-12 education, basic state aid, AA wasn’t voter-protected. And it was severely cut to cope with the effect of the last recession.

A few legislative sessions ago, Ducey proposed phasing in a restoration over five years. This is the second year of the phase-in. Next year would be the third.

We will have to see the governor’s budget for validation, which is expected today. But the State of the State message indicates fully restoring AA funding next year.

This is a big deal, both in terms of the bucks involved and the effect it should have on education finance litigation and debate.

The acceleration would produce an additional $135 million for schools next year, compared to the phased-in amount. All told, the schools would be receiving $371 million more from this single source than they were receiving four years ago.

Last year, Ducey also got substantially more funding for the School Facilities Board, which provides funding for new school construction and major repairs to existing schools.

Following a court case, the state took over responsibility for major capital projects for district schools in the 1990s. But this funding was also cut severely to cope with the recession.

Some school districts have filed a lawsuit claiming that the cuts in AA and SFB funding violated the settlement that closed the court case.

The full restoration of AA funding and reasonably robust appropriations for the SFB should mean the end of the lawsuit. If not, the state will be in a strong position to win in court for a change.

Inflation funding for basic state aid, the much larger funding source, has already been restored and then some. With full restoration of AA, the cuts in state support for K-12 operating expenses will have been largely reversed.

The SFB programs for major capital projects have been altered some. Building renewal is now through a grant program rather than flowing automatically through a formula.

But the previous formula was universally recognized as problematic. Even Gov. Janet Napolitano refused to fully fund it at the height of the housing bubble, when the state was awash in cash.

With the full restoration of AA funding, assuming the continued robust funding of the SFB, the claim can credibly be made that state support for schools has been returned to prerecession levels.

An argument can be made, and will be made, that isn’t enough. But fully restoring the major K-12 funding streams — basic state aid, Additional Assistance and the School Facilities Board — to prerecession levels changes the dynamics of the debate considerably.

Certainly it makes it more difficult to argue for a radical approach such as proposed by the recently filed Invest in Ed initiative.

If major funding streams have been largely restored to prerecession levels, it’s harder to argue that Arizona should take the economic risk of adopting some of the highest income tax rates in the country to fund K-12 education.

There was already discussion among legislators about fully restoring AA funding next year, given the large surplus the state is enjoying. Ducey advocating it makes getting it done a virtual certainty.

Ducey deserves more credit than he is given for the substantial increases in K-12 funding that have occurred during his tenure. Yes, much of it has seemed to be reactive to events, such as lawsuits or teacher strikes. But, at the end of the day, it was his political muscle that got the job done.

Fully restoring AA funding will be a milestone. It will reset the K-12 education funding debate in fundamental ways.